What is your exit strategy? Whether you’re a young entrepreneur with grand ideas or a seasoned professional approaching retirement, you should have an exit strategy for your business if you want it to continue after your tenure.
If your desire is that your business continues to succeed after you step down, there are a number of options for you to consider. Here are the typical paths to handing your business reigns to another:
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Sell it to an outside buyer – You might sell to another entrepreneur or perhaps undergo a merger with an existing larger firm.
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Sell to employees – Perhaps you’ve built extreme loyalty with employees. Consider transferring the business to them through an employee stock ownership plan.
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Sell to top manager(s) or partner(s) – You might also have a top trusted advisor or a partner who wants to assume full responsibility of your business after you are gone.
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Transfer or sell to family – Many business owners want to “keep it in the family” and have a son or daughter take over after retirement.
Selling To Outside Buyers
If you are considering selling to an outside buyer, here are some tips to help you get the most value for your business:
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Improve Business Valuation – Be sure your business is in top shape for sale. Reduce expenses and streamline processes, while simultaneously building your customer base and improve your products. The better your business can make money, the more buyers will be willing to pay.
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Be Ready for an Appraisal – Buyers will want to have your business appraised. Be sure your books and all records are clean and ready for evaluation.
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Find the Right Buyer – You might advertise locally or even nationally for your ideal buyer. You may even want to use a national business brokerage to find the right buyer.
Transitioning Your Business
If you are handing off your business to a family member or new qualified manager, here are a few tips for a smooth transition:
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Develop a Plan – You must prepare for the handoff. Clarify your expectations and your role, if any, in the company after you step down.
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Groom your Successor – Work side by side with your successor. Help build their skills and confidence and ability to make wise decision. Share your wealth of wisdom.
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Phase Out – Try letting your successor lead while you are still present to offer advice. Help employees transition their loyalty and support to their new leader. And finally, you must eventually “let go” and say goodbye. Have a company party as a celebration of both new and old leadership.
Whether you are on to greener pastures or looking towards retirement, planning your exit strategy in advance will pay dividends.
