If you’re thinking of exiting the business, have you planned for it?
There’s probably nothing we at VR Business Sales haven’t heard before, from “Is now a good time to sell my business in Charlotte?” to “What is my business worth?” Having sold over 100,000 businesses, VR can provide expert advice founded in deep experience.
Setting Up Your Exit Plan
Did you know that 85% of small business owners have never developed an exit plan?
Without an exit plan, a business could quickly be severely damaged by a sudden crisis, such an illness, death, divorce, partnership dispute or rapid change in market or competitive environment. Or a business may deteriorate gradually as the owner burns out and neglects the business, or transfers it to a weak leader.
Either way, the result is the same: greatly diminished business value.
By contrast, more sophisticated owners and financiers of businesses, rarely fund or purchase a business without first having a formal exit plan in place. At VR Business Sales Charlotte, we can help you create an exit plan, so that you will be prepared for when you’re ready to step down as a business owner.
Understanding the Basics
So what is an exit plan? It’s actually a series of continually evolving and interrelated plans that will help you address at least the following critical questions:
- What are your preferred options and timing for exiting the business? For example, sale to outsider, sale or gift to family or employees, merger with competitor, buyout by a partner, etc.
- What family members, if any, are involved in the business, and what are their objectives?
- What are your financial objectives and retirement plans?
- What is the value of your business now?
- What key actions are necessary to increase business value and position it for sale at the optimum after-tax amount needed to achieve your financial objectives?
- What actions are necessary to manage estate, trust and tax issues you will face through retirement and beyond?
- What actions, programs and agreements are necessary to ensure continuity of the business in the event of departure, death, or incapacitation of any of the owners or key executives? Examples include training programs, system development, buy/sell agreements, key man insurance, and non-compete agreements.
- Who will replace you or other owners upon departure? Are any current executives and/or family members capable of doing so, and if so, what additional skills, training, licensing, etc. are needed? If not, what is the strategy for recruiting and developing a replacement?
- What changes in the business and your role are needed now to preserve your quality of life and your passion for the business?
- A comprehensive exit plan addresses a wide variety of intricate strategic, operational, financial, tax, human resource and legal issues. While a primary focus is meeting the owner’s objectives, it should ideally reflect the desires and concerns of all important stakeholders, including family, business partners, employees, and in some cases customers, suppliers and the community. Input should be gathered from key advisors, including your CPA, wealth planner, estate planner, business consultant, insurance broker, appraisers and mergers and acquisitions advisor.
To be an effective tool, your exit plan should have a timeline and be regularly updated to reflect changes in your life, family, health, goals, finances, and business. If an exit plan sounds like a lot of work, it is. But having one can help you leave a legacy that endures for generations.
As a VR Business Broker, I can answer your questions as you set-up your exit plan and help you determine what your business is worth. For a free, confidential consultation including a valuation, please contact us.
It is our job to orchestrate this process and help you achieve your goal.
When the time is right for you to start, we’ll be there to help. Please contact us with any questions and or need of assistance.