Successful Business Owner? Plan to Retire or Exit Your Business Some Day?

how to successfully exit your business

Answer these 7 Questions as your first step …

Your dream may have always been to own your own business. But once you’ve achieved that and run it successfully for several years, you may be finding your life goals are shifting slightly. Are you beginning to wonder when you might be able to leave it all behind and do something entirely different instead?

If so, ask yourself these 7 important questions:

  1. When do you want to exit? Try not to answer with just a number of years, ie, ‘in the next ten years’, as the temptation is just to keep rolling that on. Instead, think about an ideal age range such as ‘not before 55’ or ‘not after 60’. This gives you something to focus on and helps you define how much time or how little you have left to plan a successful exit.
  2. What is your most likely exit strategy? There are, in fact, only four possible answers – passing the business on to a family member, selling it to an insider, selling it to an outsider and squeezing it dry. Think carefully about which best suits your particular circumstances. Also, consider whether your business growth strategy is compatible with your exit strategy.
  3. How much is your magic exit number? No doubt you’re accustomed to thinking about getting the maximum value for your business. But in fact, it’s more significant to consider how much you need from the business to achieve your financial freedom. That’s your magic exit number. The lower the number, the less dependent you are on the business and the more flexible you will be to leave. A good financial adviser using financial modelling tools can help you calculate that magic number.
  4. Where will it come from? Are you confident that you are fully aware of all the tax-efficient funds that may help you exit? Make sure that you identify strategies that convert both today’s current cash and tomorrow’s future equity into your personal wealth. Don’t delay everything in the hope that you will get paid eventually as that may not give you the results that you need.
  5. What risks do you face prior to exit? These can come from a number of sources – lost key employees, problems with co-owners, health issues. In fact, anything unexpected can, by definition, undermine your carefully prepared exit plan. Business owners often struggle with risk management because the right mindset to protect your business is very different from that used to build up your business in the first place.
  6. What will you do in life after exit? A successful exit is about so much more than just a financial transaction. Think carefully before you exit about how you want to spend your time and talents once you’ve left. What dreams do you want to fulfil? Do you want to travel? Or take up an interest you’ve never had time for? Spend more time with your family or lend your skills to a voluntary organisation? We would recommend you consider what steps you can take to make sure you’re as fulfilled as when you ran your business.
  7. Who should be in your exit planning team? You should involve people responsible for tax, legal, financial, family, business and HR issues. Ideally, they should all collaborate to come up with a sound exit strategy. Once you have identified your experienced team, one person should be in charge of driving the process forward. Meet up regularly to make sure you’re on track.
business exit strategy

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