Small Business Owners – What's Your Exit Strategy?
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If you've ever attended a rodeo you know that means a few 8 second bull rides. I've noticed a few of the bull riders seem to make their exit quite gracefully, as if they'd worked and planned for it. Most others seem to make their exit at the whim of the bull they're trying to ride.
Have you noticed that some business owners seem to know exactly when to sell? They end up with a really sweet deal – it's as if they're practiced and planned for it. Others seem to be thrown for a loop – here today, gone tomorrow.
If you've ever sold a house, you know there are always a few little things you need to do to get it ready to sell no matter how great a shape it's in. Whether it's a dripping shower head you've been meaning to fix, updating old faucets, a new dishwasher, a little paint in the kids room, turned office when they went off to college, cleaning out overstuffed closets or some freshly planted annuals curbside, once you're done you wished you did it earlier and enjoyed some of the improvements.
Running your business is a bit like this. You could opt for the exit most bull riders make, without any planning or strategy on your part, or you can run your business as if you were going to have an open house one day to sell it. That does not mean you will anytime soon, but running your business with a long term strategy has some very positive side effects.
Does your business need a little bit of touch up paint, some updated fixtures, or is there major structural work that needs to be tackled? What can you do to run your business that would make it more attractive to a potential buyer?
You may think you'll just call it quits one day, cash out and go off to the islands in retirement. That may work for some, but why not considering reappearing some rewards for the years you've spent in the business, building a list of loyal customers, and valuable business relationships?
Perhaps you think a son or daughter will take over your business. But, more and more business owners are finding there are no family members interested in (or capable of) taking over the business and are beginning to look to key employees who might want to step up to an owner advanced buy-out.
How would an outsider look at your balance sheet? Do you have enough debt to rival the federal deficit? Are your sales dismantling? Have you experienced increasing employee turnover?
Taking a look at your business as if through the eyes of a potential buyer can give you a glimpse into the areas where you need to clean out some clutter of past due accounts, touch up your financial reporting, or major structural work to get your business "open-house" ready. And, if you're like me when I sold my last house, doing it sooner rather than later means you get to enjoy the upgrades in your business and reap both immediate and long term rewards.