It’s easy to understand that, if you’re in a partnership, having an exit strategy would be essential. But what about for people who are sole traders in small businesses that are doing it on their own?
Should they wait until they’re ready to sell before they start working out their exit strategy? When do you start the planning?
The answer is you really should be thinking about it from the very beginning, rather than wait until later.
One of the best examples of needing to be prepared for an exit is around a big business deal, for example, when Kerry Packer sold Channel Nine to Alan Bond.
In case you’re not familiar, Kerry Packer’s quite famous for having said, “You only ever get one Alan Bond in your lifetime and I’ve had mine.” Now the reason he said that was that he sold Channel Nine for a billion dollars when it clearly wasn’t worth that.
The station was always for sale, though, and a few years later Kerry managed to buy it back for about $250 million or something crazy like that. He made a huge profit on the deal.
The point is, everything should be for sale, and you should always have your business ready for sale because you never know when the Alan Bond might come along in your life.
My husband and I were not even thinking about selling our real estate business in 2007 when the Alan Bond in our life came along. We said, “This is too good of an offer to refuse,” and it was as simple as that.
Our business had been developed originally as part of a franchise, so we had everything systemized — everything worked, it was ready to sell, and all we had to do was sign on the bottom line.
So that’s why I say you should always start thinking about your exit right from the very beginning and structuring your business. It doesn’t matter if you’re the owner/operator of a single micro business or if you have a few staff or even if your business is online, you really need to have it structured so it’s always ready for sale.
You need to have your systems and processes documented, and there are some great ways to do that nowadays. You may be outsourcing elements, but if you’ve got that set up, it’s very easy for the next person to be able to take over — your business is saleable. A good, strong, viable business is often not saleable if its systems aren’t in place and documented.