No matter what your small business financing situation might look like, you should be aware of your long-term options. After working all your life to grow your business, you should ensure that you’ve established the necessary exit plan to protect the company. While most people plan for years to get their small business off the ground, most owners fail to draft an exit strategy. Whether you want to make the transition on your own terms or whether an unexpected turn of events leaves you unable to continue overseeing the day-to-day operations, you need to prepare the business to continue functioning after your eventual departure.
Even though 76 percent of business owners plan on exiting from their companies within the next 10 years, 83 percent either do not have a transition plan or have failed to articulate their plan to the appropriate individuals, according to the 2013 Northeast Ohio Chapter of the Exit Planning Institute. With a myriad of options available, it makes sense that owners are overwhelmed by the choices. From selling to a private equity group or establishing an Employee Stock Option Plan, you need to make a choice that determines your company’s future.
No matter which exit strategy you wish to pursue, here are five tips to help ensure you stay focused during the business-selling process:
- Don’t stop selling
Even though the sales process will consume large portions of your time and resources, you still need to focus on continuing the day-to-day operations. Don’t get sucked into the whirl of distractions. This includes checking out early before the deal has been finalized. Some transactions can take a significant amount of time to complete, while still others never get finished. Be sure you stay focused on the business until you are sure all ownership responsibilities have been transferred.
- Communicate your plan
Nothing messes up the cogs in the operation faster than miscommunication. This can lead to redundant activity, unfinished tasks and total disarray. Clearly communicate your plan to all management and the necessary staff members. Keeping everyone on the same page helps ensure the exit plan is successful. But be careful about who you tell since you don’t want word of the sale to get out ahead of your own announcement. Competitors can easily use the leaked knowledge of an ownership shuffle to spread distrust in consumers’ minds.
- Assemble the best team
No matter how much control you like to maintain over your affairs, selling a business is a complex endeavor with significant variables, all of which can drastically alter the outcome of the sale. While you might know your business and your industry, you will still need to enlist the assistance of financial and legal professionals. Do your research to ascertain the best team possible for you and your business.
- Focus on your value
While you should always hire an outside firm to perform a business valuation, be sure to heed their advice. You should try to avoid comparing this acquisition to other sales, since all companies and buyers are drastically different, with unique circumstances surrounding every deal. If you try holding out for more money because someone else received a higher offer for their company, you can end up missing a potentially lucrative deal.
- Know your triggers
Like a wounded yet determined boxer struggling to stay on his feet, you need to know the right time to call it quits. In your case, throwing in the towel isn’t an admission of defeat, rather it’s an opportunity to start another phase of your life. Establish triggers for when and why you plan on exiting the business, either once you’ve reached certain goals or passed specific milestones.