You’ve spent years growing your business. Now it’s time to close this chapter of your life and start a new one. Stepping away from the company you’ve nurtured for so long can be fraught with emotions. But it’s best to remain objective during business exit planning.
Less than half of all businesses have an exit plan. With an exit plan, you can ensure a smoother transition and get the right price for your company during a sale. Here are our top five tips for a business exit strategy.
Plan your exit strategy at least six months in advance.
This is the most crucial step and will help you remain objective during the transition phase. During phase one of business exit planning, you’ll define your goals, assess different exit strategies, and prepare your company for succession.
The planning phase can take as little as six months or as long as a year. Depending on how many changes you need to make, you may want to start on this estimate’s low or high end.
You’ll need to evaluate precisely what you want from the succession plan. Do you want to partner with an investor? Or sell the business so you can retire? Or start another company? Defining your goals and objectives for the exit plan is crucial.
Consider your tax strategy.
Next, you’ll want to notify estate and tax planners of your exit plans. Once you define your objectives, meet with your tax advisor. Business exit planning is much easier if you handle your tax strategy early in the process.
Retirees, take note.
People sell their businesses for all sorts of reasons. The current work may have gotten stale, and they want to make a change by starting a new company. But for the most part, the majority of exit plans involve retirement.
The process of stepping down and transitioning the business you’ve founded to another can be an overwhelming task. But with ample time to plan and with guidance from an experienced business strategist, you can determine how much you need to make on the sale to retire comfortably.
Determine your plans post-sale.
Having a post-sale plan can also help manage emotions during transition. Establishing a sales price, making appropriate financial preparations, and planning for the post-sale phase are all a part of a successful exit strategy.
So, what will you do once you sell the business? Retire, or reinvest the profits of the sale into a new venture? Whatever your post-sale goals, knowing your next steps after the sale takes place will make the entire process less stressful.
Will you use a broker?
A major consideration during business exit planning is to make sure you sell to the right person. A business broker can help you find the right buyer who has the funds to purchase your business for the right price.
Are You Planning an Exit? C&A Can Help.
At Cunningham and Associates, we help business owners in a variety of industries create beneficial tax strategies for succession and plan their business exit strategies. For assistance during this crucial time in your life as a business owner, contact us today at (508) 797-5003 for a free consultation.