Here are some things that should be on your list if you are ten years from an exit:
1. Order a baseline business valuation. You’ll want to see where you are currently and how far you are from your goals.
2. Consider all the elements that go into an ideal exit. Money isn’t everything.
3. Talk to your spouse and family about their plans. Do they want to have a role in the business after you exit? What is their vision about what your exit might look like?
4. Consider whether managers should be promoted or have more responsibility. Are there qualified people who know enough to keep the business running if something should happen to you? Are there employees who should be cultivated because they would be considered an asset in the eyes of a prospective buyer?
5. Evaluate your sales trends. Are sales growing? If they are stagnant or dropping, what is the cause? Is that problem being addressed?
6. Look at your pricing. Are you covering all your costs with profit left at the end of each month? Are your prices competitive without necessarily being the highest or lowest? What is your methodology and schedule for raising prices?
7. Scrutinize your expenses. Review your budget monthly and compare what you predicted to what you actually spent and made. Have department heads submit and explain their costs. Eliminate waste. Buy strategically. Have a protocol for when and how you pay your bills to maximize your cash flow. Avoid paying fees and penalties. Control variable costs the best you can.
8. Hire an experienced, confidential advisor to help you strengthen your business. You and your advisor should look at improvements in every category, especially those that make the business attractive and add value.
9. Track your progress. There is software and online tools such as our VBS that can help you identify your strengths and weaknesses and provide suggestions about areas to work on. You’ll want to be able to keep a record of your progress and catch issues early if you see a negative trend.
10. Follow through on items requiring your attention. You will see better progress if you work on one thing at a time and finish each item. If you are just getting started, you can work on items assigned by your advisor. The more you refine your process and come closer to your goals, the more you will want a customized process and hands-on attention from your advisor.
Number 10 on the list is important. Follow through is critical. It is easy to get distracted or overwhelmed. Owners are busy, and thinking about the future of the business requires calm moments and dispassionate thinking. Don’t fall into the trap of thinking, “I have ten years to do this, so why do anything now?”
Believe me, ten years will fly past, and you’ll wonder how you arrived at the exit stage. You’ll either arrived prepared or not.
A ten-year horizon gives you time to make improvements. If you make your road map now, informed by an expert valuation and diligent follow through on your plans, you should be better positioned and more attractive as a seller when the time is right.
Are you thinking about retirement or selling your business? Rock LaManna is a professional advisor who helps owners add value to their businesses and make well-informed decisions about the future. Your success in growing and achieving an ideal transition starts with a trustworthy expert with years of experience and proven results in our industry. Visit rocklamanna.com or email Rock@RockLaManna.com for a confidential discussion about your ideal situation and timeline. Buy, sell, grow -- let’s go!