28 Jan How to start your exit plan
What does it take to start making an exit plan? The first step is to set your goals and objectives. Consider these three areas: Professional, Personal, and Financial. What do you want to accomplish, over what period of time, and how much money do you need?
The next step is to take stock of your financial resources – how much do you have right now? Include both personal and business assets. For many owners, that implies that you need a valuation of your business. You can use an independent appraiser or M&A professional, or you can do it yourself if you have the tools and you can be objective. But the main thing is to be realistic and honest about your own “baby”. Be prepared for disappointment – we’ve seen many owners be frustrated by their business valuations. They’ve heard about huge tech acquisitions with sky-high valuations so they get their hopes up. But most businesses won’t get those types of offers. Consequently, some owners will realize that after paying off their debts and taxes, there’s not as much left over for as they hoped.
Once you know what you need and what your business is likely to sell for, you can begin the process of enhancing the value of your business to get to your goals. For example, if your business is worth X and you need to be able to sell it for 2X, you can focus on what needs to be done to make it more valuable and attractive. Some of the additional value will come from growing your revenue and profits. If you run an IT company, common strategies that can make your business more attractive include expanding your customer base, locking in more long-term customer contracts, and increasing managed services and subscription revenues. Additional value will also be achieved by improving certain non-financial factors, such as making yourself dispensable.