Will anyone want to buy your business?
This is a question that every Business Owner, Entrepreneur, and CEO should ask themselves. Asking the question doesn’t mean that you’re selling your business tomorrow, in 5 years, or ever. It just means that you’re building your business with the critical eye of a potential buyer. Do you even have an idea of who a potential buyer would be and how they would value your company?
You may be surprised that, for many businesses, the answers are “No”. Of course, no one likes to hear that the company they’ve spent 1, 5, 10, even 30 years building has no value to a buyer. However, it’s better to find that out now than when you’re ready to retire or during the due diligence period of a potential sale.
What can you do?
Change the answer to “Yes” by starting your Exit Plan today. A thoughtful plan will become your 3-5 year roadmap. This plan will identify potential suitors, risk factors, and strategic opportunities. It will help you lead more effectively and prepare your business for changes down the road. It will define the KPI’s (Key Performance Indicators) that you should focus on to maximize your business’ value and the number of potential suitors. In short, following your plan will ensure that you are building a better business, even if you never choose to sell.
What goes into Exit Planning?
Some think that Exit Planning is contacting a Business Broker or M&A Advisor to tell them you want to sell your business and plan to retire in the next 6 months. It isn’t. If that is your goal, please contact a Business Broker ot M&A Advisor ASAP.
Think of an Exit Plan as a Strategic Business Plan designed with future buyers in mind. It’s a completely new way to look at your business and should be started at least 3 years before you’d consider selling. The process is the same whether you’re a software development company, a dental practice, a consumer goods company, etc. Here are some of the items that a thoughtfully conceived Exit Plan or “Roadmap” will include:
- Your potential buyers (and why they would buy your company)
- How you will be valued by them
- Determination of KPIs (Key Performance Indicators) that drive value
- Plan for process/system mapping
- Ways to build owner leverage
- Ways to build IP (Intellectual Property)
- Your strategic plan
- Analysis of risks and plan to reduce or eliminate them
- and much more
Some say “build a business you love and not a business you want to sell”. This is great advice when choosing what business you want to be in, but terrible advice when running your business. You will eventually want to exit or will have to exit. You don’t want to end up at retirement with a lucrative hobby business that no one else will value or that has no value without you. Exit Planning will ensure that you are building a strong, stable, and valuable business that can run without you.
At Manley Strategic, we work with companies to guide them through the Strategic Planning, Succession Planning, and Exit Planning process to help them build a better business. We can we reached at email@example.com .