Douglas Greenberg, President of Pacific Northwest Advisory, believes that reducing risk should always be a top priority. This is even truer when you want to come up with an exit strategy for your business. Here’s how to develop a reputation as a solid enterprise. You may even create a competitive bidding environment that could give you a higher value for your business.
The following are some steps to help get your business ready to sell, according to Douglas Greenberg.
1. Get your paperwork in order. Check with your financial or legal advisors to ensure the business documentation is ready to go. Extend contracts with long-time customers and seek progressive vendor contracts that will interest buyers. Documenting your best practices is critical for a good valuation and smooth transition.
2. Gather important financial statements. Douglas Greenberg urges business owners hoping for a fast sale to keep up with their bookkeeping to ensure a smooth transition. To present a professional impression, remove all personal expenses from the business’ books.
3. Have a strategic plan. The strategic plan should have your business’ core competencies laid out and how you view the future growth of the business. Do you have a long-term strategy? Document how you can diversify your customer base and how you see the business growing in the future. Your experience could prove invaluable to a new business owner looking for their first entrepreneurial opportunity, according to Douglas Greenberg. Therefore, create a strategic plan for marketing, sales, operations, finances, legal, and technology.
4. Create contingency plans. A formal succession plan ensures that your business will always have an effective leader. Your successor should be able to run the business and have knowledge of your industry. This also impacts what happens to the business if you pass away. Douglas Greenberg highly recommends consulting with a financial advisor regarding how your business succession plan and your estate plan work together to achieve your intended results.
5. Don’t forget to put your legal records in order. If you don’t already have one, create an employee manual that documents all employee related policies and procedures. If appropriate, document how your business complies with environmental or regulatory obligations. If you can extend the lease on favorable terms or pursue real estate holdings, now is the time to do so. Douglas Greenberg advises business owners with intellectual property rights to make sure that any patents and intangible assets are protected. Are they owned by the business or the business owner, do they have value on their own?
6. Develop a leadership team. A solid leadership team makes for a smooth transition if the business is acquired. Future owners look for able leadership when they decide whether to invest in a new opportunity, according to Douglas Greenberg.
7. Determine whether you need to elect a board of directors. Establishing a formal leadership team such as a board of directors has numerous benefits according to Douglas Greenberg. You can establish a council with outside members that can guide future growth. BOD’s are also great for setting corporate policy and providing expertise in any particular area. Relationships solidified through your BOD may also lead to investors looking for an opportunity such as your business.
8. Minimize your involvement in day-to-day activity. According to Douglas Greenberg, many business owners prefer a hands-on approach. However, if you plan to exit the business, you need to ensure that elements driving revenue and profit don’t depend on your personal intervention. This is a key factor that new owners look for. After all, they aren’t you and they want to know that they can succeed in the business once you’re gone,
said.
