At some stage every business owner has to ask themselves a fundamental question: Am I building an asset with lasting value that I can monetize at great value some day.
In other words, do I have an Exit Strategy?
Let’s explore this.
First things first.
If you are planning to sell your business in the future your business must be able to operate on its own without your day-to-day involvement. It must have
- Self- directed and motivated employees
- Systems and processes that produce consistent results
- Measurement systems
- The right branding
Only then can you think about your business as an asset that you can grow and some day sell at a high multiple.
Then, your focus can shift to growing the asset and your “Exit Strategy”.
Your Exit Strategy need not be short-term. It is just useful to know that you can sell the business whenever you need or want to. And, you should always know what your business is worth.
There is no one right or wrong Exit Strategy; it all depends on your own circumstances.
SOME OF THE FUNDAMENTAL QUESTIONS YOU DO NEED TO ASK YOURSELF TO DEVELOP THE RIGHT STRATEGY ARE:
- How does this asset fit into my personal financial or wealth management plan?
- When is the best time to capture the maximum value for this asset? For where I am in my life? For where the business is in its life? For where the economy and industry is and is going?
- Who are the natural buyers for the business?
- Are there some natural partners for the business? Management? Employees? Outside investors?
- For how long do I want to be personally engaged in the business?
- Do I have good management and a succession plan?
In Las Vegas when one wins a big jackpot, a good strategy is to take some “money off the table” and to “play with house money”. The same is true in business. When your business reaches a certain scale, it is usually prudent to take some money “off the table” by selling a portion of the business to a partner.
Finding a good partner at the right time in your growth trajectory can be an effective way to 1) reduce your investment risk, 2) reduce your own future investment commitments to the business, 3) gain access to needed resources and expertise, and 4) enable faster growth.
These are some of the more important considerations you will need to address once you have reached the point of being a true Business Owner.
Having an outside advisor, coach or consultant is invaluable to help you build the right strategy from the beginning and avoid costly mistakes.
If you are ready to build a plan for your EXIT STRATEGY let’s talk!
Apply for a complimentary business strategy session today by sending an email to our team at: [email protected].
