Whether you’re well into the exit planning process or just getting started, including goals for your exit strategy is key as you plan for the coming year and beyond. A simple way to get started is to set three specific goals for the year and map out how you’ll achieve those objectives. The specifics of your exit strategy can be as unique as your business, but there are elements that every business needs to address. Here are some suggestions to get you on the right track.
- Set or review your exit date.
A destination you intend to reach must first be identified, so if you don’t have a target exit date, choose one. You can adjust along the way if needed but, with a destination in sight, you can start to chart your course. Our online Exit Planning Assessment will help you gauge your readiness to exit.
I always suggest to business owners that they write their exit date on a sticky note and place it somewhere that it can be seen every day – such as on the light switch near their office door. Along with choosing your date, document your current objectives and basic company information, including the KPIs you measure.
If you’ve already started planning for your exit, now is a great time to review your targeted date and your company data. Attaining the lifestyle you want when you exit takes years of working your exit strategy, so periodically review whether your journey is on track.
- Turn your attention to your company’s value and value drivers.
Knowing your company’s current value and what it must be worth when you exit will help you identify the gap between the two values. That gap amount will be the basis for your entire exit strategy as you work to reach that ultimate value goal – the amount you need to live the next chapter of your life as you envision it.
Your plan will involve your company’s value drivers, which are business systems that either generate recurring revenue or financial efficiencies from an established/growing customer base. Maximizing the performance of your business in these key areas will ensure the sustainability and growth of your business. This will help you get top dollar if you eventually sell to a third party or alternatively, will enable you to transfer a financially strong entity to key employees or family members.
The top ten business value drivers are:
1. Stable, motivated management and a high-performing workforce
2. Systems that sustain the growth of the business
3. An established, diverse, customer base
4. A facility that is consistent with the asking price in terms of its appearance, condition, technology, equipment, and organization
5. A realistic growth strategy
6. Effective and documented financial controls
7. A good business overview in terms of audits, bank relationships, etc.
8. A solid financial structure in terms of growth, cash flow, profitability, revenue, and debt
9. Positive standing within the industry and diversity of industry sectors served
10. Protected technology and intellectual property
You’ll need to identify your own company’s value drivers and ask some questions.
- Which ones are working and why?
- Which ones are not working and why not?
- What needs to be done to get those working?
Develop an action plan to improve those that need attention and determine which value drivers are priority and should be focused on first. Complete our online Value Driver Analysis as a foundation for this step.
- Establish a support system to keep you on track.
Once you have the basics in place, you’ll begin to envision your eventual exit which will be a motivator to stay on track and accountable to your plan. But life gets busy, and business can be challenging – especially during uncertain times. As a business owner your responsibilities are many. So, share your exit plans with someone who can and will help you stay focused and working towards your goals.
If you don’t have a support system or want to streamline your work towards your exit, consider joining our Exit Planning Peer Advisory Board. You’ll share experiences, challenges and solutions with other business owners who are on their own exit planning journey. It’s the most affordable and efficient way to work towards your ultimate exit goal and you’ll find the experiences invaluable. Let me know if you’d like to be a guest at an upcoming meeting.
I invite you to contact me to set up an hour meeting – in person or via Zoom – for a complimentary review of your current situation, your online assessments, your ability to exit according to your goals, and to discuss what would be involved in putting an exit plan together. Take that first easy step and start creating your future today!