What is an exit strategy for business?

Start early planning your exit from your business preferrably three years before you would like to exit.

Financial records kept in good order and up-to-date are essential. They should be void of personal expenses. If you presently are including personal expenses such as non-business related car, phone, utilities, etc. expense they should be eliminated. Begin with phasing out one-third per year until it is completely clean.

Buyers of business understand owning a business is risky. If they see personal expenses included in the business, although it may be a legitimate write-off, it sends a bad message to the buyer. Some of those expenses can be easily identified and are more easily dealt with, i.e. travel, dues and subscriptions, seminar expenses, client entertainment, etc. but they should be well documented.

The larger the business the more critical the financial records reliability becomes. Businesses who have incomes exceeding one-million dollars annually should at least have CPA reviewed financials annually.

The economy today dictates the owners to consider owner financing as a large part of the sale price. One should determine the absolute minimum of cash they will require to sell that would allow them to pay off all liabilities and to have cash, after taxes, to accomplish much of what they want over the next five to ten years. The note payments will provide monthly income, however, in the event there is a default planning needs to be in place to face that issue.

How long are you willing to stay as a part of the company and in what capacity? What compensation would you expect for a long term relationship beyond the initial training and transition?

What is the loyality of your customers, especially the larger customers, and what is the best arrangement to assure they would stay on board with a new owner?

Is your business concentrated with one or two customers? No one customer should consist of more than 25% of your business gross income.

Don't try to sell on your own. Find a qualified investment banker, business broker or merger and acquisition advisor to assist you with pricing, structuring, and marketing of the business.