Even if your business exit plan may not be used for years, developing one sooner rather than later can ensure a smooth transition. More importantly, it can help you make strategic decisions that will benefit you financially during and beyond your exit.
Building a small business exit strategy plan from scratch can be daunting. But rest assured, the Pinpoint Management team has you covered with this personal five-step exit planning guide.
If you have any questions along the way, contact us. We’re here to help you prepare for your transition and achieve the profitability you deserve.
A business exit planning strategy is a business owner’s strategic plan to sell their business ownership to another company or to investors.
An exit plan can benefit you in two ways:
No matter how much you love what you do, leaving your role is inevitable. By making a small business exit strategy plan early on, you can walk away financially (and emotionally) fulfilled. Not to mention, an exit plan demonstrates commitment to your business’s vision and goals, which will attract buyers.
Leaving your business is a big decision that can be overwhelming. It takes time and care to build the right exit strategy, so the time to start is now.
Here’s a five-step checklist on how to make your business exit plan:
Lay out your personal and professional financial goals and compare them with your current monetary situation. Having a thorough understanding of your expenses, assets, and performance will help you better leverage your time, money, and team. You can set specific milestones (e.g., $XX by December 2023) to help you establish relevant targets (e.g., XX amount of leads or construction projects per month).
Especially in industries such as construction, there tends to be more volatility with earnings (contracts going in and out). Therefore, we believe the finest exit plans are ones that are realistic about future cash flow and market shifts.
Too many business owners don’t have a specific financial goal in mind for their exit strategy. Simply saying, “I want to make as much money as possible,” is not a feasible plan.
Determine how much you’ll need to earn to:
These factors will help determine your exit value. Keep in mind, there are people who specialize in preparing exit plans for small business owners like yourself. They can examine your business’s financials to help you determine a fair value.
Your exit plan should detail all key roles and responsibilities within your business. How does each role contribute to the overall success of the company? What are some tangible results they produce?
Mapping out key roles will help create a smooth transition for your successor. This can also encourage you to think of new ways to leverage key individuals and map out a new leadership team prior to your exit.
There are several options to exit. The Pinpoint Management team can help you select the right one based on your goals and needs.
You have seven options to consider:
For further guidance on building your business exit plan, contact the Pinpoint Management team. We’ll pair you with one of our experienced business development consultants to help you plan ahead and get your exit plan where it needs to be.