8 points to consider before exiting your business

You’ve built a business and you’ve watched it grow, but it’s not always the intention of the business owner to run things forever.

Recently, Sharn Rayner, Head of Business Consulting at AdviceFirst and founder of POD, a HR consultancy (and a recent AdviceFirst acquisition), spoke at a Greater East Tamaki Business Association Inc. seminar on best practice for being exit ready. As a small business owner for more than 10 years and having just successfully executed the selling of POD, Sharn was well placed to discuss the strategic management of planning for a sale, deciding on your exit date and road-mapping the transition.

Here are Sharn’s top eight tips for being exit ready:

1. Plan your exit date. Sharn knew within one month of starting her business when she planned to sell POD.

2. Have a road map and keep it alive.Develop your strategy and bring it to life with people buying in to your vision and plan. Keep the road map relevant, incorporating the latest developments, and treat it like a living thing that needs to be fed in order to keep going. Review it monthly and accept that there can be detours – just as it can be on a road trip, there may be scenic re-routes, burst tyres, toilet stops and sometimes crashes!

3. Get a mentor or business coach. Finding someone who knows what they’re doing and has experience helps with your decision-making and keeps you challenged and commercially astute.

4. Be a sponge.Never stop learning. Take courses (New Zealand Trade and Enterprise), read (audio), watch (TED talks). Don’t stagnate, soak it all up like a sponge.

5. Benchmark your performance.This is how you compare what is valuable when determining your potential business worth to others, and it opens up awareness of where you need to improve.

6. Know your financials.Know your profit and loss. Take stock of your earnings before interest, tax, depreciation and amortisation. If you’re not making money, you’re unlikely to get the most attractive offer.

7. Make it ‘not about you’.At the point of sale, make sure you’ve already taken that big step back and that you’re not the ‘key widget maker’. If the business is reliant on you and you’re planning on leaving, the team and clients may also be reliant on you, which is less attractive to a prospective buyer.

8. Know your number and your likely who. Know your business worth, the types of buy-out available to you and the right fit for your team, your clients and your business overall. First and foremost, keep your clients and team happy to ensure a successful outcome.

AdviceFirst Limited | A Disclosure Statement is available on request and free of charge.

AdviceFirst is a Financial Advice Provider (FSP23242).