Are you the type to avoid conversations about exiting your company? Do you usually say you will deal with it later? Is it hard to write a will? Are you scared of affecting your company if something happens to you? Do you think about what would happen to your employees and family if something were to happen?
Addressing the subject head-on and on time will help you take care of your family, protect your business, and optimize your professional assets. If you don’t, you will leave the future of your family, employees, and company up to chance.
What is exit planning?
An exit plan outlines a business owner's departure from the business. It includes someone who leaves their own company, someone who leaves a company where they own shares or even someone who plans to withdraw from the market altogether.
This strategy entails an organized and systematic approach. The primary goal is to maximize profits. It can either mean selling the entire company or just one’s shares if there are co-founders or shareholders. By doing so, a business owner can liquidate stocks to raise money - which would be equivalent to being bought out of the company for profit
It takes years of planning to make sure you have a seamless exit. But what is your reason for selling your company?
Reasons to Exit?
Because you are involved in your business and enthusiastic about your company, it doesn't mean you should not think about leaving. Even if you intend to work until you die, it is still wise to have an exit strategy before starting a business.
Making exit-related decisions for your business is another way of preparing for future success if you are looking to sell your business. It could also happen when you want to transition from one business idea to the next but realize that you don't want to keep working on the previous one anymore.
Three main reasons why planning an early exit strategy makes sense are:
- An emergency forces you to sell.
- Competition overwhelms your ability to keep up with market share.
- You decide to sell the company to one of your successors.
Emergency
Unfortunately, emergencies are always followed by sudden acquisitions. It typically includes unforeseen deaths, health complications, or traumatic injuries. When this happens, the company that has previously taken over experiences a loss of direction because they were too unprepared for this type of unforeseen situation. For example, if the company does not have any preparation - for instance, powers of attorney and wills - things can go south quickly.
In this scenario, longer-standing employees will be asked if they are willing to take over the company. It saves your job and helps all of your coworkers keep theirs. The pressure is immense because you need to provide for your customers.
Competition
A fluctuating and ever-changing market can be difficult for medium-sized businesses to deal with. Constant pressure from competing companies makes it difficult for many owners to make a profit; based on that, some may even want out of the business.
Selling to a Successor
It is hard for anyone to part with their company. However, thousands of companies are transferred to new ownership each year - usually due to aging. A fair price for the company alleviates some of the pain from this parting. And for many entrepreneurs, it also means doubling up as their retirement plan.
Why do I need an Exit Plan?
There are many factors to consider before selling a company. However, a major factor most business owners don't consider is how they will be affected psychologically. For this reason, it is important to plan so it is possible to overcome any obstacles from a mental perspective.
Take advantage of these additional benefits when you move forward with your exit planner:
1. Make reasonable decisions for your company.
2. Increase the value of your business.
3. Add in more flexibility for yourself when needed (giving yourself some free time)
4. Save a headache if you must perform an emergency exit.
Postponing an Exit
Postponing your exit planning process can result in an unnecessarily difficult situation when you finally plan to exit the company. Remember, though you won't stay there forever, it is good to know what will happen next! When at some point, you feel that your skills and expertise cannot take care of the company anymore or if financial instability reaches its peak, a hasty decision could lead to many unfortunate outcomes for all involved.
In these cases, a high-risk premium applies to every purchase price determination for a company; previous successes and incomes are irrelevant.
Postponing an exit turns a simple but orderly process into something chaotic and worrisome.
Exitplanner can help
Exit Planning is an essential step when considering the sale of your company. You will need to invest time and effort in finding reliable advisers who can make the process less demanding on your part. This is where Exitplanner steps in!
With Exitplanner, you don't have to be an expert to make a great exit plan. ExitPlanner will help you through every step of the process. So, get to know what you don't know about exit planning from a personal exit coach.
Don't hesitate to contact us to book a confidential conversation with a professional exit coach that will help you get started on your exit plan.
