Deciding to exit your business is a significant step in your journey as an entrepreneur.
It is crucial to have a carefully planned exit strategy, regardless of the current stage of your business. However, given the multitude of exit options available, it can take time to determine the best course of action. In this context, we would like to explore three practical exit strategies that will help you make an informed decision about the future of your business.
Opting to Sell Your Business
Selling your business is a common exit strategy for those wanting to depart from their enterprise completely. This can be motivated by retirement plans or pursuing new business ventures. To get the best sale value, planning thoroughly and proactively is essential.
Making your business sellable from the beginning is vital. Enhancing your business’s appeal to potential buyers can lead to a financially rewarding sale. Although it may take time to find the perfect buyer, being prepared allows you to take advantage of opportunities as they arise.
Transferring Ownership to a Trusted Individual
Many business owners, especially those running a family business, prefer to pass on their business to a trusted person. This strategy is popular among people who have devoted a lot of time and effort to their business and want to see it thrive under the same management. Integrating this succession plan into your business model early on is recommended, just like with a third-party sale. This will help increase the business’s value and sellability over time, making the transition smoother and more beneficial. Additionally, this strategy usually requires mentoring your successor, which can significantly improve the chances of a successful handover.
Gradually Reducing Involvement
Remembering that an exit strategy sometimes means something other than completely withdrawing from your business. Instead, a balanced approach reduces your day-to-day involvement while maintaining a strategic role. This way, you can enjoy personal freedom while staying connected to your business.
To make this transition more structured, it’s recommended to implement the strategy in phases with a clear timeline. This approach provides ample time for you and your team to adapt to new roles and responsibilities, ensuring a stable change in leadership when the time comes.
Understanding the magnitude of exiting your business, we’ve compiled a comprehensive checklist to aid you in this critical phase. This resource is designed to prompt thoughtful consideration of crucial factors in your exit planning process.
How can a financial planner help?
We understand the immense commitment and personal sacrifices to build and sustain a business. We recognise the importance of safeguarding your legacy and ensuring the financial security of those who depend on it.
To help you better, we will take the time to understand your business’s ins and outs and role within it. We can help you decide whether an exit or succession strategy is suitable for you and your family and assist you in building a solid financial foundation outside of your business to provide greater flexibility in planning for the future.
If you are considering an exit strategy, we have powerful lifetime cash flow modelling tools to help you evaluate what a potential deal would need to deliver to meet your financial goals. We can also help you prepare for such a decision’s psychological and emotional challenges.