As a business owner, are you starting to reflect upon the future direction of your estate agency business, and perhaps more importantly your role within it?
Well, I suspect that if I were to conduct an opinion poll amongst estate agency owners, the vast majority would all state that an “Exit Plan” is an important element of their overall financial security. Yet if I were to ask the supplementary question – so do you have an exit plan in place? The vast majority would be slightly embarrassed, shuffle about a bit and begrudgingly admit that the answer would be no, despite all best intentions I have no doubt.
So why the disconnect in thinking? Well, I suspect that the very same business owners would proffer a range of explanations, such as “lack of time”, “sheer expense” “not knowing where to get the right advice” etc, all of which I am sure have some validity. However, I have a strong suspicion that the underlying reason is straight forward in that whilst the idea of an “Exit Plan” makes perfect sense, most agency owners don’t really know what an Exit Plan is – they just know that it sounds like a good idea.
So, to answer the question “Why do I need an Exit Plan?” I would reply as follows;
- To formulate clarity of both thought and purpose.
- Provide a strategic roadmap (accepting that amendments may need to be made in order to reflect changing future circumstances)
- Offer peace of mind.
All three points above should speak volumes about how important an Exit Plan is – so now how do you set about creating one? Well, a good place to start would be to consider the points listed below.
- Gather Information and maybe have a conversation with family and/or close friends, hopefully resulting in some clarity of purpose with regard your future (both personal and professional).
- Reflect on a potential timeline – albeit “ideal” at this stage.
- Request advice regarding the likely value of your business both now and potentially in the future.
- Honestly reflect upon the strengths and weaknesses of your business, as of now and potentially in the future, and whether you might influence either in order to optimise your eventual sale price.
Once content with the groundwork carried out, it is time to plan the next steps to your exit – the first of which is understanding your sale options. It is important to understand that business sales can come in different forms, each of which may have differing implications – so advice well in advance from a) A broker (market & sale advice), and b) Your Accountant (tax and insurance advice) should be a key stage in shaping your plan.
I ought to add, that when initially discussing your situation with advisors, it is vital that you are honest with them, as well as with yourself. I mention this because successful businesses are usually the sum of a number of working parts (staff, management, technology etc) which all need to be transferred to a buyer or buying firm, so professional disputes and/or other major impediments to a sale need to be disclosed from the outset in order to avoid abortive professional costs at a later stage.
Once you have figured out the exit path you wish to follow, it’s time to think about maximising your chances of success and financial return, after all, selling a business for most people is not an everyday occurrence. So prior to executing your plan you need to take a long hard look at your business in order to determine whether it is possible to – for example, marginally increase profits by cutting low priority/personal expenditure, or review/revise any lease commitments that may prove onerous to a buying firm.
I mention this because in my experience some business owners can (on occasion) come to regard their business as their own personal thiefdom. It may not entirely surprise you to learn that buyers are not interested in taking on the loan for the sellers student sons first car for example – but this news did come as a shock to one potential client that I met with a year or two ago (perhaps not unsurprisingly that particular potential client decided not to sell at that juncture).
So final thoughts – take your time, think about what it is that you are trying to achieve, and be both honest and realistic with yourself, your family and advisors like me – who are simply trying their best to give you the right advice. Needless to say, should you still feel that you require further help or advice, go to www.ideologyconsulting.co.uk .