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Do You Know How You Will Exit Your Business?

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Do You Know How You Will Exit Your Business?

By , January 24, 2024
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In the world of business, the journey doesn’t end with the inception; it’s crucial to plan the exit just as meticulously. In the first article of this series, “The Exit Trap,” we delved into the necessity of preparing your business for a strategic exit and introduced the 21 Steps designed to guide business owners through this complex process. Today, we embark on Step 1 – clarifying your goals and outcomes.

Understanding the Terminology: Succession vs. Exit

Before diving into the intricacies of business exit planning, it’s essential to distinguish between succession and exit. Succession involves transitioning from working ‘in’ your business to overseeing it ‘on’ a broader scale. On the other hand, exit marks the point where you depart from the business or shift away from equity ownership.

Setting the Destination

The journey begins by envisioning your desired outcomes. What’s your timeline, and what activities do you foresee post-implementation of your exit plan? While the idea of sipping pina coladas on a beach may initially sound appealing, it’s often insufficient. We explore how to fill newfound time in a way that excites and fulfills you, ensuring a satisfying post-exit life.

Motivation Through Clarity

Knowing the destination is crucial for motivation. Whether it’s succession or exit planning, clarity on the end goal is paramount. Numerous exit deals crumble due to last-minute changes, often stemming from a loss of identity and uncertainty about the future. The desire to maximise valuation, leave a legacy, or care for employees are common themes, but every owner wants to leave on their terms, avoiding convoluted earn-out periods.

The Magic Number

Every business owner has a magic number in mind for their exit – the amount they wish to sell their business for. Understanding this number is key to gauging its proximity to a realistic market valuation. Whether it’s a personal sense of achievement, retirement needs, or an arbitrary figure, this number shapes the foundation of the exit plan.

Consideration of Risk Profile

Beyond the magic number, the risk profile of the owners plays a pivotal role in shaping the exit plan. This insight helps evaluate the feasibility of the plan and allows for necessary adjustments to meet expectations. As Stephen Covey wisely stated, “Begin with the end in mind” – and that’s precisely the purpose of Step 1.

Looking Ahead

Now armed with a clear understanding of the end point, we transition to Step 2 – the Fact Find. In the next article, we’ll delve into the importance of gathering information that defines the starting point. Stay tuned as we continue our journey through the 21 Steps, navigating the complexities of business exit planning.

Darryl Bates-Brownsword

Darryl Bates-Brownsword

CEO | Succession Plus UK

Darryl is a dynamic, driven Business Mentor and Coach with over 20 years of experience and passion for creating successful outcomes for founder-led businesses. He is a great connector, team builder, problem solver, and inspirer – showing the way through complexity to simplicity.

He has built 2 international multi-million turnover businesses; one now operating in 16 countries. His quick and analytical approach cuts through to the core issues quickly and identifying the context. He challenges the status quo and gets consistent, repeatable and reliable business results.

Originating in Australia, Darryl’s first career was as an Engineer in the Power Industry. Building businesses bought him to the UK in 2003 where he quickly developed a reputation for combining systems thinking with great creativity to get results in challenging situations.

A keen competitive cyclist, he also has a B Eng (Mech) Engineering and an MBA.