A lot of business owners ask me, “When should I develop my business exit strategy? and how far in advance of my departure should I build my plan?” My answer is always immediately! A strong business exit plan is a dynamic document to be reviewed and updated frequently as conditions change. Change in your personal goals, your business growth, the business acquisition climate and the overall economic environment will all play a part in continually shaping your exit plan.

I’m going to assume you ultimately want to exit your business on your own terms by creating a company that is highly desirable to potential buyers. Generally speaking, the more time you have to implement a plan, the closer you will get to your goal. Below are some of the advantages of early planning:

• Market Timing; you will be able to take advantage of strong demand for your type of business.
• Economic Conditions; you can take advantage of economic trends. Will things be better or worse over the next 3-5 years?
• Tax Liability; you will have time to position your business and exit point to maximize your profit and minimize what the IRS takes.
• Barriers to Sale: cure any defects that may depress the value of your business.
• Growth; establish systems and groom personnel to increase business value.
• Exit options; you will have time to select the exit option you prefer: succession, sale or other transfer.
• Personal planning integration; dovetail business exit planning with personal financial goals.

 

 

 

 

 

Tags: business exit plan, business exit strategy, business planning, leaving your business, minimize taxes