The Importance of Timing: When to Exit Your Business for Greatest Results

Timing is everything.

It’s a saying we have all heard before and when it comes to running a business, it rings truer than ever. Proper timing can mean the difference between success or failure. You invested a great deal of thought and planning into starting your business and growing it into a successful enterprise.

When you want to sell your business or pass it on to the next generation, what then?

Many business owners fail to look into their exit planning process until it is right in front of them. By that time, they are so close to their departure that they may not receive the best value for their company. This lack of planning can also result in the owners exiting at the wrong point in time in their company’s lifecycle.

So, when is the right time to exit your company?

There are a few steps to keep in mind when determining the appropriate timeline for exiting your business:

1. Speak with your business partner(s). It is extremely important that you are on the same page as your partners and that all decision makers are aligned. Lack of communication and unawareness of your company’s life cycle can also be significant factors in the exit planning process.
2. Determine the best exit plan for yourself. Do you want to retire at a certain age? If so, planning to sell before that time is vital. In contrast, if your desire is a slow transition over three to five years, your exit plan will look dramatically different.
3. What does a successful exit look like? There are four main considerations that business owners should determine at the beginning of the planning process:
   • Value – you want to receive the most value for your company;
   • Employees – your loyal employees need to be protected during and after the transition;
   • Legacy – your legacy will continue after the sale; or
   • Estate – you want to ensure that your estate is well planned.

Determining which of these values is the most important to you will shape how the exit will look. Your definition of success determines many smaller decisions that are involved in the exit planning process.

4. Plan for the big D’s: Death, Divorce, Disability, Disaster, and Disagreement. Planning for these life changing events now greatly increases your level of preparedness should the need for an exit plan become immediate.
5. What is the true value? This is the essence of the exit planning process. Begin evaluating the true worth of your company now and what it needs for future growth. This analysis will also help you pinpoint the best time to exit your company for the greatest benefit to yourself and the organization.

Timing plays a key role leading up to the transition of your business. Selling too soon or too late can have a lasting effect on your organization and devalue the true worth of the company you have worked so hard to build.

The Bottom Line

Start planning early. Putting together an exit plan is not something that can be left to the last minute if you wish to receive the full value for your business. Create a timeline that fits your needs and incorporates your company’s life cycle.

The right timing doesn’t just appear out of thin air. Seek answers and know what areas are important to you. Your end goals and values should define how your exit strategy is created. Start now to plan your exit because as we all know:  Time waits for no one.

Your company is the product. Growth to Exit® is the process. The Buyer is your customer.

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