The first step in selling a business is defining what success looks like to the business owner. Just as a well-developed marketing plan can do wonders in the expansion of your business, a well thought out exit strategy, with written goals and values, is essential to the sale of your business and achievement of your long-term goals. Your business may be generating profits every year, but if it is not positioned to reach your overall objectives will it really be a success? There are many different types of exit strategies, but they fall into three main categories:
- The business is passed on to the heirs during the owner’s lifetime or at death
- The business is sold or merged during the owner’s lifetime
- The business is sold or merged at the owner’s death
The first two strategies need to be planned well in advance, while the third typically occurs as a result of poor planning. As you begin the process of introspection, make decisions based on current facts and the most probable scenarios. For example, if you want to pass the business onto your children, you need to determine if they are currently active in the business and if they are effective. Not only should you consider your own emotional desires, but the aptitude of the players involved.
Whatever the situation, it is imperative to begin considering the future of your business today. Many business owners are lulled into the belief that they can wait until much later to start preparing their business for sale. Unfortunately, as the years pass by, they miss out on opportunities to enhance their business value and position it for the maximum selling price.