John is very excited. He’s just begun his manufacturing company, he’s got his first customers, hired employees, and delivered his first orders. The business seems to be on its way to success.
Selling his company is the last thing on his mind.
When is the best time to start planning for the sale of a business?
Most business owners do not have an exit plan. For many, the thought of leaving or selling their business is akin to death – something they don’t want to contemplate and therefore ignore.
“It’s better to look ahead and prepare than to look back and regret.”
Business owners create companies for a wide variety of reasons. Starting with the end in mind helps guide the decisions that you make for your business. Growth and profitability are not the only objectives of businesses. Some business owners may be trying to create a legacy, either for themselves, their family, or their community. Others may be trying to re-define their industry and how customers interact with their products and services.
And, for others, the goal may be as lofty as of solving world hunger.
Regardless of your goal, developing an exit plan to sell or transfer the business from the start of the business lays the path early for the eventual transfer.
Exit plan overview
What if you haven’t even begun to think about exiting your company?
Now’s the time.
Creating an exit plan does take time and thought. One of the keys to a successful exit plan is reducing dependency on the owner. Structuring the business to run without the constant attention or interaction of the owner creates value in the eyes of buyers.
The value of a business is broadly measured by not only the value of the assets, but the value of the leadership and management processes, the brand value, marketing programs, and customer lists. The exit plan guides company management to make these programs more easily transferable when the time comes.
The exit is a process
For those who have prepared a company for sale or transfer, they know that starting early and getting some help from experts makes the transfer far more profitable and much less stressful.
John M. Leonetti, founder, and CEO of Pinnacle Equity Solutions and author of Exiting Your Business, Protecting Your Wealth, says “The exit is a process, not an event. This process takes time and will impact a lot of people, so owners should put a lot of thought and analysis into it to gain clarity about what the right decision is. In most cases, if owners make the investment of time, they will be rewarded for it. Likewise, if they don’t take the time for this type of planning, then they leave their legacy and wealth to chance.”
If you need help understanding where you are today and if you’re going in the right direction to create value for your company, Quist Valuation can help. Let’s set a time for a free 30-minute consultation. We can discuss the specifics of your business and identify areas to focus on as you progress along your exit plan.
Schedule your free 30-minute consultation here.