"Demonstrate how the business can run without you. In many ways this is the ultimate sign of leadership".
Selling is the closure of persuasion, and persuasion drives leadership.
Yet the reality is many business owners going through the process of selling up often neglect the leadership qualities which delivered growth.
One of the largest ever studies on business exit strategy by The Exit Planning Institute, found that for owners of most small and midsize businesses, the sale of their business is central to their retirement plan. While for others, their business is a legacy they hope to pass on to family or employees. Yet despite these important goals, the EP’s report found 83% of owners have no plan to get there.
At Champions (UK) PLC, we specialise in helping create solutions and strategies which ensure our partners and clients sit in the 17%.
Crucial Steps to Take for a Successful Business Exit Strategy
As a leader and a figurehead, it is vital for the success of your exit strategy and longevity of your business that you implement the correct strategy. This will also likely help compliment the needs of your prospective purchaser.
For anyone looking to exit, there are four boxes in particular you need to tick:
1) Start by getting a professional valuation
This isn’t something you can really do yourself, as personal attachment tends to lead to unrealistic valuations, especially where market dynamics and current business realities are concerned.
2) Improve your bottom line
A business that makes a lot of sales but yields little return is unlikely to be of interest to prospective purchasers. If you are planning an exit by selling your business, you would be best served by focusing the year or two prior to sale on cleaning up your business, reducing unnecessary costs, streamlining processes and systems, and increasing your sales.
3) Provide a solid business view
As an owner, you’ll no doubt be looking at the business’s past performance. Having a well-documented set of accounts dating back three to five years is essential to providing provenance for the business.
4) Perform due diligence
Many business sales fall through because of complications that arise through due diligence. It’s therefore important that when you prepare for exit that you spend some time putting yourself in the shoes of a prospective buyer, not just you as the seller.
Implementing a Successful Business Exit Strategy
For businesses further down the line in the transaction you need to think carefully about how you are communicating with your staff. Look to demonstrate composed leadership qualities. This will instil tranquillity amongst your staff and quickly position you as a voice of reason and assurance.
Furthermore, maintain strong and stable communications during an ongoing takeover process/sale. A workforce which is informed and invested is far more likely to respond effectively to what you are aiming to deliver.
The last desirable environment for any business is one where the stakeholders are relentlessly disgruntled with the firm’s current affairs. Internal culture will be dampened, and communications will prove ineffective. Also, responsive to concerns raised. Have an open-door policy as this will ease reservations about the direction and longevity of the business and reduce the potential for workplace tension.
Why does this matter?
Prior to any exit, the retention of talent is fundamental in driving value creation. Having the most able and experienced members at the heart of your exit preparation will not only catch the gaze of potential suitors, but simultaneously produce a higher quality of output. This will increase consumer satisfaction, boost sales, and generate higher sales revenues.
It is vital to systemise your business too. Potential buyers want to see that your business runs like a well-oiled machine. So, work diligently through your operational systems and procedures and ensure that everything runs in accordance with clearly outlined and efficient protocols.
Also aim to create a comprehensive 'how to' manual. This is a powerful way of demonstrating to potential buyers that the company can continue to run smoothly during and after transition, and that new owners need not feel overwhelmed by taking over. Additionally, create templates for repetitive tasks, create formal job descriptions, and anything else that can be systemised and recorded for utmost efficiency.
Demonstrate how the business can run without you. In many ways this is the ultimate sign of leadership.
Finally, be flexible and ready to pivot. Advice can provide a framework for the challenges that lie ahead. But those challenges can and will quickly change.
So, it’s vital you are ready to adapt to them.
Are You Looking to Exit From Your Business Successfully?
Matthew Hayes is the managing director of Champions (UK) PLC, a strategy-led growth and implementation partner for businesses with market leading expertise across strategy, digital, communications, creative and talent. They work with businesses in a state of transition, enabling them to achieve their strategic vision and increase EBITDA.
For support in helping plan the sale of your business, get in touch today via our contact page.