Article 5 in our Exit Planning series
If you find yourself at this stage of our series,then you should have a much better understanding of the elements you need to consider in a successful exit planning strategy. You'll have:
- Decided that being prepared for the business exit is a priority for you and needs ongoing consideration in your business operations - Article 1
- Given thought to what an exit means for you personally and what you wish to achieve out of the process and in life beyond - Article 2
- Understood the importance of gauging where your business stands in the market and what you will need to do to achieve the exit you want - Article 3
- Understood what adds value to your business and how improving intangible capital will add value, increase transferability and make your business an attractive acquisition prospect - Article 4
Knowing the above is great, but as we often say to clients, "nothing's done until something's done.” While the numbers show the odds of a successful sale are still stacked against you, there are plenty of examples of successful sales for you to follow. If you want to join them, you need to adopt a proven framework and get started.
You need a team:
You’ve read the theory, you understand what lies ahead and your itching to make a start on your exit plan. So, it’s time to ask the golden question, ‘How can I get things working in my favour?’
The first step is assembling a team. Exit Planning is a team exercise requiring different capabilities from a wide range of experts, many of which you probably already have as part of your advisory set. From our experience, you will need at least some (or all) of the following:
You need a team:
You’ve read the theory, you understand what lies ahead and your itching to make a start on your exit plan. So, it’s time to ask the golden question, ‘How can I get things working in my favour?’
The first step is assembling a team. Exit Planning is a team exercise requiring different capabilities from a wide range of experts, many of which you probably already have as part of your advisory set. From our experience, you will need at least some (or all) of the following:
Growth / Value Advisor – A business consultant or advisor assisting with embedding value in your business through increasing intangible capital and making the business transferable.
Personal Wealth Advisor – Providing guidance with financing the personal side of your journey and helping you set yourself up for your post-business life.
Accountant – Supplying the numbers that a prospective buyer will judge you on, numbers you should be regularly using to develop the value prospective purchasers seek.
Lawyer - Ensuring your legal framework delivers to your desired future and having updated agreements with suppliers and customers that reassure prospective buyers of the ongoing nature of your business.
Insurance Broker – Unexpected events happen, both to you, your business and potentially your business partner. Ensuring you have appropriate cover to suit your individual needs is important and will change through the process.
Funders – Funders can span the range of the spectrum from traditional (banks) through to more modern options (Private Equity, Non-Bank lenders). They are tied to your exit and can also assist with transition and funding for prospective buyers.
Broker / Merger and Acquisition Specialist – Like house sales, selling a business is a specialist skill and should involve the capabilities of someone who does it regularly and can assist with realising the best result
Personal Wealth Advisor – Providing guidance with financing the personal side of your journey and helping you set yourself up for your post-business life.
Accountant – Supplying the numbers that a prospective buyer will judge you on, numbers you should be regularly using to develop the value prospective purchasers seek.
Lawyer - Ensuring your legal framework delivers to your desired future and having updated agreements with suppliers and customers that reassure prospective buyers of the ongoing nature of your business.
Insurance Broker – Unexpected events happen, both to you, your business and potentially your business partner. Ensuring you have appropriate cover to suit your individual needs is important and will change through the process.
Funders – Funders can span the range of the spectrum from traditional (banks) through to more modern options (Private Equity, Non-Bank lenders). They are tied to your exit and can also assist with transition and funding for prospective buyers.
Broker / Merger and Acquisition Specialist – Like house sales, selling a business is a specialist skill and should involve the capabilities of someone who does it regularly and can assist with realising the best result
Your team needs a captain:
The challenge often faced is that these experts work directly with you but in isolation of each other. This means one other key position needs filling - the captain of your exit planning efforts.
You can take up this role yourself, because after all, nobody knows the business better than you. But there are three things you should consider before you personally lead your exit planning efforts:
- Do you have the time? We find owners generally have enough on their plates dealing with the day-to-day without having to coordinate a team of experts and ensuring the business is operating in a way that makes it exitable.
. - Do you have the expertise? Most business owners who have not gone through an exit before will benefit from having someone by their side who is familiar with the process. For most owners, ensuring your business is transferable (and that you get the outcomes you desire) will require external assistance.
. - Can you prioritise the important over the urgent? Exit planning falls into the category of important, but is rarely urgent. Despite your best intentions, will the daily pressures of the business mean Exit Planning ends up on the backburner and time slips by without real progress?
The team has one aim - to get you the exit you desire. They will help you in several ways, building maximum value, knowing when it’s the right time to sell, deciding who to sell to, and overall delivering the best exit option for you.
The team you create is not the one that focuses solely on price. It is the one who understands all your personal, business, and financial goals to ensure you have a successful exit.
Make things happen: 90-day cycles
We started this article saying nothing gets done until something gets done. One of the best ways to make exit planning happen is to adopt a framework and work in 90-day cycles.
There are many popular business books providing frameworks on driving business growth, adding value through developing intangible capital and how to work through a business exit. Whilst they differ in approach, they all supply similar wisdom. It’s useful knowledge, but like any objective in life the key is to get started and keep developing in-flight.
That’s where 90-day cycles come in. Whilst the wisdom varies slightly in terms of how they suggest you address things, they generally land on the need to work in 90-day, or quarterly cycles. The process is simple - set what you are going to do over the next 90-days that will move you towards your longer-term goals, start executing (with corrective actions) and then rinse and repeat the process. 90-days is enough time to get things done, but not so long as to lose focus and drift away from action.
Working to a 90-day cycle helps set specific and manageable goals. Tied to the overall mission, everyone knows their roles and expectations. Reviewing and re-establishing direction four times a year gives you enough time to make progress and work out what is and is not working so you can adapt your plan and clear those hurdles.
At Strategic Specialists Group we’re familiar with these concepts and have seen them work to great effect. We encourage all our clients to follow a similar path and have incorporated both business growth principles and 90-day cycles into our Exit Planning and Discovery Roadmap™ services.
Are you ready to even the odds? The best time to start planning your exit was the first day in business. The next-best time is now. It requires relentless execution. Take the first step and keep going!
