Here are the best practices for all businesses:
1. De-Risk Your Business. Do not assume that the value you
have built will remain level or even grow.
2. Have a buy-sell agreement if you have any co-owners (and
possibly even if you do not, which is discussed in Way
#16). Buy-sell agreements are discussed throughout this
book, but most comprehensively in the Unintentional
Exits section.
3. De-Risk through Insurance – including life, key-man, disability,
business interruption, liability, malpractice, and
worker’s compensation.
4. Have written contingency plans and processes – such as the
If I Die Notebook described at Way #35 and 36.
5. Work on Business Readiness by knowing the market value
of your company and what factors are used for multiples in
your industry.
6. Work on Business Attractiveness if you intend to Sell to
Others. This includes concentration on the business value
growth, branding, and culture.
7. Work on Personal Readiness by knowing your next act
(see Why Business Owners Are Afraid to Exit chapter for
more information).
8. De-Risk your Sale. This is the biggest sale you will ever
make. Do NOT finance more than 20% of the cash flow –
let a bank be the bank.
9. Take at least a portion of the sale and put it away (see Ways
#19 and 22).
10. Perform an entity-type analysis on the business at inception
and at least every 4 years. Read Entity Type is Everything
Please check back in the upcoming week for daily posts on the chapters referenced above. Have a Happy Thanksgiving and enjoy some down time with family and friends!
Excerpt from “50 Ways To Leave Your Business (There Must Be) by Sandra Finch. Now available on Amazon.
Leave a Reply