Plan for Your Exit Now!

When should I start planning to sell my business?

Plan for your exit now!

As an owner, you’re busy building your business, but what about planning your exit? The question of selling your business now might not be the top priority. However, all roads may lead to the same destination.

If you’re not preparing your business to be sold from day one, you’re not maximizing its value, potentially missing out on significant financial benefits. John Warrillow suggests in his book “Built to Sell” (www.Builttosell.com) that exit planning and growth planning are part of the same journey.

Here’s why.

The Myth: Business Growth is for Scaling, & Only After That, I’ll Exit Plan to Sell

Business phases are often thought of as build, grow, and sell or pass on. This view misses a crucial point: building scalable value and preparing for an exit are not mutually exclusive. Approaching them separately can be a disadvantage. Start planning to sell your business now!

Business growth focuses on elements such as growth, efficiency, team dynamics, and profitability. Exit planning focuses on similar metrics, just at a deeper level. Here are the overlapping strategies.

How Growth and Exit Planning Overlap

Whether growing a successful business or optimizing it to sell, these questions are relevant. Experienced buyers will ask these questions to determine if a business is worth buying – these are also asked when building a company for growth.

Growth

• How diversified is your customer base?
• How have you simplified your offerings for customers?
• Have you implemented a long-term retention plan for customers? If so, what does it entail?

Efficiency

• Does your business have systemized marketing and sales with a positive ROI?
• Does your business have documented systems and SOPs (Standard Operating Procedures)? If not, what steps are you taking to create them?

Team Dynamics

• Is your business reliant on you as the brand or product? If so, what steps are you taking to change this?
• How have you structured your business to ensure efficiency and scalability? Are there departments? Or do employees wear many hats?
• Have you cross-trained your team members?
• Have you added experienced growth managers to your team? If so, how have they contributed to your business growth?

Profitability

• Do you have clean audited financials for your business? If not, what steps are you taking to achieve this?
• How have you differentiated and defended your intellectual property?

Exit vs. growth mindsets might have nuances in answering and executing these questions, but generally, they align.

Let’s answer a few of these questions to see how the exit vs. growth mindset overlaps.

Q: How diversified is your customer base?

A: Diversification reduces risk, which is beneficial for growth and appealing to buyers.

Q: Is your business reliant on you as the brand or product?

A: You want to step away from being the ‘Chief Everything Officer’ to focus on specific projects, allowing company growth and reducing dependency on your presence.

Q: Does your business have documented systems and SOPs (Standard Operating Procedures)?

A: SOPs create efficient transfer and scalability of repeatable processes, which buyers see as a strength.

Every business has an eventual exit, whether it involves selling or not. Going through the exit planning process can result in a more passive, profitable business. Regardless of the outcome, this growth cycle applies universally.

Whether scaling, stepping away passively, or eventually selling, readiness is crucial. External factors like market crashes can impact timing, and being prepared allows capitalization on assets rather than scrambling.

Paradigm Shift: Growth = Exit Preparedness

Every day spent building your business is a day spent preparing for an exit. Metrics, strategies, and benefits overlap, such as increased profitability and more efficient operations. The key question is whether you want to maximize the value of your efforts. When beginning to think about an exit reach out to Austin’s boutique business brokerage, Griggs Business Brokers.

Adapted from an article by Lauren Mauldwin & Khaled Azar on www.bizbuysell.com