I often ask prospective clients if they have an exit strategy for their business. Too often, I get a response that tells me: they do not have an exit strategy; they never thought about an exit strategy; they have one “in their head;” and/or they have one but they have not documented it properly and do not have contingencies covered. One of my favorite authors, Michael Gerber, in his E-Myth books tells us that we create a business to sell it and that if we do not do that, we own a job not a business.
So, with Michael Gerber’s thoughts in mind I would say that whenever you create a business or something that's interesting and useful, you create a business or something that's worth selling. And subsequently, when you're thinking of selling a business or something that's as important to you and your future well being as your business, it's critical to have a well-developed plan firmly in place.
The ending of a business by a business owner is known as an "exit," and the planning of a defined ending is called an "exit strategy," in business terminology. The development of a well thought out and documented exit strategy demonstrates that you are in control of your business, that you're a strategic thinker and planner and goal focused, and that you have a well defined plan for an organized and profitable ending for your business.
Unfortunately there are too many business owners who have not planned for an ownership transition and therefore are jeopardizing the funding of their retirement and/or the future care and well-being of their family and/or others. And the really sad part about this is that this failure to fund a comfortable retirement and other future needs doesn't happen because these owners failed to create value in their businesses. No, it happens because they failed to do the critical and strategic exit strategy planning that would have allowed them to keep that value.
One of the lessons learned as a business coach and that I have tried to pass along to my clients is that if and when they seek angel investors or venture capitalists, those investors will require that them to have a viable exit strategy in place before they'll invest a single dollar. Some business owners who are approaching retirement may want to sell their business to an outsider, a key employee, or to a fellow shareholder or partner. Or, they may want to transfer their interest to children or other family members. But the million-dollar question is: “How can all of this be accomplished?” Well, the million-dollar answer is you must have a well planned and funded exit strategy.
Perhaps you are a business owner who is just now thinking of developing an exit strategy. I applaud you for that. My advice is to do much more than think about doing it. You need to start planning your exit strategy today, keeping in mind that defining it is a strategic planning process that requires careful thought. This type of plan is not done quickly and haphazardly. It is planning that requires some outside advice and effective strategic thinking. From my experience in business coaching and strategic planning, I have found that all strategic exit plans should identify the following:
A current valuation of your business
The major factors that drive the value of your business Strategic methods to increase your business value The potential future value of your business Options for ownership change Options for funding of the ownership change Protection/risk management re: the ownership change Defined tax implications of ownership change.
Potential tax-saving methods specific to your business The likely proceeds from strategic ownership change You can ensure a smooth transition and make your business more valuable and desirable with a proper business valuation and some sound exit strategy planning. The strategic exit strategy is a key component of your strategic plan and will provide guidance to you to make the decisions that will position your business to reach your exit goal.
Your strategic thinking business coach encourages you to fully realize the benefits of business coaching to strategically plan for increasing the value of your business and strategically planning for an ownership transition for your business. If you would like to learn more about how a strategic thinking business coach can facilitate and guide you in that endeavor, please contact Glenn Ebersole today through his website at www.businesscoach4u.com or by email at jgecoach@aol.com
A Strategic Look At Why You Should Develop A Business Exit Strategy Now! - To learn more about this author, visit Glenn Ebersole's Website.
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