Planning your business exit is a pivotal decision that requires careful consideration and years of preparation. Engaging an exit planning partner well in advance can enhance the value of your business and help you navigate the transition. Here’s why sooner is better when it comes to exit planning.
Why You Should Engage in Early Exit Planning
Exit planning is not as simple as deciding to sell or transfer ownership. This comprehensive process aligns your personal, financial, and business goals to facilitate a smooth transition. Starting early allows you to:
Maximize Business Value
If you know you are planning to sell your business in approximately five years, you can make decisions that will maximize its value. The goal is to make it more attractive to potential buyers. Changing the business structure or filing for trademarks are a few simple ways to improve the value of the company.
Address Operational Inefficiencies
Early planning provides a chance to find and fix any operational issues that could deter prospective buyers. To you, the business is a labor of love. However, potential buyers are purely looking at the financial repercussions of the transaction. Glaring inefficiencies may make them question the long-term ROI of the deal.
Ensure Financial Preparedness
Remember, you won’t have that recurring income after you exit the business. Have you prepared to live without it? A longer runway also gives you time to address your post-exit financial goals.
Develop a Succession Plan
Time allows you to mentor successors and put leadership in place to promote business continuity after your exit. Potential buyers want to know that your company is stable, even if you step away. That requires strong mid-level and top-level leaders.
What Does an Exit Planning Partner Do?
An exit planning partner brings specialized expertise to help you navigate the complexities of transitioning out of your business. A partner like Zabel & Co. will:
- Create a tailored exit strategy that capitalizes on market conditions
- Evaluate your company’s financial health and implement measures to enhance its value
- Identify potential risks and develop strategies to address them
- Collaborate with legal and tax advisors to ensure a smooth sale
The key is to find a hands-on partner who has the requisite experience and resources. Zabel & Co. has assisted with numerous business departures and can create a plan that aligns with your unique needs.
Assess Your Readiness
Are you ready to step away from your business? There are plenty of great resources to assess your readiness.
The Freedom Point quiz provides you with a Freedom Score. Once you complete the quiz, you’ll receive a free report and score, which evaluates whether selling your business will yield enough income to live on for the rest of your life.
You should also download The Exit Checklist, which provides five steps to ensure a happy (and lucrative) departure from your company. The guide helps you leave your business with plenty of cash (and without regrets).
Internal Considerations
Leaving your business is about much more than dollars and cents. Some other factors you should consider include the following:
- Are you ready to step away?
- Do you have plans post-exit?
- Is your business performing at its peak?
- Is the current market favorable for a business sale?
Reflecting on these questions can help assess your readiness and time your exit. If you aren’t ready quite yet, remember — it’s never too early to start planning for your eventual departure.
Ready to Begin Your Exit Planning Journey?
Initiating the exit planning process at least five years before you intend to walk away can maximize the value of your business. If that window has already passed, it’s not too late to implement an exit plan. Partnering with an experienced exit planning advisor helps you address the intricacies of the transition while securing a prosperous future post-exit.
At Zabel & Co., we specialize in guiding business owners through the intricacies of exit planning. Our tailored strategies are designed to align with your unique objectives and ensure that the transition meets your personal and financial goals. Contact us today to schedule a consultation.