It’s essential to have a plan in place for when you’re ready to leave your business – whether it’s selling the business, passing it down, or simply walking away from it.
Exiting a business: Whether you sell it, hand it down to your kids, or simply decide to close up shop, there should be some satisfaction in knowing that you built a business over the years and made it a success.
But know that whether you’re ready to exit or don’t plan to for years, you can start planning your exit strategy now. Planning ahead puts you in the ideal situation to sell your business at the best price or transition to a new owner so smoothly that your customers won’t even notice the change.
Here’s what to do in each exit scenario to ensure that you walk away with loose ends tied up.
If You’re Selling Your Business
Whether you planned all along to grow your business so that you could sell it for a nice profit or you recently decided it to sell when you’re ready to retire, the further out you plan, the more you’ll be able to command pricewise.
Get Your Business Valued Now
You may think your business is worth millions, but unless you’ve had a professional business valuation, you really don’t know what it’s worth.
Rather than waiting until you’re ready to sell, get the valuation now so you can be strategic about growing the business to make it worth more.
Think of it like a home remodel: You know if you spend money on remodeling your kitchen, it could increase the value of your home.
So, once you have the valuation of your business, you might decide to buy new equipment, expand office space, or invest in something else that will make the business worth more by the time you plan to sell it.
Start Shopping for a Buyer
Again, even if you don’t plan to sell your business for years, it’s never too early to start looking for the perfect buyer.
Presumably, you want a buyer who will keep what your customers love about the business mostly the same. So as you get to know other business owners who run similar companies, consider whether one of them might benefit from eliminating you as a competitor while also taking advantage of the brand you’ve built.
One of your employees might also be a good person to sell to. He or she already knows how your business is run and is invested in its success.
You can also work with a broker or list it yourself on a site that lists businesses for sale.
Get Your Accounts and Processes in Order
If your accounting is messy, it will be hard to walk a potential buyer through your finances, so start organizing and categorizing your expenses with the right tool.
Make sure you have all processes for each role in your company documented so someone can come in and figure out how to run your business.
Allow Plenty of Time
You might assume that you’ll sell your business in a matter of days, but that’s not always the case.
In fact, 30% of businesses sell within 90 to 120 days, but some take even longer.
The more organized you are, the quicker your business will sell, and the better price you’ll get.
If You’re Passing Your Business on to Family
Here’s a startling statistic: Only 30% of family-owned businesses successfully pass from the first generation to the second. This is likely due to the fact that 47% of family business owners who expect to retire in the next five years don’t have a succession plan in place.
Again, the more organized you are, the easier this transition will be.
Peg Someone as Your Successor Early on
You can’t just assume that your daughter wants to take over your business from the moment she’s born. As she enters the professional world, pay attention to her strengths and inclinations. If you think she’d be a good fit at your company, hire her in a role that suits her.
Over time, see what she’s made of. You may have dreams of her taking over the role of CEO once you retire, but you may find that she’s better at hiring and training employees. Be flexible about where she fits into the company.
The last thing you want to do is make her feel obligated to fill your shoes if she doesn’t want to.
But if you see that she’s adept at all the things she needs to run the company, start training her immediately to take over down the road. The more responsibilities you give her, the easier that transition will be.
Separate Work From Home
Family-owned businesses are challenging because you’re surrounded by people you love every day ... but who also can drive you crazy. It can be easy to let a professional relationship impact your personal one, so strive to separate the two.
You may not always agree with what your successor has planned when it comes to discussing what the company will look like after your departure. Try to let go and trust that person. After all, they’re family.
If You Just Want to Walk Away From Your Business
Sometimes, there’s no one to pass your business on to, or you simply don’t want to go through the trouble of selling the business. In that case, you probably have the easiest exit strategy: Walk away.
Liquidate What You Can
If you have assets you purchased for your business, such as computers, equipment, and office furniture, you can recoup a little of that investment by selling them.
You can post the products on sites such as Craigslist, Facebook, and NextDoor, or if you have a lot of items to sell, contact a professional auction company to do it for you.
Pay Your Bills, and Tie Up Loose Ends
When you walk away from your business, you don’t want any more responsibility related to the business.
Make sure you pay all your creditors. Cancel bank accounts as well as business permits so you won’t be charged for them again. If you incorporated, fill out the appropriate forms to terminate the corporation.
Exit Your Business Without Worry
No matter which route you take to exit your business, let your customers know that you’re leaving, particularly if you have a personal relationship with them. Let them know what the transition will look like and what they can expect once it’s under new ownership if that’s the plan.
Pat yourself on the back: Leaving a business means that you had the perseverance to start and grow one. There’s nothing you can’t do.
If you need help determining how you should exit your business, you can use a business consulting firm.