Monday 28 December 2009

Four popular exit strategies

Every business, no matter how big or small, has to part with its owner or proprietor at some point. Situations can arise that cause you to sell your business or pass it down to younger family members.

At some point, in some way, you will part from your business. Fact.

That’s why it’s a good idea to plan your exit in advance so that you are constantly working towards this ultimate goal and that necessary procedures are in place, when needed, to finally part with your company – successfully.

Here are four options available to you:

Float your company

Floating your company on the stock market can be a hugely rewarding way to exit your business, or at least step back from it somewhat.

However, flotation is unsuitable for the majority of businesses given the size and growth needed to attract potential investors and to be permitted to float your company on the stock market.

If your company does not have secure revenue streams and strong growth prospects then you can eliminate floatation as an exit option from your business.

Sell your company

This can involve either selling to external buyers, or selling to internal buyers i.e. employees.

Although selling to internal buyers may not be as profitable as selling to a trade buyer, it can often be a simpler process given that they already understand the business and its operations.

Selling your business can be made easier if you can:

· Show year-on-year increasing profitability

· Create a high-quality product or service

· Develop an innovative product or own intellectual property

· Build a strong customer base

· Recruit a high-quality team

· Maintain premises and assets in good condition

Family succession

Family succession is a case of handing the business down to another generation; whether that is a son, daughter, cousin, or nephew.

This allows you to maintain some degree of involvement in the business and keep it ‘in the family’.

If you are planning to take this option, try to involve your chosen family member(s) in the business as early as possible, not only to enable them to get a grasp of the processes and procedures, but also to develop their interest in the business and encourage them to take this career route.

Close your business

This is the simplest way to part with your business.

It is often the case in ‘lifestyle’ type businesses that the owner delivers all value therefore deeming the business inoperable, and indeed unsellable, without their skills or knowledge.

To help you decide what exit option is most suitable for you and your business, get in touch with me, Bob Brown, today on 01709 810081.

Tuesday 8 December 2009

Why you need an exit strategy for your business

In my line of work, I deal with people who either don’t have the time (or the patience) to build an exit strategy for their business.

Unfortunately (although not for me), this represents the majority of business owners.

They do not appreciate the sheer importance of getting their exit plans down on paper and finalised.

Without proper planning and preparation a business has no clear purpose. Without a clear purpose, it has no direction. And without direction, how will you know when success has been achieved?

The reason most people go into business is to, eventually, boost their own personal wealth. This is the main drive for economic development, the pursuit of personal wealth and, ultimately, the pursuit of a better standard of living.

Building an exit strategy whilst the company is in its pre-start or infancy stages gives you the ability to mould and shape the development and direction of the company to ensure that this strategy can be realised and that your goals can be achieved.

In fact, not only this, but planning at this stage gives business owners a distinct advantage in terms of the mindset and situation that they are in.

See, when a business is launched, the owner is often in a strategic, relatively calm mindset. When things start to become a little busier and business begins to boom, the business owner can become a little less strategically-minded and more wrapped-up in the day-to-day operations of the company.

This means, business owners who leave exit planning until the very last minute are in a disadvantaged state of mind to that of business owners who plan their exit from the company in good time.

Having the plan written and developed at a point where they were in their clearest state of mind, in terms of goals and objectives, means that they have had the opportunity to follow this plan and know when they are at the stage to exit their business for maximum ROI.

Business exit strategy companies can help you to develop and build an exit strategy from the outset, enabling you to give yourself a distinct advantage when the time comes to part with your company.

This is what we specialise in. We have helped many business owners to maximise the value of their companies. Let us help you to maximise the value of yours, get in touch today on 01709 810081.

Thursday 26 November 2009

Exiting your business can be a ‘taxing’ issue

Whenever I’m approached by a business owner wishing to exit their company, they all want the same thing – to achieve the most financially advantageous exit.

With tax having such a huge impact on the sale of a business, it is, first of all, important that the business owner understands the tax implications of selling their company and how much money they can expect to lose out to the taxman.

Obviously the aim is to minimise this amount, whilst maximising the amount that goes to the business owner – the one who has actually earned this money! Whilst remaining on the right side of the law, of course.

If you are planning to sell your company, you could be liable to pay capital gains tax on the profit that you make from the sale of your business; the rate that you are subject to will depend on how long you have owned the business for.

Currently, capital gains tax allowance stands at £10,100 for 2009-10, so any profit under this threshold is yours to keep. Anything above this threshold is liable for the taxman to take his share.

If your company is classed as a business asset (the operations of your particular company will determine this) then you could also be able to claim business asset taper relief – which will reduce your capital gains tax bill by anything up to 75%.

If, like 40% of all other entrepreneurs, you invest this profit in another enterprise and become a ‘serial entrepreneur’ you can avoid your capital gains tax bill entirely. The only downside to this is, the profit still isn’t yours to spend – it’s now tied up in another business just as it was in your original company.

It’s often a wise idea to employ the services of a tax advisor and business exit specialist to help you determine the most tax-efficient, economically advantageous option available to you in your particular situation. The cost of paying for such advice and guidance is almost always far-outweighed by the gains made from implementing whatever strategy they advise.

