Ending (or exiting) a business is rarely given the attention it deserves. Most people understand the need to have a plan when they start or buy a business. But they typically don’t pay much attention when it comes time to sell or end their business.
There are some great reasons for this: you won’t have a business to exit unless you start it with a strategy, a purpose, and sound business fundamentals. Without a good plan in place to start the process, there probably won’t be anything to end.
If having a plan at the beginning is important to be successful, having a plan in place at the end is equally important. In my experience, people tend to leave a lot more money on the table by not investing in the exit of their business, when compared to the money wasted on ill-conceived or poorly executed businesses.
Businesses are meant to end, and they will indeed end. The question: Is it better to end as a result of a well-crafted plan or for things to just… end? Which scenario do you think results in a better financial outcome at the end of the day?
And it’s not only about the money. Do you want to go out on your own terms, or go out based on someone else’s plan? Even if an exit has to happen suddenly, based on an illness, injury, a family situation, or other unexpected circumstances, wouldn’t it be better to exit with a plan you have designed and planned in advance?
When you plan for your exit (whether a sale to an employee, a family member, or a third party) you get to set the terms. Do you want a clean break or a part-time mentorship phase out? You can plan for the duration of the transition.
The truth is, planning for the sale of your business actually takes years of doing little things that result in creating more value, thereby attracting better buyers, and achieving a bigger return. Why years? Because you need to know where you are going and make decisions over time to bring you closer to that objective. It is relatively simple, but it’s not easy.
I have seen too many business owners give away the hard-earned equity they have built over twenty, thirty or more years simply because they did not take the time to understand what their business could be worth, to invest in preparing their business for sale or taking the steps needed to attract the right buyer.
Results speak for themselves. The right time to begin planning your exit is 5 to 8 years before you want to sell. The more time to prepare, the better the results.
Regardless of where your exit planning is right now, your best investment is to move it forward. If you do not have a plan, then let’s start making one. If you do have a plan, what are you doing to move it forward? If there are gaps, what do you need to fill them?
Ending a business should be rewarding. Get paid well, for heaven’s sake! You have worked too hard to leave it on the table.