When will your Eagle land? How long should you give yourself to exit your business?
If we compare the running of a business to space exploration, we can find a lot of similarities. ‘Landing’ the ideal business exit takes preparation and planning.
You might have been inundated with advice over the last few weeks about how to make this your best year yet, and what goals you should be setting yourself, how to LAUNCH 2019 with gusto. Rightly so. The start of something can be precarious. Start of a new business, start of a new campaign and we tag the start of a new year into this same psyche.
What is not talked about at this time of year is how you’re going to land this rocket, which can also be perilous. Metaphorically speaking, what will your countdown be to the point you want to sell your business.
Most business owners are unaware of what’s involved when it comes to selling a business. Not just in terms of paperwork or figures but in terms of time. Whilst every sale is different, here’s a brief outline of what it might look like
The Exit Countdown
FIVE – Decide when you want to sell. Work backwards from that point to create your personal timeline. If you want to stop working aged 60, you need to be having preliminary talks with your broker at least 5 years before that.
FOUR – Give yourself time to put your business in order. To make marginal improvements to it’s presentation that make it easy for someone else to understand what’s going on. A buyer buys from company accounts, so any financial changes you make, need to reflect in your accounts and that can take a minimum of one year to filter through. Embark on coaching that specifically addresses the aspects of selling a business such as our Build package.
THREE – Creating copy and advertising the business. A really raw average from the point of coming to market to first offer takes one year.
TWO – Negotiating the terms of the sale and completing all required documentation for it to exchange hands. This can take anything from 3 months to a year to complete. It depends on the complexities of the company and the deal.
ONE – The earn out or transition period where you could end up as an employee or consultant to the acquiring company until certain milestones are passed. This can be anything from 1 month to 3 years. It depends on how reliant the business has been on you personally, or whether continuity is provided by a solid management and staff team that you leave behind.
LANDING – Walk away, no longer having any involvement with the business you owned.
The Exit Timer
We can’t stress enough how important it is to think ahead as a business owner. It’s not impossible to sell your business fast, but more often it takes at least months if not years. In our example graphic below, if you are aged 55 now, you need to be starting this process to successfully and profitably sell your business in 2024. If it happens more quickly than this timeline suggests, that’s probably going to work to your advantage.
What you need to be concerned about is if you want your ‘landing’ to be in the next 2 years. You may have missed the beginning of your countdown.
You should be thinking about your exit strategy well in advance of when you want to start selling. It doesn’t have to be a negative process. In fact, by preparing your business for exit and adding value, you’ll benefit from the increased growth and potentially a larger sale figure when the time does come.
We have ‘One Small Step’ for you to take for free which will provide you with your own Exit Timer. It takes 15 minutes to complete a Value Builder Survey. You will receive your score immediately, and your Exit Timer will follow within 24 hours. What’s to stop you getting started?
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