It has been said that ‘timing is everything’. Well in business transition planning, timing is important, but so is transferability. Today’s newsletter discusses both and is intended to provide you with some guidance as to how you can begin to design a plan for a successful business transition, which includes growing the transferable value of your business towards an exit that is a number of years into the future.

Gaining an Exit Perspective

Setting a plan for an exit requires a perspective on what you are trying to achieve and when it is possible to attain such an outcome. An important consideration for every business owner is that of ‘exit windows’, or, how to time your exit to meet your business and personal goals. Once you understand the timing of your exit, there is an opportunity for you to begin planning and making decisions today based upon achieving this future exit. Without this type of planning, you are likely to be without direction for your exit, and possibly missing the next exit window.

Exit Windows

The chart below illustrates the cycle of business exits and shows that the next likely window for exit is within the next few years. According to this ‘ten year transfer cycle’ chart, in 2015 we are inside of a window for exit that may last for another three (3) years or so – see below

 

So, how can you grow into your exit? Well, you can begin with the end in mind. You can begin by understanding when you would like to exit and then build the business around that timing.

Three Concepts Relating to a Transferable Business

In order to manage anything in life and in business, you need to be able to measure it. A measurement of your current value becomes very important. A plan to grow that value as you approach your exit becomes a critical part of the exit planning process. There are three (3) concepts that you should be looking at when thinking about growing into your exit. They are:

1. Profitability
2. Sustainability
3. Transferability

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