10 tips to get ready for a business exit
Whether you’ve decided it’s time to sell your business, or you’re thinking that this is something you want to do a bit later down the track – it’s important to have your exit planned. In an ideal world, every business owner would plan their exit from the very beginning. This helps to keep your business aligned with your long-term goals and also forms a naturally occurring trigger – that moment in time when you decide whether it’s time to cut loose or keep going.
Wherever you are in your exit, here are 10 tips on how to get ready for it.
1. Create a little black book of buyers
It’s a good idea to keep an ongoing note of potential buyers. These could be individuals, competitors, or companies. People or businesses you come into contact with, that you think may be interested in acquiring your business – when the time is right. By keeping a little black book of buyers from early on, you’ll have a good, solid place to start once you’ve made the decision to exit.
2. Keep your books like you plan to show them off
Good bookkeeping is one of the most important things to get on top of when getting ready for a business exit. After all, it’s one of the first things someone is going to want to see. Make sure they’re audited regularly and don’t be afraid to admit defeat. If bookkeeping is not one of your strengths, outsource it to an expert.
3. Try to have as much reoccurring revenue as possible
The more reoccurring revenue you have rolling in, the more attractive your business will be to potential buyers. Revenue is an important part of your business exit, not only the amount but also how it’s paid into your bank account. If you’re able to set it so you bill your clients automatically at the same time each month, your business will become very attractive.
4. A solid but agile operating procedure
This may sound like a bit of a contradiction – is it possible to be solid and agile at the same time? Yes, it is, and this is how your operating procedures need to be. As you build your business, you’ll be on a constant learning curve. Your operating procedures need to solid enough that if you drop down dead tomorrow, your business will continue to grow. However, the need to be agile enough to change and grow with your learnings.
5. Prepare to take a step back
When you’re preparing your business exit, you need to prepare your own exit at the same time. Your business needs to continue to thrive without you at the helm otherwise, how will a potential buyer know they can continue the success?
6. A website that’s ready
If you’re frustrated and overwhelmed with things that need to be fixed on your site, imagine how potential buyers will feel. Make sure that you’ve fixed all the bugs and technical glitches. Perform an audit on everything from SEO to site speed and hosting fees.
7. Plan the time to sell
Timing is everything. Try to avoid impulsive reactions to sell after a bad day, week, or year. Unless circumstances out of your control have forced your hand, you should monitor the market and keep track of trends. If you’ve noticed that businesses in your industry perform better in certain seasons, don’t sell in a down period. Your business is more attractive when sales are high.
8. Business housekeeping
Perform a little housekeeping on your business. Tie up any lose-ends and make sure all your policies, such as insurance, are up-to-date.
9. Know your business’ worth
You should always have an idea of how much your business is worth. Whether you’re handing down the business to a family member or selling to a stranger, you need to know its value to work out the tax implications and what your stake is worth.
10. Form a team
Don’t approach it on your own. There are many complications which can arise when selling a business. Make sure you have experts on board whose advice you value. Accountants, solicitors, brokers or consultants and financial advisors. All people who can help ensure you plan for every eventuality, especially if your circumstances are complex.