Preparing For Exit: Write Your Own Story and Ending
In this video, Business Broker, Roger Smolik, addresses the subject of preparing to exit your business. He likens the subject to writing your own story and ending, bringing up the point that is important to prepare from the start.
Video Transcript: Launching a business is like writing a story, with the owner as the author and the opportunity to define and shape how their business develops and grows a “choose your own adventure.”
Perhaps most important is how you, as the owner, eventually transition from the business you've incubated and built with care, time, moey and effort. You also want to contorl how and when your business meets its target objectives, your objectivs and how and when you plan to exit.
You want to be in the positoin to sell because you choose to sell, not because you need to. Exiting on your own terms, when and how you want to after reaching your gaols, that is the key to your business story. To be able to exit on your own terms takes time and preparation. We like to call it, "Beginning with the End in Mind."
To be able to sell your business and exit on your terms start with preparation.
First, selling a business does not happen overnight. Write in enough time to start the process, get your business in order and allow your business to be put on the market and sell. Simply deciding to sell your business does not make it so - the process takes time.
Second, address your books and records. While you are writing your story don’t forget to keep up with your books and record keeping. Having access to 2-3 years of tax returns, profit and loss statements and balance sheets will help present and clarify your company’s financial position. If substantial expenses have been run through the business, recasting the financials may be necessary to provide a more accurate picture of the businesses finances.
Third, call in the professionals. Don’t be afraid to ask for help. Maybe your financial documents are not in good order. Using a CPA or EA to review and organize your records will help prepare you and your business to move on to the sale process. Maybe while writing your story, you neglected more than your financial documents, working with a broker can provide needed feedback and a plan for getting your business ready to sell.
What are the Strengths and Deficiencies of the Business? Have you so ingrained yourself in the story of your business as the Hero that without you there is nothing left. Now is the time to boost your supporting characters and provide them with the strength to run the business on their own. A new owner will be grateful they can step into the business and not worry that the previous owner’s absence will make success difficult.
Fourth, understand your economic concentrations. Does your business rely heavily (upwards of 5-10%) on a specific customer? Make an effort to understand your economic reliance on individual customers, as buyers tend to be wary of this reliance as it can be a point of potential vulnerability.
How is your Timing? The story of your business has reached great success and is headed to the top of the bestseller list. Capture this good opportunity when you have the chance and consider selling when you are experiencing a profitable uptrend cycle or approaching peak economic performance. Industries can also experience cyclical or circumstantial performance cycles. Evaluate the prevailing industry conditions to help optimize the timing of a potential sale.
Fifth, buyers like to remove points of risk. An owner who is willing to stay on to support training efforts or carry out a contract with a specific customer this will allay buyer fears and reduce risk.
Building a business can be a great adventure- but being able to write the nding that you want to make happen is important to put some thought into. I invite you to read my full blog post or to schedule a consultation directly with one of our brokers for more information. Thanks for listening!
To read this blog in its entirety please visit: http://www.tworlddenver.com/preparing....
Other Transworld Business Advisors of Denver Resources:
https://www.youtube.com/watch?v=CkPtY...
https://www.youtube.com/watch?v=i8E_r...
https://www.youtube.com/watch?v=m137c...
Transworld Business Advisors of Denver
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Denver, Colorado 80205
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www.tworlddenver.com
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