Three Steps To Optimizing Your Business Exit

Over the years, you have invested money, time, blood, sweat and tears into your business. While you may have enjoyed a good income during those years, most business owners look to their exit as a time of cashing in on accumulated equity. Optimizing the financial gain from you exit is important, but too often assumed.

Fact: 75% of all businesses put up for sale NEVER sell. Worse, the majority of business owners who do sell are shocked, disappointed and unhappy with the price they get.

If you want to have a different, successful exit experience there are 3 basic steps to follow:

1 – Begin with the End in Mind

Whether you are planning on selling your business ten months or ten years from now, you should be working on it now. You need to consider an array of important questions and develop goals from them, For example, What price range do you want to sell for? Do you want to stay attached or do you want to immediately retire? What do you want for staff, family and associates who may be involved with or dependent on your business?

You also need to develop scenarios for possible sale. This means determining well in advance, by category or by name, who the likely buyers of the business may be so you can think about why they will buy and what will be attractive to them.

It is not enough to create value. It is important to create saleable value and to do that you have to consider the potential buyers’ means of calculating value.

Incidentally, the majority of businesses that sell for top dollar sell to unobvious buyers so creative thought when considering all possible buyers is critical.

With a vision of what your business needs to look like, act like and perform like when you finally engineer your exit, you can then move towards that target.

2 – Create Value, Not just Income or Profit

You do not want your businesses marketability and selling price to be defined by a simple multiple of earnings or cash flow. Instead, you want to create higher value from a complex set of factors including demonstrated but fully exploited potential value.

To create value in a business rather than just income, you have to assume the role of Chief Value Creator, not Worker.

Are you building yourself a valuable, saleable business or just a glorified job?

Over just eight years, I built one of my businesses from scratch to a value of more than $30 million. That means, on average, every day I worked, I added $10, 273 of real, saleable value to my business.

Then, I was still developing my Maximize Your Exit system for building value but, with what I know and use with clients today, I could have done it in half the time.

To add that kind of value every day, you just cannot afford to be working in your business like an employee.

3 – Build Your Exit Plan NOW

There are a lot of options and opportunities for exit, not just an outright sale for a huge cash payout.

You might want your company to go public and extract your cash through stock and stock options.

You might want to delay your exit but sell part or all of your business to a much larger company and stay on as its CEO, able to expand and achieve bigger goals with the parent’s more substantive resources and synergies at your disposal.

You might want the family to take over the business.

These options involve plans for a staged exit over years, rather than all at one time. While flexibility is required, it is important to create plans in advance so you begin shaping the business accordingly.

This kind of planning will help you breakout of the ‘glorified employee’ mentality and motivate development of better systems, better people and better delegation. Therefore your businesses day-to-day operations become less and less dependent on you so you are freed up to think and act more like an Investor creating value.

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