Proper plan can help business owners make quality decisions, says MYOB executive director Scott Gardiner.
Planning to get out of business
The start of the year - or even the start of a new business - might seem like a strange time to be planning your exit strategy. But an exit plan can be the platform for success, now and in the future.
Start thinking about your goals
According to the latest MYOB Business Monitor, fewer than half of New Zealand small and medium business owners have an exit strategy. But planning for an exit is essential even if you plan to work in your business for the foreseeable future.
Doing so helps you make quality decisions about your business, identifying areas you could improve to promote stronger results and setting up systems that make it more valuable.
From raising funding for start-up investment to putting a price on your business for potential purchasers, having good systems and paperwork provides the sort of evidence you need to demonstrate value.
Creating business plans, comprehensive accounting records and process manuals for staff and management will not only make your business sale-ready, they are also the foundation of successful trading. Getting such elements down pat now will save you plenty of time later when time-frames become crucial.
One big challenge many small business owners face is distinguishing their own value from that of the business. If you are the number one earner, hold most of the customer relationships and all of the intellectual property (IP), it can be hard for a prospective purchaser to find a way to derive the same value from your business when you are gone.
Becoming dispensable by promoting staff to positions of responsibility, identifying and organising IP, sharing relationships and creating opportunities for the business to grow beyond your core skills is key to establishing lasting value in the business. It could also be the secret to a better work/life balance.
Identify the value
Business owners create business value in a range of areas, from unique techniques and processes, to brand equity, goodwill and customer relationships. Some of these are much harder to quantify than others, but all have an impact on the bottom line.
But rather than rely on a gut feeling, get some professional independent advice. Like everything else in the exit strategy exercise, getting the right advice can help you enjoy the rewards of your business - now and in the future.