The vast majority of independent businesses across Australia are small and have been set up by an enterprising entrepreneur, usually as a "lifestyle" operation. This means that they are relatively compact in nature and were never designed to become particularly large or cumbersome. In fact, they were set up so that the founder could maintain control and, eventually, reap the rewards of his or her efforts. Of course, sometimes these organisations will become particularly successful and may still grow to a certain size. When this happens, they can tend to take on a life of their own. Why is it still important for the founder to stick to their original plans and focus on the exit strategy as well?
Most people set up their own business to make life better for them and their dependents. They may be looking for a certain amount of freedom in life at some time in the future. Assuming that the business has indeed been successful and is a valid, ongoing concern, then they must stay true to the original intent and put it up for sale at the appropriate time.
What's Your Exit Strategy?
Unfortunately, many of these entrepreneurs do not have an exit strategy in place and simply don't know what to do in order to move in that direction. However, it's not too difficult once you have a plan.
Surviving without You
To begin with, the business must be able to survive without its founder. In other words, it should have a competent management team in place that can successfully run the business without the main man or woman. This is by far the most important rule, as even the best-looking business may not be worth anything if its success is entirely linked to the outgoing seller.
You've also got to make sure that the business is saleable and that you don't have too many eggs in one basket. In other words, do you have excellent relations with your customers and have a good spread, without a focus on one individual organisation? This will help to appease any potential buyers, who may be worried about longevity.
Furthermore, make sure that all your financial affairs are in order and that your books are well kept. You need to maintain management accounts on a month by month basis before you put the business onto the market. This will show the prospective buyer exactly where you stand when they access the profit and loss account and balance sheet.
Team of Experts
If you're serious about moving on, you can build a team of experts to help you. You should certainly get your accountant involved at the earliest opportunity before advertising your availability because he or she will be vital throughout this process.