While you might not be able to imagine walking away from your business today, there will come a time when you choose to retire. When that time comes, you must have a plan in place for the best possible outcome. This is what Kiplinger describes as having an exit strategy for your small business.
Even if you do not plan on retiring for a number of years, there are many things you can do now to prepare for the future. By taking care of the following, you can look forward to a smooth, seamless business transition.
Place a value on the business
Knowing your business’s worth places you in a much better position to negotiate. This entails valuing your business, which can involve different methods. You can look up sales of businesses similar to yours and see how much they garnered if prices are public. You can also perform a cash flow analysis, which provides insight into the future cash flow of the business. Keep in mind some intangible factors, such as the loyalty of your customer base, also prove enticing to buyers.
Organize important documents
From employee contracts to documents related to tax payments, there is a lot of information new owners of your business have. If this information is currently in many places and not organized in a meaningful way, now is the perfect time to do so. In addition to organizing hard copies, consider making a digital file, which allows you to share documents with others easily.
Consider the future of your business
After so many years spent building up your business, you want to see it thrive in the future. Accordingly, you should think long and hard about the type of person you want to take over. Look for a person with the right financials, but who is also willing to put their heart and soul into the business to take it to the next stage.
A business is a legacy, and just because you are retiring does not mean it needs to end. By taking these steps, you can retire with confidence.