You have got a terrific enterprise and you are not pondering of promoting proper now, however what if you have to? A well being disaster, lack of a accomplice or reluctance of household to take over the enterprise may all lead to the necessity to promote your enterprise, however may you execute an exit technique instantly?
As much as 70-80% of small enterprise proprietor’s whole internet price is straight tied to their firm, primarily based on analysis from GrowthSmart Consulting, Inc. But, regardless of this, over 60% of enterprise house owners don’t have an “exit” technique.
With a lot at stake, enterprise house owners want to incorporate an exit technique as a key element to their general marketing strategy. Being ready will assist you to keep, and certain improve, the worth of your enterprise. Actions you’re taking now may take time to implement to have full affect.
Listed here are some suggestions for data to have prepared, and actions to take, to arrange an exit technique:
1) Monetary statements (5-7 years) primarily based on a constant utility of U.S. GAAP (Typically Accepted Accounting Rules). If you happen to don’t have already got a monetary accounting system in place, it’s to your benefit to take action
2) Updated tax filings, and payroll withholding submissions if relevant
3) Full and clear information on all contracts, together with prospects, distributors, loans, leases, insurance coverage, and so on. in addition to any shares owned by others
4) A complete narrative on your enterprise, together with services and products provided, pricing, prices, markets served, worker retention, buyer satisfaction, enterprise historical past, aggressive evaluation
5) Contain your lawyer within the course of in order that your exit plan is aligned along with your property plan. Seek the advice of your accountant / tax advisor to plan for and mitigate any tax impacts
6) If you happen to function your enterprise out of a constructing that you simply personal, take into account the worth of the enterprise with and with out the constructing being included. Would leasing the constructing to a brand new proprietor be one thing that might curiosity you and the brand new enterprise proprietor?
A enterprise with favorable traits in gross sales, working margin, and money circulation, in addition to a “lean” stability sheet, will lead to a better worth at exit. If your enterprise wants to enhance in any of those areas, this may take time.
So, if you’re a enterprise proprietor who doesn’t have an exit technique, take motion now. Sometime, you, and your loved ones, might be very grateful that you simply did.
Robert Denten is a volunteer mentor with SCORE’s Tip of the Mitt Chapter. To request the free, confidential mentoring providers which SCORE gives for small companies, name the Petoskey Regional Chamber of Commerce at (231) 347-4150.
