The big day is almost here.
No, not tax day.
(Which is on April 18th this year — and you should be thinking about that now and start by grabbing a time on our calendar: 423-648-8272 )
I’m obviously talking about the Super Bowl. And maybe you’re not paying attention because you don’t really care about football, but here’s why you should…
The weeks leading up to the Super Bowl — and of course, the event itself — mean big money for not only the NFL but also the plethora of businesses capitalizing on the opportunities inherent in it. I just saw the news that all the ad space is sold out. But even small Chattanooga businesses like yours can get in on the action, if you’re creative.
It might be too late for this for you, or it might not … but here are a couple quick ideas: Throw a party for your customers. Create promotions around it. After the game, do something related to the final score. Talk about the commercials in an email to your customers.
The point is this: Many of your customers care about this event, whether you do or not. And as a business leader, you should care about the things your customers care about.
Of course, you need to have a plan to take care of your needs too. And it should be forward-facing enough to align with your goals around an eventual exit from the business, whatever it looks like.
So, let’s look at that, shall we?
Thomas Taylor CPA Wants to Know: Got a Business Exit Strategy?
“Look on every exit as being an entrance somewhere else.” – Tom Stoppard
Whether you look at stepping away from your Chattanooga business next month or decades down the road, it makes sense that a transition strategy is vital. But are you in the crowd of business owners who lack a written plan?
It’s a common enough occurrence. Why? Maybe you think the process will be informal, depending more on soft skills and relationships than on facts and documents. Or maybe you just don’t want to think about the subject and so convince yourself that the day will never really come. (It’s hard to let your business baby go.)
As I’m sure you’ve guessed, this move doesn’t bode well. How you pass on your company can be just as important as how you started it — and not just emotionally. A written plan helps you get the most of what your small business is worth.
So, let’s take a look at what’s involved in a business exit strategy. Where you are
A written business exit strategy is a lot more than a note to remind you to shut off the lights when you leave on the last day. Turn your notions into a document by writing out a solid assessment of your worth, activities, and goals (typically at least three to five years out). Your plan should define your current state and establish your goals and a timeframe for selling/leaving.
If you haven’t done this planning yet, don’t beat yourself up — that can only paralyze you to put the task off more. Most owners have no general plan for their next life, let alone one that’s written out.
Fix the details
What are the goals of your business before you leave it? Write them (helps make them real) and work backward: They should dictate your everyday operations of the company.
For example: If one of your plans is to go public and someday sell stock, you need to follow certain accounting regulations as soon as possible. If you want to have an in-house or family successor, the quicker you look for and start training that person, the better. M&A? All the reason you need to determine your company’s worth.
It’s easier to know where you’re going if you know where you are. How many hours do you put in at the company every day/week? Are your customers concentrated in any one niche or area (maybe too much so)? How stable are your revenue, supply streams, and staff?
What are your company’s biggest strengths and weaknesses? Be honest, or your projections and plan won’t be worth much.
Don’t forget your personal goals. What do you want for the future of your family, your estate, and yourself away from work? These answers can help you decide (among other things) when you want to sell or leave your company.
Crystal ball time
We don’t have one, either, but an inescapable part of creating a business exit strategy is estimating how long you want to be with the company and how you envision it (or your involvement in it) ending.
If you’re a sole proprietorship and foresee no future for the company after you leave, you might want to just run it until the operating money is exhausted. This can mean planning when to increase your pay the nearer you get to departure. If you’re in a partnership, when should you start thinking about selling your shares (and what can you do in the coming months and years to make them worth more)?
We mentioned M&A earlier. If you’d like to sell to a larger competitor, part of your written plan should detail how you’re going to secure clients in a niche that’s attractive to that larger company. Looking to acquire? How many companies and by when? Detail your timeframe for funding and for approaching those potential acquisitions.
Depending on when in your company’s life you’re putting plan to paper, all of the above could be either immediate snapshots or cover two, five, or 10 years, or longer.
Moving forward with your business exit strategy
Proper valuation of your business is the lynchpin of your plan, so after you’ve penned all you know about your books, operations, AP, and AR, you’re not done yet.
Call in your team and your financial, tax, and legal advisors to finish analysis of how much your company is worth. (We’re happy to help with this.) Bounce their feedback off each other, too.
All plans need attention and action to be worth anything. Your business exit strategy is no exception. Working backward from your goals, map out what needs to be done over what seems a sensible amount of time.
What potential successor needs to be promoted or trained, and by when? What niche do you have to move into by next year? What should your pay be five years from now?
One important action: Revisit the plan. How often will depend on how close you are to leaving. The point is, don’t just write it and forget it.
Your future isn’t going to wait.
We’re here for you in each stage of your Chattanooga business — and as you plan your business exit strategy and beyond.
Getting you ready,