Often, business owners put exit planning on the back burner. They built a business to fulfill a passion or realize a dream – not to exit it.
This interview with the Founder and President of Exit Factor, Jessica Fialkovich, provides a different perspective. In it, Jessica shares that most business owners don’t sell their companies at the most opportune times. Instead, life often gets in the way, forcing them to consider selling the company they’ve built. Burnout, medical issues, family troubles, and more can all cause an early exit from a business you love.
Instead of worrying that something might happen, Jessica and Adi share how a business owner can plan for an exit. Preparing a business for sale has short-term and long-term benefits both for the owner and the company.
How to Get Started
The first step in exit planning is to perform an exit assessment. This data-gathering exercise shows the business owner the actual value of their company. With this information in mind, the entrepreneur can plan to build their ideal company that is worth the amount they’d need in order to make a graceful exit.
The Three Keys of Exit Planning
Once you have your assessment done and have a general idea of where you’d like your business to be when you make an exit, address the following three key components:
Keep clean books and records that someone can easily review.
Many companies are built with a “grow at any cost” mindset. This can mean that the company is not built with profitability in mind. To sell a company, it must be profitable. Reposition your company to focus on profitability over rapid growth.
Businesses need to have transferable processes and systems. All of the information about how the company runs cannot “live” in the owner’s mind. Therefore business owners considering an exit in the next five to ten years must have systems for everyday activities and for knowledge transfer.
Short-Term Benefits of Exit Planning
This all sounds like a lot of work for a potential exit within a decade or so. However, there are short-term benefits of exit planning. One significant advantage is that, when the business owner is no longer the go-to person for every little thing, they can go on vacation, weather an illness, and ease their burnout. By planning for the future, you are creating a more pleasant, collaborative present.
One Last Exit Planning Essential
Have a “post-exit” plan. It could be an extended vacation you are looking forward to, visits with family, caring for grandchildren, nonprofit work, or something else. The key is to have something you are working toward. You want to wake up the day after your business sells and be excited about your next step.
The Business Success Consulting Group team does not do exit planning – that’s for specialists like Jessica to tackle. However, we do help companies create knowledge transfer systems, document procedures, and set up processes so business owners can build a more profitable and more transferable company.
Find out how we can help by scheduling your initial consultation.