When preparing for your business exit, it's important to know exactly what steps to take in order to create a seamless transition. Consider the following steps to make the process as successful as possible.
Articulate three main goals.
The key to a successful business exit plan is to plan around what you want and need from a business exit. This should include clarity about
- When you want to exit,
- How much money you need to maintain financial independence, and
- To whom you want to leave the business.
While it’s likely that you also have values-based goals for your business exit, such as maintaining a certain company culture or providing continuing support to your local community, these three main goals are fairly universal among business owners and should serve as a primary focus and foundation of your plan.
Make sure your goals are SMART.
When setting goals for your business, it’s useful to use the SMART goal framework: make sure that your goals are
- Time limited
For example, if your answer to “when do you want to exit the business?” is non-specific, such as “within ten years,” then other goals for your exit will necessarily be vague as well. Limit your other goals in time by choosing a specific exit date so you can ascertain at any point whether you’re on track to meet them. Then, you can identify the specific amount of money you’ll need to live independently, allowing you to measure your progress toward that goal in relation to your planned exit date. Of course, that amount should also be relevant to your wants and needs for your life as well as attainable given the current state of your business. By structuring all of your goals to meet this framework, you gain the ability to objectively assess your progress at any point along the way.
Use your exit goals to guide other business decisions.
With this foundation in place, you can more effectively address the current needs of your business in ways that support progress toward the three end goals that you articulate in your business exit plan. Furthermore, sharing your exit plan with experts who advise your business enables them to better serve your company when providing services like financial management, drafting employment agreements, recommending compensation packages for key employees, and managing risk. By putting your wants and needs at the core of your exit plan, you create a foundation that supports your lifelong goals—for your business and for what comes next.
If you need help determining whether you and your business are prepared for your exit, take our exit plan readiness survey.