Harvard Business Review (HBR) recently wrote that entrepreneurs only take exit planning seriously when they desperately need to sell or have inbound interest from an acquirer. As a result, they either miss out on significant strategic opportunities or end up with a suboptimal outcome. The only way out of this unfortunate predicament is to devise an exit plan early and lay the groundwork for a potential sale to acquirers long before a sale is imminent.
HBR advises that we can’t improve what we don’t pay attention to, and delaying talks and considerations related to a strategic exit today renders entrepreneurs utterly unprepared for the single most outcome-defining event in their business lifecycle: its exit sale.
Generally one of the main intentions in selling a business is to generate cash to fund retirement.
But unfortunately many business owners overvalue their businesses so that retirement plans are delayed. And they find this out too late in the day so a major double whammy!
But if you act positively you can influence your cash nest egg.
MAJOR COMMON MISTAKES
- Overvaluing your business and getting a much lower valuation offer when you sell.
- Running your business so that it is very reliant on your presence.
- Failing to keep with up with technology developments.
- Expecting to be able to leave the business soon after selling while the acquirer might be looking at a 3/5 year work out period.
- Have your business professionally valued now; determine your proposed retirement date and funds required; decide on how you are going to achieve your goals. Periodically revisit and revise your plan for evolving market conditions and industry changes. Planning protects against downside risks while maximising the upside potential.
- The more a business relies on you, the less valuable it is. So start training and upskilling your staff and delegate all that you can. Make yourself as dispensable as possible as quickly as possible.
- Invest in technology and having great processes to make your business run as smoothly as it can.
- The more you can implement the above suggestions, the quicker you can exit the work out period and enjoy your retirement.
To tilt the odds of success and survival in their favour, business owners need to devise and implement an exit strategy long before they are seriously considering a sale of their business.
If you want advice in selling your business please send an email with your telephone number to firstname.lastname@example.org