Exit Planning: Why Business Owners Need a Strategic Plan
If you’re beginning to think about selling a business, you need to ensure that you have a sound exit strategy in place. Why? Because comprehensive exit planning will aid in assuring a smooth and lucrative transfer of ownership of your business. Here are some of the many benefits that business owners will realize from proper exit planning.
Establishes Clear Time Frames and Strategies
A well-conceived exit plan protects you from being forced out of your position in a sale to a competitor, or a liquidation. Instead, it makes clear when and how you will exit the business upon selling it.
Make Help You Prevent Costly Taxes
By working with an experienced business broker, accountant, and financial advisor, you may be able to avoid paying more taxes on the sale of your business than necessary.
Planning Gives Your Greater Control
A well-constructed exit strategy will put you in control of not only the sales price but also control over who assumes ownership of the business. By working with a team of experienced advisors, you can plan when you should list the business for sale, the amount of money you need to make from the sale, how you’ll leave the business, and ultimately, who becomes the new owner of the business.
Planning for Your Exit Can Help You Maximize Your Biggest Asset
For many business owners, most of the wealth they have accumulated is tied up in their business. To that end, it is to your benefit to maximize the value of the business before exiting. Part of your exit planning strategy, therefore, may be to expand the business before you sell it.
A Strategic Exit Plan Can Make Your Business More Attractive to Buyers
When potential buyers see that you’ve taken exit planning seriously, and your efforts will result in a smooth transition of ownership, your business becomes much more attractive to them.
Exit Plans Ensure a Smooth Transition for Customers, Clients, and New Owners
A thoughtful exit plan will help not only the customers and clients you’ve grown to love over the years but will help the new owners to build on your life’s work. This can help assure that your legacy remains in good hands, and all those who came to rely on your products are services are still cared for the same way that you took care of them.
Exit Planning for Business Owners Helps Mitigate Risks
It is an unfortunate reality that failing to plan for your eventual exit from your business can leave you exposed to excess losses, taxes, or time. Specifically, failing to dedicate the necessary time and commitment to exit planning puts you at risk of:
- Missing out on opportunities to increase the value of the business before exiting
- Being forced to delay retirement
- Burdening family members in the event of your death
- Undervaluing your business due to a hasty exit
- Selling your business for less than you need for a comfortable retirement
- Paying excessive taxes on the sale.
Talk with a Business Broker About Your Exit Plan Before Listing Your Business
If you do not have an exit plan, don’t panic. But it is time to create your strategic plan for leaving the business. Having this plan in place before you are ready to sell can help you to sell your business faster, and for top dollar. If you don’t know where to begin with an exit plan, contact Northwest Business Sales & Certified Appraisals for more information, and for additional referrals to professionals who can help. Call 541-968-2728, or send us a message.