Owning a business demands immense dedication; it becomes an integral part of one’s life. Some days its smooth sailing, other days, not so much. But one thing is for certain, at some point, the reins must be passed on to another. The process can seem like your first ever ocean crossing, daunting, exciting and great uncertainty about what lies ahead. Like passage planning, exit planning can illuminate this unfamiliar path, providing a roadmap to a successful business sale.
Exit planning prepares you and your business for the inevitable transition. It’s not simply about making a sale, but improving the salability, increasing the business’s value, identifying any tax concerns, ensuring the enduring legacy of your life’s work and paving the way for a successful future.
Understanding the current and future value of your business is an essential first step in this journey. This valuation depends on various factors such as financial health, market position, industry trends, and more. It
is a holistic process, taking into account both tangible and intangible aspects of your business.
Professional advisors can provide a comprehensive business valuation using several techniques, including earnings-based, market-based, and asset-based methods. These perspectives on your business value can increase its appeal to potential buyers.
Preparation is a vital part of a successful business exit. This involves making your business attractive to buyers and ensuring it operates smoothly without your presence.
Consider your business from a buyer’s perspective. How can you improve its marketability? Are your financials in order? Is your management team prepared to take over? By addressing these aspects, you not only enhance your business value but also make it easier for a transition.
If you have hit a value goal or have identified weaknesses in your business from a sale perspective, it’s likely you will need between 12 to 36 months to implement changes and see the profits flow through to your financials. Preparation is key with selling.
The sale process may seem overwhelming, but with the right preparation and guidance, it can be managed efficiently. I break the sales process down to three simple stapes; prepare, promote and sell.
Attracting buyers requires strategic marketing and networking. The negotiation stage is where your preparation pays off. This is where we leverage your business valuation and the value enhancements you’ve implemented. Remember, every negotiation point can significantly impact the final sale price.
A successful business sale involves more than just a profitable deal. It also means efficiently managing your tax liabilities. The tax implications of a business sale can be complex, so it’s important to consider these in your exit planning process.
Several strategies can help reduce your tax burden, including tax-efficient structuring of the deal. It’s advisable to engage your accountant early on in your preparations to navigate this aspect of your exit plan. The right tax advice can save you a significant amount of money and prevent any unpleasant surprises down the line.
An effective exit plan covers all aspects of the exit, including personal, financial, legal, and emotional considerations. It ensures you’re ready for any contingencies and provides a roadmap to guide you through every step of the transition.
The benefits of having an exit plan are manifold. It brings clarity, direction, and peace of mind, allowing you to focus on running your business until the transition occurs.
As a business owner, your concerns and apprehensions are valid, and that’s why proper exit planning is essential. With the right resources and expert advice, you can ensure a successful and satisfying exit from your business. Remember, it’s never too early to start planning your exit. The sooner you start, the better prepared you’ll be when the time comes.
If you need assistance in crafting a robust exit plan, do not hesitate to reach out. It’s time to ensure the future of your business aligns with your personal and financial goals. Book an appointment online, and let’s start shaping your successful business exit together.
Registered Business Valuer
0416 638 154
mickgodwin@benchmarkbusiness.com.au
166 Ashmore Road, Benowa, Qld 4217
Published in print July-September 2023
