As part of the Business Planning process, one of the questions I often ask people is, “What is your Exit Date?”
I am often faced with a blank look, as most people have never given this question much thought. Most business owners are living day-to-day, without a clear vision of where they want their business to end up and how they will exit their business.
We're all going to exit this world one day so it's far better for you to choose the date that you wish to exit your business, rather than somebody upstairs choosing it for you.
Sadly, my father died when he was 54, and that was his "exit date" of his business. He had no succession plan, so we were left with a business with no idea of what to do with it, who was going to run it, or where everything was at... Not ideal! We were left with a pile of mis-matched jigsaw puzzles.
If you know when you want to retire, or sell or exit the business, make sure you have a strategy for how you'll get there and have it written down for others to know. Be it part of your Will, your Business Plan or otherwise, make your plans clear. You can't just reach that date and say "Cya, I'm outta here" (well, you could, but those around you may not be as impressed with that plan as you are).
There are many ways to exit your business; the most common ones I see are:
- Having a public offering / making your business go public
- Selling to a competitor
- Promoting a General Manager to run the business, and stepping out of the operations
- Selling to an employee
- Passing down to a family member
If you're looking at selling, a lot of businesses look at competitors who may be looking to acquire in a different location to expand their business presence locally, across the country or globally. Some people also have employees who are keen to explore the option of buying the business.
Alternatively, discussing your options with a business broker will give you a good indication of what your business is worth and how best to go about selling it.
If you're not wanting to sell, you can look at promoting or hiring a General Manager to run the business, while you step away from the running of the business and simply take a cut of the profits by way of residual income. You may otherwise have family who want to step-up and run the business, as I see with a lot of family-owned and operated businesses.
There are many options, but it's important to think about and get clarity in advance what your ideal exit strategy is, and a date.
If you have never given this any thought, think about what legacy you want to leave, or speak with your family members or a broker to get some ideas circling in your head. In line with your vision of success and your long-term goals, you should become far clearer and confident in writing an exit date and strategy.
Remember, plans can change and nothing is set in stone, but a starting point is always better than no plans at all.