Sell it, lease it or close it. What’s your exit strategy?
Do you need a business exit strategy? By 2032, more than a half million small and mid-size business-owners in Canada will transfer ownership to a buyer, sell their shares, lease their business to a new operator, or close their doors. Many reach this important milestone without enough preparation. Some, none at all
This post was first shared on the ModernBiz Blog. To read the original blog, click here.
My advice to you dear business owner, it’s never too soon to plan your exit strategy.
Depending on the size of your organization, finding “new management” can prove difficult, so it’s important to consider your options…
A high-potential prospect is a person already involved in your business who could run it well. If you have high-potential prospects within your company or your extended family, you’re one of the lucky ones. Not every business owner gets to sell and wash their hands of it. Build your exit strategy around them.
Owners of businesses with fewer than 20 employees, including SOHOs, can lease their business to a new operator/potential buyer. While leasing can increase the valuation at the time of sell, it can also require owners to stay involved in the business for an undetermined amount of time. The owner can’t cut and run.
Closing the doors
With no one in the waiting in the wings to take over, many business owners simply close their doors. Though the point may seem moot, you can still find ways to profit by shutting down your operation.
Many businesses possess a variety of assets that have considerable value on the open market. Your business may own equipment, machinery, real estate, contracts/relationships, or intellectual property that other entrepreneurs consider valuable, for example. So, take stock. Assess the value of it all.
Taking stock may require the expert advice of an accredited appraiser. This is no time for DYI. Business valuation takes time, effort, and follow-through to be accurate. Like estimates, you should get three to compare. Learn more about valuating a business with a helpful guide published by the Canadian government.
Staging for sale
If you choose to sell, stage your business, first. Like preparing a house for sale, your business needs to shine to attract buyers. It’s not just about cleaning the physical space, either.
Your virtual and social presence factors into a buyer’s decision-making process. The value of your brand is intrinsically tied to consumer perception. Get to know your buyer and then, you’ll know what they’re looking for in a business.
Buyers require transparency to make an informed decision. That includes the financial health of the business. You should reveal the risks you’ve assumed and liabilities you wish to transfer. If your accounting software isn’t integrated with your inventory system, you may want to add it to the “gap” column.
Analyze the gaps
Ask yourself what you would do if an angel investor provided you with capital to improve your business. What systems, applications, or equipment would you improve to help boost or streamline production, for example? Is your website mobile-optimized? Does your e-store’s back-end integrate with your warehouse in real-time?
Modernize your systems
If your business still requires fax paper to operate efficiently, you may need to consider upgrading your systems to fetch a higher valuation!
With Office 365 you get the latest Office apps (like Word, PowerPoint, and Excel) plus introduce services, like business class email. Eliminate the need for software updates and always have the latest security features in place 24/7. Safeguard your business while you boost collaboration, increase productivity, and improve internal and external communication. You can find the free trial offer here.
Move to the cloud
If you haven’t already moved to the cloud, you’re leaving money on the table. Just on hosting alone, the cost savings outweighs the initial effort of migrating from managing hardware to a no hassle, turnkey cloud solution. Add on the state-of-the-art security management, the savings grow exponentially.
With rising rates of cyber attacks, it’s cost-effective to leave security to the real experts at Microsoft. And with Microsoft’s Canadian cloud, you can rest assured your data remains on Canadian soil.
Involve your experts
When preparing your exit strategy, leverage the expertise of others. Talk to your business consultants, your family, your commercial real estate agent, and your HR department. Use their advice to gain insight in the minds of potential buyers and cover off any objections.
If you do plan to sell (even to employees in the family), get guidance from your lawyer and/or accountant. Leverage their expertise to protect your interests and avoid conflict. Above all, work with them to prepare, review, and revise offers/agreements before you sign anything.
Remember: Succession planning is one of the biggest decisions of your life. Take the time required to do it right!
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Original Post https://blogs.business.microsoft.com/en-ca/2017/11/07/exit-strategy/