How to create a winning exit strategy

In business, we haven’t been programmed with Steven Covey’s famous words… to “Begin with The End in Mind”.   Whether you have ever thought about it, or whether you want to, it is an inevitable, undeniable fact your business will change hands and you will exit – why?  Because we’re human!

When you start your business, you have nothing to lose, so you risk it all on your idea. But as you grow, you naturally become more conservative, because your business becomes worth something. For many of us, our company is our largest asset.   There has never been a better time to get your business ready for your exit.

Your winning exit strategy

To create a winning exit strategy your goal is to:

• Build, harvest and preserve wealth
• Identify and grow business value
• Create Transferability
• Create a “Life After” Plan

You don’t have to choose between today and the future.  Doing the right things today ensures a successful exit in the future.

From my work with almost 500 business owners over the past three years, these were their biggest challenges relating to exiting their business:

1. Knowing what the business is worth
2. Getting started and how to plan
3. Timing – figuring out when to get out
4. People – getting myself out of the business

The ultimate exit model 

Evaluate – Explore – Innovate – Transition

Crafting your exit strategy will be systematic and rewarding when you follow this four-stage E-X-I-T process using value acceleration as a life-planning management system.  The timing of your exit is irrelevant.  Value acceleration focuses on now.

Evaluate

1. The first step is to benchmark where you are now and decide where you want to be. How much is your business worth today?  Next, clearly identify and align your business, personal, family and financial goals to create the foundation of your plan and give you a compass to guide you to your successful exit.

Explore

This part of the process is about exploring your personal readiness for exit and your potential exit options, so you’ll stay on track.

What type of exiting owner will you be?  Will you be the…

1. Get-me-out-right-away-at-the-highest-price exiting owner
2. Well-off-but-choose-to-work exiting owner
3. Stay-and-grow-the-business exiting owner
4. Rich-and-ready-to-go exiting owner (can use any option)

There are many exit options from which to choose (sell, family succession, management buyout, liquidate, asset sale, IPO, etc.) so it’s important to explore what you’d like to achieve most with your business exit and which option best satisfies both your personal and primary motive.

Innovate, Iterate, Improve

Exit planning requires doing and thinking about many things from different perspectives – both business and personal.  You will need to be innovative and iterate many improvements to your business. There is no “off the shelf” solution exit plan that will be right for everyone, but there is a robust value acceleration process and when followed, will give you your best shot at realising maximum value for your business, as well as the best outcome for you personally and for all stakeholders.

Find a strategic buyer to get the maximum price

To get the highest price for your business you need to create a compelling opportunity for a future buyer.   Seeking out a strategic acquirer who can exploit the business better than you can, or who can take parts of your business and add it to theirs, where the sum of the parts will add exponential value will get you the maximum price.

Transition

Preparing to exit your business is a major step every entrepreneur needs to take.

What if you are forced to sell or shut down?

If you are forced to sell because either the company has outgrown your entrepreneurial systems or because of outside investor or family decisions, or simply because you’ve “run out of puff”, let alone for more difficult reasons such as a health issue, this transition may be even more difficult.

At this point, your best solution would be to turn to business brokers for help. Doing it on your own may lead to a poor evaluation and a lot of other things for you to learn and add to your to-do.

Start your planning now

If you haven’t already started thinking about your eventual exit, now is the time to start – even if you think you’ll never sell your business.  Everyone leaves their business eventually.

• Everybody needs to be going somewhere – continue to create a purposeful and fulfilling life.
• If you think you have something better to do – force yourself to spell out what that “something better” is… write it down.

Focus your business growth on value acceleration, properly prepare for your exit and transition with definitive action plans and you will give yourself the best chance of achieving the outcomes you desire.