Did your favorite Kelce brother win Sunday?
It doesn’t take an accountant to know the Super Bowl means big money – not just for the NFL but all the businesses capitalizing on it. This year, ad space sold out. But even businesses like yours can get in on the action. Mention notable ads or your favorite moments in your marketing (that Mama Kelce love).
Next year, consider throwing a super bowl party for your customers. Create themed promotions. Many of your customers care about these kinds of events, whether you do or not. You should care about what your customers care about.
Of course, we’re here to help you plan for your needs, too. That includes your goals around an eventual exit from business, whatever and whenever that looks like.
The TCG Accounting Team’s
“Real World” Business Strategy Note
Got a Business Exit Strategy?
“Look on every exit as being an entrance somewhere else.” – Tom Stoppard
Whether you look at stepping away from your business next month or in several decades, a transition strategy is vital. But are you one of the several business owners who lack a written plan?
It’s a common occurrence. Maybe you think the process will be informal, depending more on soft skills and relationships than on facts and documents. Or maybe you just don’t want to think about the subject. You might even think the day will never really come. We get it! It’s hard to let your business baby go.
As you’ve probably guessed by now, this move doesn’t bode well. How you pass on your company can be just as important as how you started it — and not just emotionally. A written plan helps you get the most of what your small business is worth.
Where you are
A written exit plan is a lot more than a note to remind you to shut off the lights when you leave on the last day. Turn your notions into a document by writing out a solid assessment of your worth, activities and goals, typically at least three to five years out. Your plan should define your current state, plus establish your goals and timeframe for selling/leaving.
If you haven’t planned yet, don’t beat yourself up — that can only paralyze you to put the task off more. Most owners have no general plan for their next life, let alone a written one.
Fix the details
What are the goals of your business before you leave it? Write them down. It helps make them real. Then, work backwards: They should dictate your everyday operations of the company.
For example: If one of your plans is to go public and someday sell stock, you need to follow certain accounting regulations ASAP. If you want to leave your business to an in-house or family successor, the quicker you look for/notify/start training that person, the better. Thinking more along the lines of a merger & Acquisitions route (often called M&A)? All the more reason to determine your company’s worth now.
It’s easier to know where you’re going if you know where you are. How many hours do you put in at your company dailly/weekly? Are your customers concentrated in any one niche or market? Are they too niche? How stable are your revenue, supply streams and staff?
What are your company’s biggest strengths and weaknesses? Be honest, or your projections and plan won’t be worth much.
Don’t forget your personal goals. What do you want for the future of your family, your estate and yourself away from work? These answers can help you decide, among other things, when you want to sell or leave your company.
Crystal ball time
We don’t have one, either, but an inescapable part of exit planning is estimating how long you want to be with the company. This includes how you envision it, or your involvement in it, ending.
If you’re a sole proprietorship and foresee no future for the company after you leave, you might want to just run it until the operating money is exhausted. This can mean planning when to increase your pay the nearer you get to departure. If you’re in a partnership, when should you start thinking about selling your shares? What can you do in the coming months and years to make them worth more?
We mentioned M&A earlier. If you’d like to sell to a larger competitor, part of your written plan should detail how you’re going to secure clients in a niche that’s attractive to that larger company. Looking to acquire? How many companies, and by when? Detail your timeframe for funding and for approaching those potential acquisitions.
Depending on when in your company’s life you’re putting plan to paper, all of the above could be either immediate snapshots or cover two, five, or 10 years, or longer.
Proper valuation of your business is the lynchpin of your plan, so after you’ve penned all you know about your books, operations, accounts payable and accounts receivable, you’re not done yet.
Call in your team and your financial, tax, and legal advisors to finish analysis of how much your company is worth. Bounce their feedback off each other, too. We’re happy to help with this. Check out our valuations services on our website.
All plans need attention and action to be worth anything. Your exit plan is no exception. What potential successor needs to be promoted or trained, and by when? What niche do you have to move into by next year? What should your pay be five years from now?
Then, Revisit the plan. How often will depend on how close you are to leaving. The point is, don’t just write it and forget it.
Your future isn’t going to wait.
We’re here for you in each stage of your business — and as you plan for the next phase.
In your corner,
The TCG Accounting Team