Some owners dream of selling their business someday for a lucrative payout. Others want to leave the business to their children and keep it in the family. There are also those who don’t know what they want to do.
No matter what each business owner says they want to do … most of them haven’t done enough to set that plan into motion.
Truth is, many business owners spend more time planning family vacations than thinking about their business exit strategy. Equity in a business is often the owner’s biggest and most valuable investment, so this approach can lead to problems for the owner and his family.
Here are 5 common reasons misconceptions that can create a false sense of security for business owners.
#1: “There’s plenty of time to get it done!”
If you want to get the most money for your business, you must prepare to meet the expectations of prospective buyers. Are your processes fully documented and streamlined? Do you have contingencies in place for when valuable employees leave? How easy will it be for the new owner to remain profitable in the business?
It takes a lot of time and effort to properly prepare your business for sale or transition. The best time to get started is when you open your business. The next best time is today. Don’t wait until you’re ready to sell to start planning your exit!
#2: “I don’t need to do anything. The right buyer will come and find me!”
While you may get an offer on your business, waiting around for a buyer is not ideal. First off, it hands the controls over to the buyer, leaving you at the mercy of someone else’s timing and cashflow. Having just a single buyer can also drive down the sale price. When several buyers compete, you get a better deal.
#3: “Selling a business is easy. When the time is right, it will come together quickly.”
This one is also false. Selling a business is a long and arduous process. Even the smoothest transitions have obstacles and challenges. If a deal comes together too quickly, then you can bet you didn’t get the maximum value from your business exit.
#4: “If I start to plan my exit, employees/suppliers/customers will take that as a negative sign and go elsewhere.”
Thankfully, this one isn’t true. Your employees, suppliers, and customers already realize that you won’t live forever. They understand that you will have to step away at some point. There are ways to address this concern so that everyone involved feels comfortable with the exit strategy. And the sooner you begin planning, the more secure everyone around you will feel.
#5: “I don’t ever want to exit. Not now, not 10 years from now.”
Some business owners don’t ever want to step away from their business. They love what they do and can’t imagine life without their business. And that is great, except for one fact. Every business owner eventually leaves the business. It’s better for business owners and their families when the exit is strategically planned and executed.
So, if your business exit strategy is still up in the air, it’s time to get serious about it. Think about what you want for your business. We’re here to help. Take the first step and give us a call!