There is the old adage that says: “The time to develop an exit strategy is the day you open for business.” Sounds good, but not very realistic or very optimistic.
On the day you open for business, your thoughts are focused on making the business successful, not how to get out of it. However, as time passes you get the business running smoothly and profitably, you will find that some of the things you need to do to improve your business are some of the very things you will need to work on to plan an exit strategy.
You can’t predict misfortune, but you can plan for it. One never knows when an accident or illness will force one to sell. Or when the drive to your business becomes filled with dread, maybe it’s time to consider selling. The following ideas will improve your business, even if you’re not currently considering selling. Dealing with these areas will also supply the information a buyer will most likely be looking at when the time does come to sell.
- Buyers want cash flow. This, at least on the surface, is the thing a potential buyer will want to look at.
- Appearances are important. You may think everything about the business looks fine, but the two letters on the neon sign that don’t work indicate to a possible buyer that the seller may have lost interest in the business, causing them to also wonder what else doesn’t work or has been neglected.
- There is probably more value than you think. Business owners often don’t look at things that do create real value such as: customer lists, secret recipes, specialized computer systems, programs, customer loyalty programs, etc.
- Eliminate the surprises. Make sure the lease is transferable and that your landlord is willing to cooperate. Resolve that issue with town hall. Resolve the problem with that angry customer. Minor problems and issues will often raise their ugly heads during sensitive times, spooking a possible buyer. So, the time to resolve them is before going to market.
It’s really never too soon to begin to prepare your business for sale, even if the likelihood of sale is years away. And, changes like those described above can pay significant dividends in the interim.