Five expert tips for small business exit strategies
George Style, Regional Managing Partner at Haines Watts recently provided some expert analysis of what small business owners can do when looking at selling their business.
For entrepreneurs building a business is true labour of love. The time and energy spent making it thrive span years, and the business and its team becomes a treasured part of its founder’s life. This journey makes considering an exit strategy a difficult process but creates room for another leader to continue the legacy, and for entrepreneurs to pursue another venture.
At the beginning, a business plan is mapped out, and no matter how far away it seems, an exit strategy should be integrated into the process. Despite what it might feel like, making a plan for exiting a business does anticipate failure. A business exit strategy shows that the business has flourished and is now able to operate without original owner. There’s no straight line to making a business exit strategy, but these five tips are essential for business owners to keep in mind when looking to exit their business.
- Succession planning
Careful succession planning ensures that a trusted and capable leader is in place to keep the business up and running. Mapping out who will carry on the strategic management responsibilities in the company makes for a smooth exit plan and minimal business disruption. As part of the transition period, the chosen person must be made aware of the finer details of the business, including its strengths, weaknesses and values.
- Seek trusted advice
By partnering with the correct business advisor you will always have a helping hand as you manage your exit strategy together. Handing over responsibility for a business that you worked so hard to build is a daunting process, so having a trusted business advisor who understands you and your team will ensure you don’t overlook any crucial considerations.
- Tie up loose ends
When a founder exits a business, the organisation should be in its prime. By focusing on the health of the business in the run up to an exit, you ensure longevity and sustainability for your company long after you have left. A well-run business is appealing to the strongest candidates for taking over and means there will be minimal risk of loss of revenue.
When choosing to exit your business, you should explore all your options. One option is to go down the route of an acquisition. This is one of the most common exit strategies, allowing you to find a thriving business that wants to buy yours, and negotiate the best possible deal to sell, considering the price and the acquirer’s plans for its future.
Focusing on the finer details of your acquisition or transfer of management is the best way to ensure a successful exit. It requires you to give your all right until the very end. A nuanced job description of your role in the business should be laid out in order for a seamless transition that allows your team and customers to continue receiving the best standard of experience that they have come to expect.
Although exiting a business is a daunting process, these tips can help anyone make a plan to futureproof their company. The key to building an exit strategy that is right for you, your business and your stakeholders, is have the best advice on your side throughout the process. Having an arm around your shoulder will make the journey much easier and guarantee that your legacy remains intact.