How to Build Your Business For a Successful Exit Strategy
When it comes to building an exit strategy for your business, planning ahead is the key. The possibility of leaving your business should be part of your planning process from the start, so an exit strategy is an important consideration for business owners but many don’t consider it as part of their initial business plan. You’ll want to consider the lifetime trajectory of your business: where it is now, where it is going, and the steps you’ll take to get it there. The more proactive you are about this process, the more likely you are to succeed when it comes time to part ways.
Maybe you haven’t thought about how you’ll exit your business at all, or maybe it seems too soon because your retirement plans are 20 or 30 years down the road. If that’s the case, you’re not alone – nearly half of business owners don’t have an exit strategy planned.
In a new series of articles from the team at RVR, we’ll guide you through the key considerations that business owners should be considering when building their business and creating an exit strategy including: how to involve your leadership team, how to run your business with your exit plan in mind, how to maximize the value of your business throughout its lifecycle and how to set yourself up for success in the future. Keep reading to get a glimpse of what you can expect from us in this series.
Run Your Business With Your Exit Strategy In Mind
It’s important to understand the industry you’re in and the future of that industry. Look at your products, services, and the business you have and consider their relevance over time. Will your business still be relevant and valuable to a buyer by the time you’re ready to exit now, or in 10 or 20 years? Talk to others in your industry who have exited and learn from the opportunities and challenges they faced.
Involving Your Leadership Team
You’re going to need a team around you that is capable of taking your business where you want to go. There are a lot of people to consider when you’re planning your exit strategy. Part of that planning process is establishing who you want to involve in a discussion about the present and future state of your organization. This will also greatly influence your overall employee retention strategy. This will likely include your chief financial officer and key members of your leadership team. This is a good opportunity to talk with your trusted advisor at RVR to determine how you might want to compensate or incentivize your leadership team to be part of the long-term growth and success of your company.
Maximize The Value Of Your Business
You can create current value and long-term value, and you want a combination of both for your business. However you may imagine yourself leaving your business, the objectives in the meantime all drive towards the same goal. For your business today and in the future – your goal is to always maximize the value of your business. That doesn’t just mean profitability, but also all of the components that help you position your business for maximum success and value. Over the coming weeks, RVR will discuss the factors that help drive the value of your business, some of which include:
- The right functional organizational structure
- The right product and services
- Marketplace differentiators
- The leadership team and their capabilities
- The standardization of your processes
- A strong growth strategy and the ability to execute it
- The right information systems that drive efficiency in the organization
- Good reporting tools that provide financial and operational information, timely and accurately to help you make good decisions.
Your exit strategy should be tailored to meet your needs and the future buyer – it could be selling to family members, management, or a third party. There are many considerations and factors that go into your overall business plan, exit strategy, and your personal lifestyle goals. It’s not enough to just have a plan, you need to be able to realistically execute the plan.
At RVR, we help our clients navigate through it all with a strategic plan that helps determine how to run and grow your business throughout its lifetime in a way that will maximize its value. In this ongoing article series, we’ll discuss all aspects of planning your exit strategy and always maximizing the value of your business. This will include how to select the right experienced advisory team, how to hire and engage a strong leadership team, how to position your business to meet the needs of the future buyer, and how to effectively and profitably scale your business. We’ll also cover how to diversify your personal wealth so it’s not fully invested in your business. Developing a smart strategy now allows you to control your future – however and whenever you choose to leave your company.
By: Joe Raymond, Frank Fontneau and Mark Lowrey
RVR Consulting Group provides your company with resources to support your vision and generate faster returns. By operating from both a strategic and tactical position, we protect clients during critical periods of uncertainty. Our services include advising, talent acquisition, sourcing fractional employees, exit planning, and selling your business. Regardless of your challenges, our firm’s experience is structured to make the road to your objectives faster, simpler, and more profitable. Our goal is simple: help you maximize the value of your business.
We are motivated to foster growth and develop opportunities for companies and their internal staff. Those economic impacts transcend into communities when our clients succeed and have invaluable, lasting effects.
For more information, visit https://rvrteam.com/contact/