As you are well aware, the coronavirus or covid-19 pandemic has rapidly transformed the world’s economy and the layout of businesses of all sizes. Not only are more employees working from home, but more and more businesses are using this time to develop their exit strategy to prepare to sell their business.
At this point, you may be either considering taking your business to the next level or deciding if you should sell your business. However, no matter what you decide you should be aware of your options, know how to implement your exit strategy, and focus on how your exit would impact you, your employees, customers, and suppliers. These factors and others pertaining to the perfect exit strategy for your business are discussed in detail below.
Your Options Moving Forward With Your Exit Strategy
In the first part of your exit strategy, you should be considering what your motivation to sell your business is. Why are you creating an exit strategy? Are you creating an exit strategy to grow your business before selling down the road, or are you creating an exit strategy to sell your business in the near term? Whatever the case is, understanding your motivation and searching for honest answers to those questions will allow you to get the most out of your exit strategy.
The coronavirus pandemic may be influencing you to make a different exit strategy altogether. Not only should you be thinking about how your business will look after the pandemic, but you should also be anticipating what your target market will look like when the pandemic is over. Some businesses have even done better during the pandemic, and others may not have been affected much.
Another important consideration in an exit strategy is how long you want to work at the business after selling the business. This transition period can vary quite a bit. It may be a week in some cases, and in other cases, it is several years. Most of the time, it is something in between.
The more critical you are to the business will typically be, the longer that you will need to stay on after the sale. So if your plan is to stay on as short of a time as possible, you want to make sure that your employees can fill the roles you currently perform. So if you are the main person who deals with customers, you will want to make sure that employees learn how to fulfill this role and are developing relationships with the customers.
The same holds true for any technical skills or other critical functions that the business relies on you for. If you don’t have anyone in-house that can fulfill important roles that you play, then you may want to consider hiring someone with this skill set. Of course, you have to consider the increased expense that adding someone will bring on and determine if hiring this person will also add to your bottom line.
Another exit strategy plan would be to minimize the reliance on one or two large customers. If your largest customer makes up over 15% of your revenue, that would be a risk to anyone taking over your business, so if possible, it would be best to add new customers to diversify your breadth of customers.
Also, if you can develop recurring revenue models of pricing, this is very desirable from a buyer’s standpoint. Recurring revenue models can be subscription-based like Netflix or simply monthly paying customers that have been with you for a long time.
How to Implement Your Exit Strategy
After understanding your motivations behind creating your exit strategy and deciding what exit strategy is best supported by your motivation, you will want to decide the best way to implement your strategy. You can define your business’s target state, create an implementation road map, and identify what resources you will need to implement change. When identifying your target state, you should visualize how your business will look within different external scenarios. Your road map should compare your previous initiatives with the new initiatives you hope to achieve and implement. Finally, it would be best to predict what resources your employees will need to utilize and be successful in your exit strategy.
Synergy Business Brokers can help you with your exit strategy
Business Brokers can provide you with a potential value for your business. This can go along way with determining whether or not you might be ready to sell your business. Does this value offer you enough to move on to your next stage in life, or do you need to increase your business’s value before selling? Keep in mind that it takes 6-10 months to sell a business on average, and you will need to stay on after the sale to help with a transition.
2021 has been a booming year for business sales. If you might be ready to begin the process of selling your business, please fill out our simple online form, and a Business Broker will follow up with you.