Your Business With James Caan 2017 - 312
Thinking about the end when you've only just started
may seem defeatist but it makes sound business sense
etting up a business is a major
step and can create a mindboggling to-do list. When you're still
testing your product, analysing your
market and searching for a good
accountant, worrying about how you
will leave the company at the end can
seem premature to say the least.
But getting an exit strategy in
place is actually a critical part
of your entrance plan. Knowing
how you want to leave a business
can shape the way you grow it.
"Laying the groundwork for the
successful sale of a business represents
one of the most signiﬁcant challenges
in the life cycle of any company and,
often simultaneously, for its owners,"
says Fentress Seagroves, US inbound
advisory leader at professional services
giant PwC. "Early planning allows
time to suﬃciently understand the
strengths of your business and to
identify and shore up weaknesses."
James Caan agrees. "The exit
process itself can be complex and
emotional, but it needs to be detailed,"
he says. "This is not something you
should do in the space of a few months.
To get the best results, you need to
have actually prepared it for exit."
Preparing an exit strategy means
deciding how you want to leave the
business. There are plenty of questions
to ask yourself. Who will take the
ﬁrm on, if anyone? Will you sell it?
What are you looking for if you do?
Do you want to take as much money
as possible out of the business while
you're there, or make it as proﬁtable as
you can for a sale at the end? Is your
intention to keep as much control as
possible or to create the management
structures that will allow the company
to thrive when you're gone?
Answering these questions
thoughtfully and decisively will
allow you to run the business today
in the way that will make sense
both during your stint in charge
and also on the day you leave.
Perhaps the easiest option is to close
the doors and walk away. Companies
often hit the headlines when they
are wound up or liquidated owing to
debts, but you can choose voluntary
liquidation as long as you're solvent.
If you want to retire or step down for
other reasons, and you don't believe
the company has value to others or
anyone else is ready to run it, you
can go through a six-step process
to appoint a liquidator. In some
circumstances this will be right for the
business and its owner, but more often
you can start a plan some time earlier
that gives you a more satisfying exit.
Many businesses are passed down
family lines, with a son or daughter
taking on the running of a ﬁrm when
the current owner wants to move on.
As well as the satisfaction of
keeping something you've worked
hard to build within your bloodline,
it can sometimes allow you to
play an active, if reduced, role
in shaping its future. Beware of
wading into - or creating terrifying
new - family politics, however.
Another option is to sell the company,
either to a competitor, an investor,
a management team or, ultimately,
anyone who stumps up the cash
and meets the legal requirements.
This is a popular option for
obvious reasons because it releases
the owner from any responsibilities
and - hopefully - leaves them
with a cash sum for their troubles.
WORDS: GREG PITCHER | PHOTOGRAPHY: SHUTTERSTOCK
Selling is a popular
option, but requires
hard work and skill
to get it right