Planning your business exit
By Adam
December 09, 2011
Small Business & Entrepreneurship
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At some point in the life of your business, you will start thinking about selling, retiring or passing the torch to someone else. If that time is now—or it’s coming up within the next five years—you need an exit strategy. 
Often called a succession plan, this document will prepare you to transfer control of your business to your successor. You will want to maximize the value of your business before you sell, to ensure a smooth operational transition to the next owner.
CanadaBusiness.ca is packed with information for Canadian entrepreneurs, including ways to plan your exit (http://www.canadabusiness.ca/eng/93/876/). Here are actions to consider:
Start as early as you can
Research by the Canadian Federation of Independent Business found that:
• only 10% of Canadian small business owners have a formal, written succession plan;
• 38% have an informal, unwritten plan, and
• the remaining 52% have no plan at all.
Far too many entrepreneurs miss the opportunity to earn top dollar from the sale of their businesses and the ability to ensure a trouble-free transition.
Surround yourself with experts
Build a team of advisors to help you plan your business exit. These can include lawyers, accountants, tax specialists and management consultants.
A chartered business valuator can be an important resource. Valuators can place an objective price-tag on your business by conducting in-depth research and analysis. They may also help locate solid buyers.
By working with a team of outside experts, you will get valuable, independent advice to help guide your succession planning.
Prepare a plan
As you consider your exit, there are many decisions to make. Look at your company’s long-term potential, markets, positioning, strengths, weaknesses and opportunities. Then ask:
• What skills will your successor need?
• How involved do you want to remain in the business?
• What tax considerations will impact the transfer of ownership?
• How do you ensure your own financial security when you leave?
Research and document these questions. It will help you make these important decisions.
Craft a solid exit strategy
When exiting your business, you can wind down the business, transfer it to family, or sell it.
Winding down your business will not require a great deal of advance planning, but you should carefully consider how to sell your assets and meet your legal obligations.
If you are transferring the business to family members, consider these points:
• Communicate your intentions clearly and involve them early.
• Explain the transition process to them so they know what to expect.
• Establish clear guidelines for who does what.
• Explain how you will continue to be involved in the business, if at all.
If you decide to sell, then your primary goal is to maximize the price potential of your business. You will need to evaluate your business’ worth, which can be done with the help of a chartered business valuator. You can locate one on the Canadian Institute of Chartered Business Valuators’ website at www.cicbv.ca.
Remember that advance planning and a thoughtful, strategic approach can maximize the money in your pockets and ensure a successful transition.
More information is available at www.CanadaBusiness.ca or by calling 1-888-576-4444 (TTY 1-800-457-8466).
Often called a succession plan, this document will prepare you to transfer control of your business to your successor. You will want to maximize the value of your business before you sell, to ensure a smooth operational transition to the next owner.
CanadaBusiness.ca is packed with information for Canadian entrepreneurs, including ways to plan your exit (http://www.canadabusiness.ca/eng/93/876/). Here are actions to consider:
Start as early as you can
Research by the Canadian Federation of Independent Business found that:
• only 10% of Canadian small business owners have a formal, written succession plan;
• 38% have an informal, unwritten plan, and
• the remaining 52% have no plan at all.
Far too many entrepreneurs miss the opportunity to earn top dollar from the sale of their businesses and the ability to ensure a trouble-free transition.
Surround yourself with experts
Build a team of advisors to help you plan your business exit. These can include lawyers, accountants, tax specialists and management consultants.
A chartered business valuator can be an important resource. Valuators can place an objective price-tag on your business by conducting in-depth research and analysis. They may also help locate solid buyers.
By working with a team of outside experts, you will get valuable, independent advice to help guide your succession planning.
Prepare a plan
As you consider your exit, there are many decisions to make. Look at your company’s long-term potential, markets, positioning, strengths, weaknesses and opportunities. Then ask:
• What skills will your successor need?
• How involved do you want to remain in the business?
• What tax considerations will impact the transfer of ownership?
• How do you ensure your own financial security when you leave?
Research and document these questions. It will help you make these important decisions.
Craft a solid exit strategy
When exiting your business, you can wind down the business, transfer it to family, or sell it.
Winding down your business will not require a great deal of advance planning, but you should carefully consider how to sell your assets and meet your legal obligations.
If you are transferring the business to family members, consider these points:
• Communicate your intentions clearly and involve them early.
• Explain the transition process to them so they know what to expect.
• Establish clear guidelines for who does what.
• Explain how you will continue to be involved in the business, if at all.
If you decide to sell, then your primary goal is to maximize the price potential of your business. You will need to evaluate your business’ worth, which can be done with the help of a chartered business valuator. You can locate one on the Canadian Institute of Chartered Business Valuators’ website at www.cicbv.ca.
Remember that advance planning and a thoughtful, strategic approach can maximize the money in your pockets and ensure a successful transition.
More information is available at www.CanadaBusiness.ca or by calling 1-888-576-4444 (TTY 1-800-457-8466).