04 May The Best Time to Plan Your Exit Is Before You Think You Need To
Most New Mexico small business owners often focus on the day-to-day operations, with an eye toward growing the business. They spend little time preparing to exit their business, often because it’s such a far-off possibility as to seem impractical.
While it may sound counterintuitive, exit planning needs to be part of your growth strategy from Day One. It’s not only for large businesses. Without a plan, owners often drift toward burnout – and burnout erodes your options.
Think of it as your business’s annual physical. You may feel in great shape and unstoppable for the next 10-to-20 years. But that doesn’t stop you from routine doctor’s visits that allows you to proactively stay that way.
Wean the Business from Dependency on You
In practice, small businesses in New Mexico don’t operate like flawless well-oiled machines, and most cannot afford to carry employees – or owners – who are not vital to the business in some capacity. That’s not reality, not here, not elsewhere.
Even so, when you go on vacation, can you put your phone on mute and check messages once a day? Or is your cell phone strapped to your ear, and if you put it down for more than half a day, you anticipate that all hell will have broken loose.
When a business is dependent on the owner, buyers – understandably – worry what will happen when they take the reins.
They need one or two employees who can act in your place, documented processes, and a database of customers and vendors with their order history easily accessible. If most of this exists in your head, you might not end up ever finding a buyer for your business. Sure, problem-solving sometimes requires deftness and thinking on your feet, but this should be the exception, not the rule.
Take a Step Back from the Customer-Facing Role
When your employees have cultivated relationships with customers, vendors, and subcontractors, this stabilizes these relationships and de-risks the transfer. If customers expect to deal only with you, how will they react when a new owner answers the phone? When someone else on your team can takeover customer quotes, handle vendor meetings, and coordinate subcontractors, it gives a new owner breathing space to grow into this role.
Moreover, building a team whom you can rely on to handle these sensitive relationships benefits you well before you begin thinking about selling your business. You need that breathing space as much as any new owner.
While this may not translate directly to increasing the value of your business, it simplifies the process of finding a ready and willing buyer.
What Exit Planning Actually Gives You
Exit planning provides clarity. It encourages you to define your financial goals, envision life post-closing, and gives you blueprint that benefits you now.
Knowing your target goals supports a more focused and structured approach to running the business.
To return to our annual physical – burnout is the high cholesterol of small business ownership. By the time you feel it, it’s already been building for years. And by the time most owners come to us, they’ve got less runway than they need.
To learn more about exit planning, reach out to our exit planning specialist Carlos Duno. Carlos has been working with small and large business owners for over a decade to help them prepare for the sale of their business and maximize their proceeds.
Modified by from the original post by Business Brokerage Press, Inc.
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