(An excerpt from "Don't Do It the Hard Way" by your Uncle Ralph, Del Chatterson.)
Many entrepreneurs are at the later stages of their careers and working on their exit strategies. They are discovering that the exit is just as difficult as the start-up.
I recommend that your exit strategy should include these
three steps:
1. VALUE THE BUSINESS
Determine the current valuation of the business as an outsider would see it. Identify the factors that reduce value and the steps that can be taken to improve upon it. Remember that packaging and presentation can make a big
difference, but each potential buyer will assign a different value based on their own objectives.
2. IMPROVE ON THE VALUE
Start working on management transition to make the business less dependent on the current owner. Develop your existing team then look to fill the gaps that exist. Stabilize revenue growth, improve profitability and reduce the current business risks.
3. TAKE ACTION
Analyze the strategic options for exit and initiate an action plan. Your best strategy may be a sale, merger/acquisition or management buy-out. Select the option that is best choice for you and your business, not just the maximum cash payout.
In brief, improve business value by making it more stable, profitable and less dependent on you. Changing your role in the business from employee to owner to former owner.
Not simple to do, but it is important to know where you’re going before you have to look for the exit in an emergency. Don’t wait to work on your exit strategy. Start now.
Have a plan. Avoid the mistakes.
Be better. Do Better. Be an Enlightened Entrepreneur.
Del Chatterson, your Uncle Ralph
Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com
Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions. Everything you need to know from Start-up to Exit.