What’s good for the goose is good for the gander
“Exit planning” is the strategic approach business men and women need to take to prepare their businesses for the day they leave.
A good business plan will include a rounded approach to the future pathway the business needs to take and will include elements of management structures, marketing, financial forecasts and a study of the overall market-place.
It should include an exit strategy as well.
Many entrepreneurs will see their business as their passion, the source of their income, as well as possibly their pension – all wrapped up in one.
What is interesting is that the holistic view is one that chimes with maximising future exit possibilities; because the more successful the business is during the period of ownership of the current owner – the higher the value of the business to a future owner.
Put another way – making the business work effortlessly today will improve tomorrow’s sale price.
This is where the win/win element (“the goose and the gander”) comes into focus. What do you want from your business now? Strong growth and healthy profits? That is probably not a bad formula for ensuring your business is providing you with a decent year on year income for you and your family.
It is also likely to make the business more attractive (and by proxy, more valuable) to potential buyers.
The value of working on your business to maximise these aspects has multi-benefits.
There is one caveat to all this; you need to work on the business model and focus your efforts on making the business work on its own merits; it has to be able to survive independently of its owner.
One common issue for business owners when they come to sell is that the business has an over reliance on their personal input, reputation or contacts. The business cannot (easily) be separated or segregated from its founder or owner. Much of the “value” is with the individual not the business itself. And the individual, selling their business, is departing.
In preparing to exit – the business has to be readied for a different captain at the helm; it has to be able to operate without the original or current owner. In reality this is an excellent business discipline in its own right, one that has many advantages over and above exit planning.
It is another example of how great exit planning for tomorrow dovetails with good/solid business practice today.
There is a ying and yang element in play; the two disciplines are conjoined – working on your business today to make it a better business has immediate impact, creating a more profitable business (and a higher income?) but it also boost the exit options and possibilities. Working on your exit plan helps engender better business practices today.
What do you actually need to do?
If you are a business owner or major player in a business then you need to start by answering this question; do you have an exit plan? Written down? If not, then you need one.
You will more likely have employee handbooks, health and safety documents, disaster recovery plans, a marketing document and financial forecasts. Why? Often because they are easier to write or there are standard templates which can be adapted or there are people available to do this for you.
However an exit plan written down and thought through is a valuable and central business document, just as (if not more) important. If you do not have an exit plan make it a priority to work on one over the coming weeks and months. As described it will have dual benefits.