Blog Page

Basic Exit Planning Requirements, Part 1

By January 7, 2018 No Comments

Whether you’re looking to sell your business in the short term or not, all small business owners should be invested in basic business exit planning strategies from the very beginning. An exit plan helps keep your business moving in the right direction, plus helps create a trigger event that signals it’s time for you to exit the business.

At Utah Business Consultants, we’re here to help. In part one of this two-part blog series, we’ll look at four basic areas you should consider as part of your exit strategy.

Sourcing Your Buyers

Many business owners simply assume that someone will want to buy their business when it comes time to sell, and this is a big mistake. Only about 25 percent of saleable companies actually accomplish their exit, according to exits.com.

An important part of the plan is keeping an ongoing list of potential buyers. These may be people who have approached you in the past about your business, or competitors in your field who might be interested in buying you out at a certain point.

Showing Growth Patterns

Potential buyers for your business want to see good growth patterns, with steady and predictable growth they can count on. The occasional dip here and there is totally understandable, as long as you can offer an acceptable reason why they took place. Major growth swings, however, could be a red flag for a buyer.

Reoccurring Revenue

Buyers want to see that you not only have revenue, but also the form in which it’s paid to you. Potential buyers always enjoy seeing services that involve predictable revenue sources, such as subscription-based products or services. They also like seeing automatic advanced billing, with reoccurring payments for revenue.

Standard Operating Procedures

If you don’t have a written set of standard operating procedures, you should get to work on this immediately. This should essentially be a plan that would allow your business to function even if you disappeared off the face of the earth tomorrow – things like your executive strategy, core values, marketing and sales plans, management practices and basic operating procedures should be included. If you were looking at two possible companies to buy that were similar, and one had these procedures laid out while the other didn’t, which would you choose?

For more on basic elements of the exit strategy, or to learn about any of our exit planning services, speak to the pros at Utah Business Consultants today.