Put the “Chevy” Into Your Exit Plan

ChevyAs a small-to-midsize business owner, you know that one day – whether planned for or not – you will exit your business. The exit planning process brings what I call “FAT” (Focus, Accountability and Timing) into the process. It’s simply a roadmap of your objectives, and allows you to better understand the value of your business so that you are ready for your exit. As the old adage goes, when you fail to plan, you plan to fail.

It’s a fact that 75% of business owners who’ve generated $5-150M in sales are planning to exit their business in 15 years, but only 25% of those business owners will do so successfully. The key is understanding where you are today and when you’d like to exit. The gap (how you get from here to there) is what I help business owners understand.

A successful plan allows you to:

  • Eliminate the guesswork when it comes to valuing your company
  • Identify that gap (where you are and where you want to be)
  • Get the right team in place to help the planning process (financial planner, CPA, banker, attorney, etc.)
  • Develop and execute your wishes in a focused manner
  • Increase the value of your company for maximum return

The exit planning process is a 7-step journey, which I’ll cover in a future blog. Today, I’d like to address company valuation. It’s something we do on a regular basis for companies, and is essential to understand during the exit planning process. We offer 3 levels of business valuation reports – affectionately named:

  1. The “Cadillac” Business Valuation Report
  2. The “Oldsmobile” Report
  3. The “Chevrolet” Report

More times than not, the best way to get your finger on the pulse of your company’s valuation is by understanding the baseline. This is our “lowest model”, and affordably-priced option called the “Chevrolet” – or “Chevy” valuation.

This report provides you with a worksheet version of your valuation and arms you with information including:

  1. An estimate of what your business is worth
  2. An established baseline from which to grow value
  3. A reality-check on where your company is today
  4. The ability to define that gap so you better understand the difference between where you are and where you want to be

Depending on the transition strategy you are considering, varying levels of valuation reports may be required to give you the information and data you need to make good decisions. For example, if you were considering bequeathing the ownership of your company or gifting it to someone, you’d likely need a “Cadillac” business valuation which includes a full-blown report on the valuator’s letterhead within IRS guidelines.

Otherwise, if you are simply looking to get a snapshot of your company’s value today, or perhaps on an annual basis, the “Chevy” valuation will be more than adequate and will provide you with just the information you need to make decisions for your and your company’s future. Contact us for more information on how to proceed with understanding your company’s value.

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