The Exit Planning Audit: Are you ready to go?

At some point, most small business owners will ask: What is next for me beyond this business?

“I want to pursue something new.” “I’m burned out.” “I wonder if I could sell this business.” “My family member or employee wants to take over, and maybe it’s time.” “Retirement sounds good!”

If you are having a similar thought, it may be a good time for a business audit. A business audit is essentially a business check-up — you are assessing the health of your business so you can make well-informed decisions about next steps. A business audit is a great management tool to use at any stage of business… ideally annually!

exit planning audit

An exit planning business audit is a tool to help you specifically evaluate your readiness for an ownership transfer and determine if your business is a good sales prospect. Will your business be attractive to a buyer or will it need improvement prior to offering it for sale? Is the business’ goodwill of high enough value to attract interested buyers, or are you better off selling physical/tangible assets and simply closing the business?

Here are some initial business audit questions to consider when exploring a business ownership transition:

Your business exit motivations:

  • Why do you want to exit your business?
  • What do you want to do next?
  • Do you want to leave completely or stay involved in some way?
  • Do you have any conditions for a business sale?
  • Do you have a vision for your business even after you aren’t involved?

The status of the business:

  • Do you have up-to-date financial statements that match your tax returns?
  • Have sales revenues and profits consistently increased over the past few years?
  • Does your business have a distinct competitive advantage?
  • Does your business operate with clear written procedures and agreements?
  • Can your business operate without you, or with you in a different role?
  • Does your business have opportunities for growth?

Your answers to these questions (and many more!) will help you determine the right next steps for you and your business, and the best timeline for an ownership transition.

A business exit can be complicated and we encourage you to start thinking about your business exit well in advance. You want time to consider what an exit would mean for you and your business well before you are ready to make this change.  You want a transition that won’t negatively affect your employees and the vendors, clients or customers reliant on your business.

Don’t wait until your business is struggling or you are desperate for a change before you act.  With thorough exit planning, you can improve your readiness to transition and the value of your business!

At Paul Terry & Associates we help small business owners answer the many questions related to ownership transition. We take clients through an exit planning audit — prioritizing business ownership transition motivations, evaluating the business’ strengths and weaknesses, and assessing the readiness for a business sale. Then we help business owners create a plan for a successful transition.

Learn more here!

Selling Your Business – Essential First Steps

Are you thinking about selling your business? We assist small business owners with management transitions. For clients interested in selling their businesses, we help them focus on these essential first steps:

selling

1. Understand your business exit motivations

Why do you want to sell your business?  Perhaps you want to start a new business or focus on other pursuits. Maybe you are burned out, at odds with your business partner, or ready to retire. It is important to understand what is motivating your decision to sell your business. Your current perspective and emotional outlook can affect your approach to the sale and the timing of your business exit.

2. Prioritize your sales goals

It is good to start a business sale process with a clear idea of your desired outcomes. Are you looking to sell immediately? Is a high sale price the most important factor for you? Do you want to remain involved in some capacity? Do you have preferences for who buys the business? Do you want to influence how the business operates after you sell? Is a cash sale necessary or will you consider seller financing?  Clarifying what you want will affect the sales approach you take.

3. Assess your business’ current condition

Is your business a good sales prospect? Is your business likely to attract a buyer? Are there areas of the business that will need improvement before you sell?  When looking at each aspect of your business, you must try to understand the business from a potential buyer’s perspective. You need to consider your sales and profit history, the business’ financial condition and your products or services. For a brick and mortar business, look at your business location, your facilities and your equipment. To be a good sales prospect, your business may need to retain your employees and your clientele…and perhaps even you for three to six months!

4. Assess the current value of your business

How much is your business worth?  Valuing your business helps you set an asking price. There are different ways to determine the value of a small business. You will need to consider your tangible and intangible assets and the business’ prospects for growth. You can hire a business valuation expert to do a business appraisal or work with a business broker to request a Broker’s Opinion of Value. With recent tax returns and financial projections in hand, it may be sufficient to work with us to do some simple calculations to estimate a realistic amount.

Now you are ready

Once you are clear on your motivations, your goals, and the current condition of your business, you are ready for one of these next steps:

• Prepare to present a sale-ready business to interested buyers.

• Invest the time to make your business more attractive to buyers and increase its value. (This would start with an action plan and timeline for each area of the business that needs improvement.)

• Offer to sell the business at its current sub-par condition (knowing you may have lower interest and/or a lower sale price).

• Continue to operate the business as well as you can and close it when you are “done”, selling any tangible assets.


We can help! We work with clients through these initial business transition steps. We review the current business so you can consider a business sale. We help with business improvement action plans to improve the value of your assets (even if you do not sell right away). We help you compile the documentation necessary for a business sale. Learn more.

