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Start planning your exit strategy now with these 4 tips

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Scrambling belongs to egg making. It produces far less attractive results when it comes to selling a business. Unfortunately, far too many founders find themselves in scramble mode when unloading their business. The reason is simple: they have no exit strategy in place. rather early.

The absence of a company exit strategy is anything but rare. A study by the Exit Planning Institute notes that about half of business owners have no exit plans. While it might be tempting to assume that they all avoid the reality of ever leaving, that’s not always true. As someone who lives and breathes exit strategies, I’ve discovered that many founders don’t realize the many benefits of charting an exit strategy sooner rather than later.

In fact, 60% of owners believe that exit strategies are beneficial not only for the future of the business, but also for the owner, according to Exit Planning Institute investigation. These benefits include making the most of the sale. As a result, they may end up accepting a much lower offer than they could have gotten if they had done their research years in advance.

Another benefit of starting a business with a planned exit in place is that the exit will likely go more smoothly. After all, the trip has been “in the works” for years. This facilitates a streamlined transition that doesn’t leave anyone with a kick-ass feeling.

Related: The Founder’s Opportunity: What do I want my business to be when it grows?

It is worth mentioning that having a better understanding of the release process also avoids the frustration of delays. It can take years for a company to go through all the stages of the mergers and acquisitions process. Many founders are surprised and stressed when they find out that they are unlikely to leave their company within a year. If they had done their homework earlier, they would have known what to expect.

Don’t worry if you count yourself among the founders who focused on putting their hearts into your business, not developing an exit strategy. There’s still time to get you and your business on the right track by implementing a few strategies:

1. Learn the ins and outs of exit strategies

Unless you’ve gone through an exit strategy process before, spend some time familiarizing yourself with how it works. Read articles on everything from managing partner disputes to determining how often to go through the valuable process.

The more you learn about exit strategies, the better you will feel once you start your own. Ideally you should have at least half a decade before you consider retiring, as SVA figures estimate that releases can take five to 10 years. Use this lead time to familiarize yourself with and potentially start working with a company that helps businesses in your industry choose the best business exit strategy options.

Related: Exit Planning for Modern Leaders: How to Determine Your Company’s Value

2. Project what your future will look like five years from now

What does the future look like to you when you think of a post-release world? Write down your hopes and dreams. Also be sure to include your financial goals. Yes, life can change quickly. Nonetheless, having your goals in a readable format can lead your founder’s exit strategy to a satisfying conclusion.

Remember, you don’t have to say goodbye to your business just because you’re selling it. Many founders’ exit strategies involve staying. I work with many owners who settle into roles ranging from consultants to board members. At the same time, other clients want to flex their professional muscles elsewhere and are willing to leave the brand they’ve built. Just make sure you know what you need to be satisfied.

3. Get your business appraised

Maybe you think you won’t be pulling the exit strategy lever out of your business plan for years and years. You should always undergo a professional evaluation. Here’s why: your current valuation will give you a more realistic idea of ​​what you’d likely get if you sold your business this year. Seeing a number you don’t like today is much better because you have time to improve your valuation.

Many founders have a blind view of what they assume the market pay their business – yet they never did the necessary work to back up their assumptions with real data. You may not feel satisfied with what you hear, but this is an opportunity to make changes. Just be sure to consider all the variables if you’re trying to assess the value of your solo business. The insurance company, The Hartford, recommends that your assessment include more than financial formulas. For example, think of the impact of your geographical location.

Related: 4 Ways to Stay After Your Business Sells

4. Treat your exit strategy for the business as a living document

It’s safe to say that many business exit plans had to be revised post-pandemic. Looking at 2020 numbers from the US Census Bureau, overall business sales decreased somewhat or significantly during the year. And while no one wants a throwback to the days of Covid, anything can happen in a vibrant global market.

This means that you must remain adaptable when writing and executing your exit strategy. It is better to bend a little than to be so rigid that you end up putting off potential buyers or causing undue tension. Keeping an open mind to all possibilities puts you on a stronger footing and can lead to an even better outcome than you originally imagined.

Planning the exit strategy deserves to be done upstream. This is not a can to be thrown down the road. Instead, it’s a lifeblood of any business. And it’s a good way to avoid those “egg in the face” moments that all founders want to avoid.