Business Exit Strategy - Tip #1

"If you fail to plan, you are planning to fail." -- Benjamin Franklin

If your business has survived over 5 years -- congratulations! The Small Business Administration reports that only one-half of new businesses with employees will survive at least five years. Has your business provided a decent living for you and your family? If so, another congratulations is in order, because creating a sustainably profitable business is another great achievement for small business owners.

Now that you've achieved this great feat you may be at the crossroads of what to do next in life and perhaps contemplating an exit from your business. If so, make sure you put as much thought and time into developing a proper exit strategy as you have in building and operating your business. There are several exit strategy options, such as closing the doors and liquidating the assets; hire and train a key person to takeover your responsibilities so you can run the business absentee, or sell to a talented buyer so you can cash out. Choose the right strategy for your goals, and ensure the proper lead time for planning.

If selling the business is your desired strategy, discuss your plans with your CPA so the tax returns and financial statements will be in proper order since these are used in the business valuation. Plus, plan on having the trailing twelve months income statement updated each month once the business is on the market.

If the business needs a boost in sales, management, leadership, or business strategy a consultant can help improve these key areas before listing the business for sale. Likewise, if the business can benefit from a CFO but does not have one consider hiring a consultant that specializes in small business operations and controllership services. Also, avoid burnout so that the business does not suffer and begin to deteriorate and lose value.

Business owners often need guidance on evaluating their business' value, and different results are produced by various indicators of value. Pricing the business so that it sells is the goal using a method that makes sense. Business sellers must also understand that a buyer has a need for both compensation and financing when purchasing a business so when a buyer comes along be open to various possibilities that will achieve the end result for you and the buyer.

Planning in advance will help secure the highest sales price. In addition to the above, having the following documentation in order will help with a smoother transaction: current written business and marketing plans, current registrations with divisions of corporations (i.e., annual report, fictitious name), and negotiated options to extend real estate lease.

Sally Null - Tampa Bay Business Broker

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Sally Null

Business Broker

TRANSWORLD BUSINESS ADVISORS

400 Carillon Parkway, #110

St. Petersburg, FL 33716

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