Do You Have An Exit Strategy For Your Business?
The time to think about an exit strategy for your business is before you even start your business. Without a good exit strategy, your business will be less valuable at the time of sale.
Some businesses, especially professions such as doctors and lawyers, build the brand around the owner’s name. In cases like these, the brand is an asset only as long as the person the brand is tied to is part of the business.
When a friend of mine, who is a dentist, was first getting started, he bought his dental practice from his father who wanted to retire. Since his father had branded his name as the name of the practice all my friend was buying was the property, equipment and patient list. The patients were loyal to his father not to the name of a dental practice.
Steve, unfortunately, followed the example of his father and built his practice around his name. He was to retire in about 18 months and he is just now realizing how little value he really has to sell. The business name was added to the practice but he did not use it consistently across everything so the business name is so diluted that it is worthless.
For example: The business phone is still in his name and the property is in his name. Since these two vital pieces of information are in his name and not the company name, almost all the citations online are in his name. When it was functional, the website for the business was even in his name.
Like his father, all he has to sell when he retires is his patient list, his equipment and his property. Unfortunately, that will not provide much towards retirement.
A chiropractor that I know is only three years away from retirement and, like Steve, she built a business around her name instead of her company name.
She recently added an associate to her practice and realized that she was the brand and not the business so she is having to spend a great deal of money over the next three years to build the business brand social have a viable asset to sell.
A local barbecue joint which had been in business for over 20 years folded in less than six months after the original owner sold the business.
The name of the barbecue joint was in the original owners name so it is branded to him. One of the cooks who had worked there for 10 years was the buyer so he definitely knew the recipe, the clientele and the business. Unfortunately, he did not have a personality to overcome the brand created by the original owner.
Every business has a beginning, a middle and an end. If you at some point, intend to sell your business, please set it up so you can exit and a new owner or manager can take your place in the business can continue to function and grow.
If your business is set up with a good exit strategy, the profit from its sale could mean thousands, if not, millions of dollars to you.
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