We see a lot of small business owners approaching retirement who simply haven’t thought about how they’re going to exit the business.  Planning your exit strategy starts long before retirement.  Exit strategy goals should be to maximize value as well as make the transition smooth and easy for the new owners. 

Here’s some tips to consider:

Optimize Processes

The operational aspects of your business need to be well organized and easily explained to somebody new. Just because your systems make sense to you, doesn’t mean they will to the new owner. Streamline your operations so the value of your business is transparent to potential buyers.   

Build Revenue

Your business should generate enough cash to allow you to save for retirement with your profits. If your business isn’t currently generating enough cash for retirement, then focus on building your revenue stream by expanding products/services or increasing the markets in which you do business. Just paying your bills is not enough.  Buyers will pay top dollars for businesses who have diversified products and clients. 

Consider All Exit Strategy Options

Many business owners only consider selling the company but there are other options such as a trusted business partner, a family member, or a valued employee who continue to run the day-to-day operations. 

It will take time to train and coordinate with your successor.  Additionally, unforeseen challenges may arise that you’ll need time to work through.

Make Yourself Replaceable

The more irreplaceable you are, the harder it will be to exit the business. 

Hire Great Employees.  Ensure every hire has the same values and work ethic as you during the interview process. You can show good employees your appreciation through generous training, pay and benefits. Knowing you have good people to handle things when you’re gone makes it easier to leave, both logistically and emotionally. A healthy culture and employee base are also appealing to potential buyers!

Document process & procedures.  Start creating documents that reference your policies and procedures. This could be as simple as creating a few worksheets or checklists your crews can use. Or it could be a full-blown SOP that explains every minute detail of running the business.

Delegate responsibilities.  If you’ve already thought about the day you’ll exit the business, then you know there will come a time when your current staff has to be responsible for the workload. Start delegating more tasks that are appropriate so your team can gain experience and receive guidance before you leave.

Mentor your staff.  Allow your employees to work their way through certain issues and resist the urge to step in and handle them yourself, even when you know you could have it done sooner and more accurately.

The more that you plan to exit the business early-on, the easier this transition will be for all of the involved parties.