Take Mr Smith, from a successful manufacturing firm. He released the value in his business by selling the company to his three sons. During this process, his tax advisor and business exit specialist helped him to decide on the best people to sell the business to, structure and organise the firm ready for its takeover, arrange the valuation of the business, and undertake the entire sales process – ensuring all legal requirements were met.

Without this professional assistance, Mr Smith is certain that he would not have experienced such a favourable outcome when exiting his company.

Mr Smith was yet another of our many satisfied clients.

So if you’re planning on parting with your company anytime soon, give us a call on 01709 810081 to enable us to help you through the entire process and maximise the value of your business.

Monday 9 November 2009

How to exit your business successfully with a carefully constructed business exit strategy

One of the things I find is that business owners and investors often turn a blind eye to business exit strategy planning, opting instead to focus on the short-term and the issues that need dealing with immediately.

They often complain about not having the time, or the patience, to sit down and develop a carefully thought-out business development and exit strategy.

This is one of the worst mistakes an entrepreneur or investor can make.

Let me ask a question. Why did you invest in, or establish, your business?

Was it to make the company money? Was it to deliver superior customer satisfaction in your industry? Was it to deliver great quality products and/or services?

No.

You set your business up, or invested in a business, because you wanted to build your own personal wealth. In the vast majority of cases, this is the underlying reason for people investing in, or starting, a business.

So why do so many business owners and investors neglect the one thing that can help to maximise their own personal wealth, a solid exit strategy?

Our company, Exit and Succession Facilitation Limited (EASF) specialise in helping business owners and investors think about their business from an objective, rational perspective, allowing them to plan in advance when and how they expect to part with their business for maximum financial advantage.

We do so by using our unique, massively effective Entrepreneur Cultivator© system.

This system takes an objective look at where your business currently stands in the market and what your personal goals and passions are, it then moves on to develop a strategy for success – addressing dangers with contingency planning, building an extensive, productive ‘to-do’ list to ensure you are constantly working towards objectives, reviewing all cost and revenue issues, and eventually planning a successful, lucrative exit from your company.

Over the years we have used the Entrepreneur Cultivator© system to help business owners and investors across the country to get the most from their companies and maximise their personal financial returns upon implementation of their exit strategies.

Led by two highly-experienced consultants, Bob Brown (me) and Brian Viner, EASF (based in Rotherham, near Sheffield) is the first port of call for many business owners and investors across the UK who are looking to plan an exit from their company or companies.

As an introductory offer to help you realise the value of careful business development and exit strategy planning, we are now offering a 1-hour FREE consultancy session with me, Bob Brown.

I guarantee to reveal at least one idea that will save or make your company more money during this session.

What have you got to lose?

Get in touch with me to arrange your FREE 1-hour consultation on 07976 667226 or send me an email at bb@easf.co.uk.

Monday 2 November 2009

Will the economy recover? Of course it will. And when it does, you could be in a position to take advantage of it

I’m often asked ‘when is the best time to exit a business’?

The truth is . . . it depends.

It depends on your particular personal goals, the nature of your company, the industry in which it operates, and a number of other dynamics.

But what I do tell them is: Don’t leave it too late to plan!

People all-too-often leave it too late to build a successful exit strategy. Or at least one that totally maximises their potential return from their business.

See, an exit strategy should be built well in advance of the point that you feel you need to leave your business, largely because, if you don’t have a carefully constructed exit strategy, you probably won’t ever get to a point where you can part with your business for maximum return.

You need your exit strategy to guide you, clearly, towards a particular point where you can make a calculated exit from your company.

Planning an exit strategy in advance will also allow you to maintain objectivity and a clear mind, whereas planning it at a later stage will undoubtedly be rushed and may potentially involve clouded judgement.

Planning your exit strategy in advance gives you a clear vantage point for the future.

And right now, the future can only get better for business and the economy.

That means many business owners will be looking to exit their companies within the next few years when things pick back up to the extent that they think they can earn a tidy personal sum for floating, selling, franchising, or implementing succession on their business.

But those who fail to plan their exit strategies in advance will experience a significantly less rewarding outcome than those that plan carefully, far in advance.

In fact, the statistics are rather worrying.

A study underwritten by MassMutual found that 67% of men and women investors/business owners had no plan of exit in writing. That’s over two thirds of the entire population of business owners and investors.

These people will be getting significantly less value from their business when they come to the point of exit, than the other 33% of business owners and investors.

Don’t follow the majority.

Our company, Exit and Succession Facilitation Limited (EASF) specialise in helping owners and investors of small- to medium-sized businesses exit their companies successfully and rewardingly.

We can not only help you to discover when you should exit your business, we will also help you to plan how you are going to part with your business. Different options suit different businesses, so it is important that every alternative is considered and explored before arriving at a final business exit strategy.

Over the past three years, we have helped many business owners to carefully plan their exit routes from their respective companies, allowing them to maximise their personal gains and be rewarded for their many years of hard work developing their businesses.

Get in touch with me, Bob Brown, at EASF today on 01709 810081 to maximise the value from your business. Don’t leave it too late!