Every business owner must be prepared to exit from the business at some point. Whether you plan to reduce your working hours, sell the company, retire, or somewhere in between, laying the groundwork for an exit will make that process a much easier transition.
What is an “Exit Strategy?”
First of all, let us talk about what is involved with an exit strategy.
A business exit strategy is essentially the plan that a business owner puts in place to sell or transition their company ownership. That’s the very simple way to look at it.
While the result of an exit is straightforward, the process of getting there needs to be strategically laid out. For example, many business owners have the business’s whole function set out in their mind’s eye but don’t have it documented. This means that the entire operation is tied to them forever unless the various parts, plans, goals, flow charts, and more are all laid out clearly – so that an investor can view it all and understand the entire company.
The above must happen for a company owner to sell, retire, or transition leadership.
Formulating Internal Documentation in Preparation for an Exit
Creating internal documentation and systematization now, before you begin to search for an investor or company, allows you to organize and provide a proven property during the sale process.
However, not every business owner plans to exit by selling their company to another company or investor. Some plan to pass their company down to a child.
Would documentation be necessary for this type of transition and exit?
We would say that it is vital. In fact, if you ever want to be able to step away from your company – even if it’s just to take a vacation – you need to document your vital processes and procedures so that someone else can take on your job while you are gone.
So, how does one begin to document processes and procedures in preparation for an exit?
Here are four steps you can follow to establish the foundation for an exit:
1. Make the decision to exit
The first step is to decide to exit. This sounds obvious, but often a business owner “knows they will retire eventually” or “plans to sell when the right opportunity comes along” without making a definite decision. Your exit decision will enable you to plan and give you a general timeline to work with.
2. Set aside time to organize
Most business owners feel challenged by the prospect of sitting down and doing organizational planning.
It is challenging!
But, the first step is to set aside a consistent time to tackle the project. Once you have the time marked in your schedule, you can learn what you need to know, talk with consultants, and begin documenting company processes and procedures.
3. Break the process into steps
One of the most common questions about documenting processes and procedures is “where do I start?”
You can answer your own question by asking yourself what area of your company could benefit from more order. Or, to put it another way, which area do you always feel you have to dive into to ensure things run smoothly?
Establishing well-documented and accessible processes and procedures for that area will provide you with the most significant immediate ROI. Also, now that you have tackled your company’s most troublesome section, the other departments should be easier to organize.
4. Get help
You don’t need to tackle this documentation project by yourself! Talk with your company executives and hire outside help as needed to get the expert assistance you need to complete your documentation project.
For more on this topic, watch this video interview with Ashley Micciche and Adi Klevit on the subject of preparing your exit strategy or get in touch with us directly!