Are you a business owner who's wondering how to exit your business? Exit planning for business owners is very important, as it can affect both you and the company’s future. Every business owner has to consider the option of moving on from their company at one point or another, but many struggle with deciding whether it’s the right choice. After all, leaving your company is a huge change, and it’s by no means easy to just pack up and move on.
There’s a lot of factors you’ll want to consider when deciding whether it’s the right time for exiting your business, and this article aims to outline 10 of the most important elements to take into consideration before making the move.
1 - Family
Firstly, one of the most common reasons for business owners wanting to exit their company is family. Starting up, owning, and managing a business is a busy job. Many business owners find themselves wishing to devote less time to work and more time to their partners and children. Many business owners find it difficult to leave their business behind, especially after years of close personal involvement. There’s absolutely no shame in wanting to devote more time to your loved ones.
Take time to talk with your family and decide whether exiting your business or reducing your involvement or work hours is beneficial.
2 - Work Life Balance
In a similar manner to those wanting to spend more time with their families, many people after years running their business find themselves wanting to exercise the benefits of work-life balance and ease the workload for themselves.
Years of constant management of a business, especially when starting a business from scratch, can take a big toll on both the mind and body. It’s natural and healthy to think about decreasing the amount of time you spend working in order to allow yourself to have more time to relax and enjoy life.
Often people work towards this gradually. For example, by steadily decreasing their work hours in order to ease out of the business in a manner that will cause the least amount of stress for yourself, your business, and your employees. It can be a good idea to use this time to ease your replacement into your role through training. This means that they can gradually begin to take over, making the whole process smoother for everyone.
3 - Ability to Find Right Candidate
When considering finding your replacement, you need to make sure you and your company are capable of finding the right candidate. Sometimes this candidate can be taken from within the company, whilst other times you’ll have to conduct some external recruitment. Consider your recruitment options as well as your current talent pipeline to ensure that you are able to find the right person to take on the role. If you have nobody in your pipeline and are looking for high quality candidates, specialist headhunting agencies can often help you find the best senior talent available.
4 - Ability for Company to Manage
Before you leave your business, you must be sure that it's sustainable and can be managed without you. This includes considering company assets and connections. You should also consider your current level of involvement, who in the company could take over your duties, and in what capacity should you leave.
Think about it as a worst case scenario first; if you were to exit your company now with no replacement, how would the company fare without your involvement?
5 - Successor Training
Once you’ve identified the candidate who'll take over in your position, there’s still the issue of training them to be successful in the role. Usually, this task will be easier should you recruit your successor internally, as they'll already have experience in your company and direct contact with you.
You should be prepared to provide more training for candidates who've been recruited from other companies. This is because they may have the leading and management skills, but they often need to be trained on company structure. This includes the fine details of how your business operates, financials etc.
6 - Amount of Retained Involvement
Once you’ve made the decision to leave, there’s still the matter of deciding what in what manner; exactly how to exit your business. More often than not business owners like to retain some level of involvement after exiting their company. This is to ensure that operations continue to run smoothly, and that their replacement is settling in etc. Rather than exiting completely, perhaps consider moving to a temporary part-time or out of office role. You can retain a level of involvement and gradually ease out of the business rather than risk causing a culture shock by leaving completely.
7 - Effect on Current Employees and Shareholders
Of course, it’s always important to keep in mind that exiting your business isn’t just a personal issue, it can have an effect on your employees and shareholders in turn. This may seem obvious, but it’s hard to overstate how important it is to consider those that will be affected by senior team members exiting the company. Think about what actions can be taken when engaging employees in the workplace. This can be achieved through previously discussed methods such as slowly exiting the business whilst easing in your replacement, as well as conducting a thorough recruitment process to ensure that the candidate being brought in is the right fit for the business.
8 - Company Value if Selling
Most of the points listed so far have been directed at those who are looking to leave their business and replace themselves, but what about business owners who are looking to liquidate or sell their company? Of course in this case, you’ve got to consider the overall value of the company including any assets, investments, properties and real estate etc. Consider how your company’s value might change in the near future.
If there’s a possibility for company value to increase, you might want to think about holding off selling.
9 - Transferring of Assets
Are you looking to exit your business and hire a replacement in your role? You should consider the process of transferring any of the business assets to the new management. Depending on what sort of assets you own, this process can be quite lengthy, so you’ll need to allow yourself enough time to carry it out. This can also include any permissions or ownerships that may place legal restrictions on the individual taking your place. As such it can be a good idea to hire a professional who can assist you in processing and transferring your assets, accounts, documents, etc.
10 - Competitors
Before making your final decision on how to exit your business, it can be useful to conduct some extensive market research into your competitors business. It’s critical to have a good understanding of market trends in relation to yourself and rival businesses before you make a decision on an exit strategy.
If you’re selling your business, you’ve also got to decide on the best sales pitch that highlights your business’ value and tells buyers why your company is worth purchasing. For example if your business is losing money or being outdone by a competitor, think about what’s going to make your company an attractive purchase and what kind of money you expect people to invest. This can be very difficult if your company is struggling. This is why you should also consider benefits such as company assets and properties, as well as non-monetary aspects such as company connections, reputation, and branding.
These can all have an effect on the value of your company and its prospective attraction.
Making the choice of when and how to exit your business is a huge decision that naturally takes a lot of thought and consideration. It’s absolutely vital that you consider all possibilities and different exit strategies for business owners before making your final decision, no matter what route you’re looking to take.
