There's one part of your career as a business owner that might be more bittersweet, confusing, or downright frightening than all the rest: when and how you will leave your company.
HOBOKEN, N.J., Dec. 12, 2012 /PRNewswire/ — Figuring out how to exit a business usually brings up a lot of emotions for business owners. After all, they've poured their time, energy, heart, and soul into making it grow and helping it succeed. It's been their livelihood and life. Of course the thought of exiting the business makes owners uncomfortable.
All the more reason, says Bill McBean, that they should approach this business decision just like any other: Make sure it's well thought out and based on facts.
"Being in a position to dictate your own exit strategy should be the highlight of your career because it epitomizes the entrepreneurial dream: Go into business, be successful at it, and leave under your own terms," says McBean, author of the new book The Facts of Business Life: What Every Successful Business Owner Knows That You Don't (Wiley, October 2012, ISBN: 978-1-1180949-6-9, $24.95, www.FactsOfBusinessLife.com). "Unfortunately, many owners are reluctant to make plans to walk away, and thus, they leave too many critical decisions to chance."
The truth is, writes McBean, rarely do business owners talk openly about exit strategies for their businesses.
And that's unfortunate for two reasons. First, if you don't pick the time to exit, something or someone else will. And secondly, the best time to sell or enact a succession plan is when you don't have to.
"Always keep in mind the one key difference between the decision to exit your business and every other business decision you've made as its owner: Now you need to take into account not just what's best for the business but also what's best for you," says McBean. "Because for the first time since the company began, what's best for the business and what's best for you are not necessarily the same thing."
Here are some things to consider:
Don't allow leadership to suffer. You haven't left your company yet, so you need to continue to proactively lead. Especially if you intend to sell the company or pass it to a successor, it needs to remain cutting-edge and competitive.
Be aware that you wear two hats. When creating an exit strategy, it's important to make sure that you have detailed, accurate information about your company and your plans to exit it so that you can make sound decisions on both fronts.
Focus on your assets. Have an accurate grasp of your business's assets. Remember, employees, processes, and procedures, as well as customers have value.
When making plans, play the long game. Whenever you can, make your exit plans as far out as possible. This includes three key factors:
- Identify who would be your best or targeted buyer.
- Assess the value of your business today and compare this to what you want to have when you exit.
- Consider when would be the optimal time to exit, business-wise and personally.
Be ready to market in a whole new way. If you decide to sell your company, in addition to marketing your product and business brand, you will need to successfully market your company. This entire process will require a new focus, because working toward an "end game" will alter some of your objectives and goals, which in turn requires a new business plan.
Strategize like a winner. The ultimate goal is to sell your business for its maximum value and have it structured to minimize the tax bite. Your battle strategy will include figuring out how to showcase your company, making it ready for sale, putting together the information buyers will need to evaluate your business, and much more.
Put your business knowledge to work. The more you know about the market, how competition works, maximizing your assets, etc., the more accurately you will be able to value your company and the easier it will be to justify the company's overall worth.
"Ultimately, the more you educate yourself and the more you plan, the more likely the exit choice you make will be the right one," concludes McBean. "Remember, your decisions and focus at this time will determine what your company's and your own legacy will be. And I don't believe that's something you want to leave to chance."
About the Author:
Bill McBean is the author of The Facts of Business Life: What Every Successful Business Owner Knows That You Don't (Wiley, October 2012, ISBN: 978-1-1180949-6-9, $24.95, www.FactsOfBusinessLife.com).
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