An exit plan is a roadmap for you – and your business

Do you have a solid exit plan? Every business owner needs one – even if you don’t anticipate stepping away from your business anytime soon. An exit plan can help you prioritize your goals, be poised for opportunities, and maximize your profit. If you don’t have one, you may be leaving money on the table.

“We’ll figure it out” isn’t a plan. Neither is “I’ll sell when the right buyer shows up.” And the painful truth is that these “plans” mean you’ll most likely be leaving money on the table.

Prepare to plan

Creating an exit plan takes more than an hour or two. It’s the blueprint for your future, and it requires careful thought. As you’re gearing up to create your plan, consider:

• What does an exit mean to you? Will you retire or move on to other ventures? What kind of time and financial resources will you need to meet your goals? Are you looking to walk away completely or are you interested in staying involved with the business?
• Who has a seat at the table? Think about who you want to sell to when the time is right. Does this include family, employees, competitors, or private equity groups? Think about who you might consider a good buyer.
• Under what circumstances will you exit? Is it at a certain age or under specific market conditions? If you have a partner, what happens if just one of you exits? What needs to happen within your business to get it ready to sell for maximum profit?
• Who will advise you? You’re the expert on your business. But you need a mergers and acquisitions (M&A) expert to walk you through exit planning. It’s too important to be “good enough” – you need a solid plan that covers all your bases.

Planning to exit definitely requires some soul searching. However, you don’t have to have all the answers. Your M&A advisor will help you think through all your options and develop a plan that works for you.

The parts of a successful exit plan

Your advisor will pull together a team of experts to create your best plan. While the specifics are always different, most exit plans include these basic building blocks:

• Statement of objectives – This explains what you’re trying to accomplish with the plan.
• Periodic valuation of the business – An outside party familiar with what buyers are paying for similar businesses will complete this. The valuation will consider uncontrollable factors (like the economy) as well as things you can manage (such as earnings and diversification).
• Thorough analysis and positioning of the business – Is the business in the best position to sell today? Or do you need a plan to maximize salability and your profit?
• Strategies to address the specific situation – No two businesses are alike. Your exit plan will have unique details and tactics.
• Contingency plans – Expect the unexpected. Outline what will happen in case of illness, death, loss of key employees, or market downturn.

Creating an exit plan will highlight where you are now and where you want to end up. When the process is done right, your exit plan will act as a bridge between the two.

It’s not too early

Exit planning isn’t just for serial entrepreneurs or folks approaching retirement. Every business owner needs to consider these issues. And they should review their exit plan on a yearly basis.

O’Keeffe & O’Malley can help you analyze your options and understand the pros and cons. Give us a call at 913-648-1085 for a confidential meeting.