Every Owner Needs an Exit Strategy
by Keith Hicks, Rudder Business Coaching / Fayetteville

 

"Planning is bringing the future into the present so that you can do something about it now." - Alan Lakein

 

You poured your heart and soul into building your business and you want to get the most out of it when you decide to move on.  You need an exit strategy.

An exit strategy, or exit plan, is a way to transition ownership of a company.  If you don't have an exit strategy – like most business owners – you probably won't be satisfied with the end result. You may not get what you deserve out of the transaction, or worse, you may even cause a family feud over who owns what.  The good news is that you can create an effective exit strategy by addressing just five key areas.

 

1. Planning. Decide what outcome will be your goal and the time frame desired. Regarding the prospective owner, protect yourself from the 4 Ds: Death, Disability, Divorce, and Discord and put a Buy/Sell Agreement and insurance in place. Determine what you will do after the transition. There are four basic outcomes for exiting your business:

• Internal – You can sell or transition to someone who is currently employed by your business, including family.

• External – You can sell or transition to someone who doesn’t currently work for you, including family members.

• Liquidation – You can settle the business debts, sell off the assets, pay yourself the remainder and close the doors.

• Death – When you don't have plans in place for this potential event. the business becomes someone else’s problem.

 

2. Financials. Determine how much you need and what the business is worth. You’ll need to perform a thorough review of your business and inventory, records and transactions, which means identifying problem areas, too. A valuation of the business guides you in determining market value.

 

3. Training. Consider how a new owner will be prepared to successfully run the business. Look at the systems and organization you have in place. Focus on financials, marketing and sales, customers and employees and their roles, as well as the systems in place to hire, train and retain them. How will these operations transfer smoothly and successfully?

 

4. People. Be diligent in the process to find the best possible successor, whether it’s internal or external.  Keep in mind that no one will be as perfect a fit for your business as you, and that's okay.  Shoot for someone 80% as good.

 

5. Emotions. Explore and address your emotional attachment to the business and your ability to let go. How will you let go? How will you deal with the change in identity and power?  This is a critical step requiring self-awareness and honestly.

 

Now may not be the time to exit, but now is a good time for an exit strategy. I challenge you to work your way through these steps so that when the time comes, you will be prepared. In the meantime, enjoy the peace of mind.  Fair winds and following seas!

 

Keith Hicks is a Licensed Professional Business Coach with the PBCA, is CEO of Rudder Business Coaching, and has 20+ years of relevant business experience that includes positions in both large and small companies and as an officer in the US Navy and Air Force Reserve.  Emails comments to keith.hicks@rudderbusinesscoaching.com or via the web site www.rudderbusinesscoaching.com.