Do You Have an Exit Strategy?
Have you thought about planning for the day you sell your company? Maybe you’re still growing your business, or you’re still heavily involved in the day-to-day operations, and you haven’t thought about leaving anytime soon. Even if it hasn’t crossed your mind, it’s not too early to get a plan in place for that transition. Your CPA is the person to talk to about your exit strategy, but here is a quick overview.
Perhaps you’ve given it some thought, and there is no apparent successor within your company. That means you’ll be looking for an outside buyer. Preparing to sell your business means knowing what buyers will be looking for.
Your financials need to be thoroughly documented. This is the first thing a buyer will look at. They’ll want to know about revenue stream, cash flow, expenses, payroll, and a number of other things. You’ll need to be detailed and document the entire history of your business, not just the last few quarters. If you are not planning to sell anytime soon, now is the perfect time to start getting your bookkeeping in order.
Make sure you have a well-functioning operation. This means assessing your standard operating procedures and making adjustments where you think things could be done more efficiently. It also means implementing new procedures where there are none existing. For example, if there is something you take care of but there is no real process for how it can be carried out by someone else, you’ll need to change that. Buyers want a business that is easily transferrable – they want it to be as simple as possible for someone new to step in and run the operation. Make a detailed list of all tasks performed and what training is required.
Finally, when the time is right, you’ll want to gradually decrease your involvement in the business. You might be the face and brand of your company but you’ll want to scale back and make it easier for someone else to take the helm. At that point, all of your planning and hard work will make you feel secure in your exit strategy and whatever the future holds.
Here is the link to the full article. Your best resource for planning your business transition is your CPA. Call us today to discuss this and any other business needs you may have.