Planning your exit strategy, otherwise referred to as your ‘succession plan’ can seem like a daunting task. However, it is an important factor that should be planned well, before the need arises. Think of an exit strategy like any other important planning task – you have a big event on and need a specific outfit, if you leave the shopping until the last minute, it is likely that you will not find what you need before the big day. With business, the same rule applies. Planning correctly and giving yourself enough time to do so, will ensure a smooth, effective and successful transition when the time comes.
What do you include in an ‘exit strategy’?
- Time Frame: How long until your exit strategy is likely to take place as well and how long it will take to implement the exit strategy itself
- Successor: The details of your successor, if known
- Restrictions: Any legal, financial or other restrictions that may come into play
- Ownership: Whether the succession is part or full
- Financial considerations: Fees, tax, post-exit income options and any other components that need to be assessed prior to implementation
- Staff: Identifying any changes required prior to, during or post-transition
- Legal requirements: Any legal considerations alongside risk management solutions
Whether you are planning to sell your business or planning to hand over the reins to a family member or employee, an exit strategy outlines specific processes which when followed, create a seamless transition. An exit strategy ensures that the business continues to operate in the most successful manner whilst ownership transfers; maintaining the level of sales, providing the same services and following protocol which allow the operation to continue as normal.
Your exit strategy should identify ways to make your role, as the owner, less hands on. This will allow the transition to be gradual, whilst also allowing the business time to adjust and become less reliant on the current owner. This is an important aspect of an exit strategy, as it alleviates risk in the eyes of the successor, knowing that the business can function successfully without the previous owner present.
We recommend seeking legal advice when planning your exit strategy. This can rule out potential disputes and ensure that all legal requirements are addressed.
I’ve created my exit strategy, what now?
Review it annually. Think of your exit strategy like your will. As life changes and situations arise, modifications will need to be made. The creation of your exit strategy is a necessary and beneficial planning task, however, it will need to be altered and adjusted as the years go by.
Core Business Brokers have countless years of Business Broking experience, which means we understand that no two businesses are the same. When it comes to selling, we will treat your business like a unique operation, because it is. The Core Business Broker you deal with initially will see you through to the end of your sale, answering your questions and assisting throughout your sale journey.
If you are planning to exit your business, contact Core Business Brokers today. We will be more than happy to discuss your options and guide you through your business Sale. Contact us on (02) 9413 2977 to chat to one of our friendly and knowledgeable team.