Planning To Exit Your Business

The volume of small businesses for sale around Australia will increase as the number of baby boomers entering retirement increases.  If you are one of these business owners how well prepared are you to exit your business?

In recent years I have discussed with many business owners their plans to exit their businesses.  Most have been poorly prepared and two particular reasons stand out.

Firstly, a business owner should always have a good understanding of the value of their business.  Do not wait until you decide to sell to concern yourself with valuation.  When I ran businesses for Kerry Packer I vividly recall being told “Son, every business is for sale at any time!”

You never know when a potential buyer will knock on the door and you should always be prepared to negotiate from a position of authority about the value of your business.  A helpful reference for business valuations is BizExchange.

Secondly, you should have a clear picture of what you will be doing when you are no longer in the business.  Unfortunately most business owners have only a vague notion of what they would be doing.  Partly this is because they spend too much time working in the business rather than on the business.  In many cases this results in uncertainty (or even fear) about exiting the business.

I usually ask a business owner the simple question “Imagine you are out of the business.  Now describe to me your week.  Is it full and productive?”  If there is no clear answer to this question then the business owner is poorly prepared to exit.

There are many considerations in planning to exit your business, and professional assistance should be sought in regard to many of them (from your accountant, lawyer, financial planner, etc.).  But the two matters above you can do yourself.

Do not leave your planning too late.  You can start now by determining the value of your business and thinking about how to fully and productively spend your time once you have left the business.  As the volume of businesses for sale increases you need to be planning to exit your business.

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