Are you considering leaving your business?

The past 12 months has probably impacted your business in one way or another. Especially if you have had an exit strategy in place for some time or are just starting to consider leaving your business.

So how do you know when the time is right, and that you have everything in place to ensure a successful sale to prospective new owners, and a comfortable life for you and your family?

When you started out in business, planning an exit strategy may not have been high on your agenda. Hours, days, and weeks of consistent hard work have gone into your business, sometimes only able to see as far ahead as the next month-end or maybe even weekend! Certainly, no thoughts to the distant future.

But that is not to say it is ever too early to consider what needs to be put in place.  

If you are looking forward to retirement at 60, for instance, then around 55 is a good time to start succession planning. Or you could be a young entrepreneur who has found a niche, grown a successful business, and know that now is the perfect time to consider selling!

Obviously, different business types and your level of involvement and commitment within your businesses will mean different levels of planning. And it is important that you seek the best independent guidance and financial advice every step of the way.

It may seem daunting when you sit down and think of all that needs to be considered. So here are just a few points to help prepare you for taking the next steps in leaving your business.

What are you looking to gain?

What are your reasons for considering your departure now or in the future - personal, professional, or financial?   

Do you want a complete cut of ties – personally and financially? Or retain an element of involvement, perhaps a salary as a silent partner?

What are your plans for when you no longer own the business? Retirement? Another business? Or just a hiatus, with no immediate plans?

This need not cause any concern for you, even if you are just at the beginning of making your plans. Our financial specialists can assist you with professional and detailed guidance to ensure you get the best and most efficient outcome – personally and financially.

How are you considering leaving your business?

• Management Buy Out? Selling your shares in the business to other partners, co-owners, shareholders, or employees?
• Family succession planning – your children or family members, or a family Trust?
• Sell to a third party?
• Is your business ready to float?
• Winding up completely?

Gaining a true valuation of your business can cause a whirlwind of emotion. Particularly for the small business owner, who might believe the business is worth more than its true value. And there is always the test of whether you would want to buy your business yourself. If you don’t want to, then how can you expect another business owner to?

If you are seriously considering leaving your business, then a high priority is management accounts and forecasts. Are they up to date? Can you start gathering the information and keep it current, if you are looking to sell the business on?

Profit and Loss reports – both historic and forecasts – are increasingly important, the closer you get to your departure. Particularly in the current climate. Assets (stock and equipment), services, staff should all be considered within the valuation.

For your business to be attractive to a third party, it must be able to run without you in it.  Consider systemising and automating where possible.  Nothing should rely solely on your knowledge or expertise. It is important that this is shared and documented.

And obviously at present, the timing of the sale or closure of your business could be impacted by the Pandemic.

All of the above may seem unnerving if you are just starting to consider your exit, or are not experienced in selling a business. But with the right guidance and financial advice, there is no reason why it will be anything other than planning and executing each step through to completion.   

So, is now the right time?

Although planning what you will do once you have left the business is key - are you ready for retirement? Are you planning other financial purchases or businesses, or even winding down other business interests too? Is your health an issue that might impact the timing of your departure? Will you have sufficient income or remaining financial support once you have left? These are all personal considerations.

But it is not simply about you deciding that the time is right. From a wider business perspective, you should also consider:

• Have you done enough preparation in leading up to your final decision and departure date?
• Your customers and clients – how will your decision impact them? Can the business continue without you? Can service levels be maintained? Are you the main influence and driving force behind the business?
• You may have shareholders, a management team, and employees to manage and include within the succession planning. And family members to consider as well. How will your departure affect family relationships where there is a business involvement?
• Is the current climate the most appropriate time to be making the move? Does the market need businesses like yours? If so, this increases the value. And vice versa.
• If the Pandemic does not impact your business, or in fact if your business has grown as a result, then what are the longer-term assumptions?

We fully appreciate that it can be a difficult and highly emotional decision, which may be best talked through with an expert to ensure you've considered all aspects.    

You are not alone!  We can assist with the next steps in leaving your business

If you are wanting guidance on any aspect of your financial planning, please contact us immediately. You are not alone in making this decision, as we are currently having such discussions with many clients in your position.

Our specialist Independent Financial Advisors can assist in preparation for leaving your business with guidance around managing your future finances; personal tax implications; retirement planning; and with the possibility of your decision affecting your mortgage, we can discuss this with you too!

We look forward to hearing from you in the meantime, stay safe.