When you first open your business, there is a singular focus and drive to succeed. It is hard to think of anything else. Often new business owners are up day and night extending their working hours far longer than the standard nine-to-five of salaried jobs under someone else’s direction. The last priority in the long line of things to do is figure a way out. However, it is almost never too early to prepare for the end. Planning an exit strategy is like planning for retirement. It’s best not to leave it until the last minute. If you do, it may not go as smoothly as you hoped, and may result in lost value.
We’re going to explore some of the components one should consider when planning a transition out of their business.
Size Does Matter
An important decision an owner must consider is size. How big do you want your business to grow? If you have stars in your eyes and see big things ahead, you may contemplate selling shares. This would mean giving up at least some ownership or control of your company. But it could be a good way to raise money. Shares can be sold on a public stock exchange, to a financial investor, or to another business. It may also offer an easy exit and, potentially, the highest value.
I’ll Take a Pass…
One option owners often choose is passing the business to a successor. This may allow for continued influence in the company, and limit third-party interference. A successor can be a family member, a close friend, or a trusted employee. After so much time building a business, having a successor can offer some peace of mind that the business is left in good hands. After all, your business is like your baby. You want to see it continue to succeed and prosper. It is important if you choose to pass down the business to make sure you have clear goals and objectives, and that the successor has the support or training they need to succeed. This should be examined before any final decisions are made.
Have I Got an Offer for You
When an owner is ready to leave the business, another option one may consider is selling the business to a partner or employee. This can have great benefits and may make the transition smooth and easy. Often, this implies that the buyer already has, at least, some working knowledge of the business and a passion for it. The owner can take comfort knowing the business will have continued independence. However, sometimes it is hard for an employee or partner to come up with the capital needed. Also, they may not have the experience or skills necessary to head a company without considerable training in leadership, in particular. This could mean a longer transition period that requires time and hands-on training from you or a hired consultant.
Should I Stay Involved?
When you begin the process of selling your business, it is important to know whether you want to stay involved or not. If you do, you should make your intentions known early. Business owners are sometimes worried it may scare off a potential buyer or complicate the sale, but it is much easier to do before the sale has begun than later on, possibly drawing out or complicating the transition. Staying on the Board of Directors is not out of reach, especially if you prepare early. You have the power to make decisions about the sale of your business.
At A R Business Brokers, we have experts who can help you prepare your business for sale. Our team will conduct a proper evaluation to show you the value of your current business. If you are interested in buying or selling a business contact our office to get started. Visit the business listings today at www.aldrin.ca