How to Get More From A Successful Business Exit

Business exit plays a critical role in most business owners financial future. Statistics show that over 70% of business owners rely on the proceeds from their businesses to fund their retirement. Yet only 2% have a clear understanding of the business exit value. This is alarming especially when most business owners are “planning” (mentally) for future financial security. That is why we have crafted this six-step guide, to help smooth your journey towards a secure business exit strategy. 

Business Exit and Succession Planning in 6 Steps

Step 1: Know Your Business’s Current Standing 

Performing a business valuation is a crucial first step on your path to future financial security. The importance of understanding your business’s worth cannot be understated. It helps you avoid prospective buyers from lowballing their offers.  Equally, with an additional look at your business operations, you gain a better grasp on your business’s strengths and weaknesses. A valuation offers invaluable insight into enhancing your business’s general health,. With this you know what to do to boost its overall worth. 

Step 2: Defend Your Assets 

Awareness of the value of your assets means you can protect what you have now. I have seen how shareholder agreements are often overlooked until something goes awry. That’s when it’s too late. Shareholder agreements offer a safety net when things take an unexpected turn. What happens if a stakeholder falls critically ill or dies unexpectedly? There are protective measures you can take such ashaving the right type of insurance coverage. This ensures that you and the business have a safety net if things go wrong. 

Step 3: Safeguard Your Business with Good Governance 

The key to success lies in having a clear and documented plan that all decision-makers are privy to. This means having the right people are in the right roles for efficiency. Keeping your staff in the loop regarding important operating numbers gives them direction and prevents them from working blindly, thereby maximizing productivity. 

Step 4: Prepare for Your Business Exit

When it comes to exiting your business, preparation is everything. This is a big blind spot for many business owners. The effort to let go of the control of your business for it to thrive independently is a great mental challenge. This transition requires you as the business owner to think and act differently.  You must recognise the importance of succession planning and financial forecasting. Adequate preparation means having all your business in order, ready to be examined to prospective buyers. 

Step 5: The Sales Process 

Navigating the sales process alone is fraught with difficulty. It is an emotional rollercoaster for the business owner. It’s a challenging technical journey that is often never explained fully to business owners before starting it.

Assemble a team of experts in advance to guide you through this intricate process. With their skills and experience, you’re more likely to secure a favourable deal. The process can be tedious, beginning with a Heads of Terms agreement, through the rigorous Due Diligence phase, to the final sale agreement documentation stage. Successful completion requires your preparation and perseverance. 

Step 6: The Ultimate Act 

Even after the Sales agreement document is signed, your work may not be over. Often there are deferred cash considerations. In other words, you do not get the money all on day 1. The sale documents set out the obligations for you to fulfil in the form of earn-out requirements, warranties, indemnities, or contingencies. This may feel like being shackled to the business you have just released. Being prepared for this helps you easily transition into the next phase of your life, free from financial insecurity. 

It’s always recommended to start planning for future financial security sooner rather than later. To gauge your business’s exit readiness, consider taking this handy 3-minute quiz (https://getexitready.co.uk/). It offers you a personalised and insightful report on your business’s current standing. 

Remember, successful succession planning can make your business exit journey a smooth process, ensuring a secure financial future for you and your loved ones. 

Want More From Your Business Exit?

Is your business saleable and exit ready for you to leave it (no matter when it happens)? Click to to get Christine’s free Exit Ready Checklist the expert in making sure your business is saleable for more money and on better terms.   Christine helps you get out of the day-to-day, guides you through the handover of controls and gets you and your businesses exit ready so you can enjoy a happier, richer future.  She saves you THOUSANDS so you can increase the value of your businesses by MILLIONS.