Your management transition

Are you thinking about transitioning out of your current management role in your business? Stepping away from your small business doesn’t have to mean giving it up completely. It could mean removing yourself from day-to-day operations or delegating management responsibilities to someone else so the business can continue to function smoothly without your constant presence.
In any business transition—whether it involves a change of business ownership or just a change in management, we encourage business owners to consider these five factors:

stepping away

1. Assess or audit your business

Before making a big management change, understand the value of your business and the strength of your existing systems. Be sure to ask key questions and audit your business. Have you built business assets that have real value? Do you know what your business is worth? Do you have operational systems that can be understood by others? Do you have key employees that will take on increased responsibilities?

2. Support and train others

To step away from the business, your employees need to be prepared to take on more responsibility… and you have to be ready to give up some control. If family members are taking the reins, they need to know the details of the business and understand what will be expected of them. You may need to hire new senior management who must get up to speed and gain your trust. Any new manager (or eventual owner) needs to get to know the business inside and out and develop the skills needed for success. Your role is to facilitate all of this.

3. Take your time

In any transition – whether it involves a change in business ownership or just a change in management – a gradual process is ideal. This allows for a new manager/owner to grow into his/her role. It takes time to gain confidence and also credibility in day-to-day management for all stakeholders. As time goes on, you may be able to assume a more advisory (or backseat) role… and by then you will be ready for it. If selling your business is the goal, you will need time to prepare for the sale and find the right buyer. So… look at a realistic timeline and set the right pace for you.

4. Get help and accountability

It can feel impossible to focus on a future transition when there is so much to attend to with the business right now. You are managing services, employees, cash flow, marketing and day-to-day operations. How can you focus on your transition goals when so many other aspects of the business need your attention right now? An advisor, support partner or support group can help you create a transition plan and stay accountable to the plan within a realistic timeline. Other professionals such as an accountant can help you understand the financial health of your business and the ramifications of any change. At some point, you will need legal help, too. Get the help you need to hold yourself accountable.

5. Your identity as a business owner

As a small business owner, your whole identity may be wrapped up with your business. You may want a change but you may feel reticent about losing control of the business and the change of identity the comes with stepping away. Perhaps you would no longer have a reason to stay involved with a merchants group, or you may no longer be invited to participate in certain business networks. Without your business identity, you may need to redefine or reinvent yourself.
As small business owners, we pour our hearts (as well as lots of time and often lots of money) into our businesses to make them succeed. After this investment, we want to see our businesses continue to flourish even after we step away from full-time management. Creating a solid transition plan with a good support team can help make our can help make desires a reality.


Paul Terry & Associates works with small business owners who want to value their business, prepare for a business sale or step away from a full-time management role. For clients preparing for a management transition, we can help:

  • Work through the challenges related to change and new roles
  • Install effective management metrics and timelines
  • Hire or train committed management staff
  • Create financial projections for any transition
  • Help the owner(s) write a succession plan

Learn more about our ownership transition services.

Business Exit… have you thought about it?

Many tech entrepreneurs think about their business exit from day one. Acquisition is central to their business model. But most small business owners don’t think about it… they are too busy getting into business! An exit plan should be a part of every entrepreneur’s business planning process — though this is the least understood part of the business plan, and often ignored.

business exit

Don’t wait. Think about a business exit now.

No matter how successful you are in business and how much you love our work, you should think about what will happen to your business when you no longer actively manage or run it.  At some point down the road—a couple of years or decades from now—you will leave your businesses (or your businesses will leave you). Personal circumstances might change or burn-out could happen. You may be ready to pursue a new endeavor or want to retire. Or someone could approach you about buying your business.

Business exit options

You may not be able to predict your business’ success, your future interests, or the direction of the marketplace. But you can start thinking about the business exit options that could be a good fit for you.

There are a variety of ways to exit your business. You could pass it to a family member, partner, employee or other business stakeholder. You could sell it to an outsider. You could liquidate it and sell the assets, or you could file for bankruptcy.

How will you figure out what is best for you and your business?

Envisioning the future

We encourage you to think about the future of your business and what it might look like when you are not at the helm.

  • Is your goal to create a legacy business that will last forever?
  • Do you ultimately want to pass the business on to a family member?
  • When you are ready to stop running the business, do you hope to sell it?
  • Would you want the business taken over by an employee(s), partner or other internal stakeholder or would you want to sell to an outside party?

The vision for your business will change as your business develops and circumstances change, but thinking about your business’ trajectory, including your exit, is a key part of strategic planning and business growth. (If you are in a business partnership, it is important that you have an ownership agreement, from the beginning, that spells out what will happen if one or more partners wants to exit the business.)

Planning your transition

When you are ready to think seriously about transitioning away from your business, you need a business exit plan. Just as a good business plan is an important part of business start-up, a good exit plan is key to a smooth transition away from the business.

We help our clients through the transition planning process. This includes identifying or clarifying your motivations and goals, assessing the current strengths and weaknesses of the business, and creating a role transition or business sale timeline with clear benchmarks. We then help business owners stay accountable to their plan.

Our goal is to help small business owners feel ready for their next steps, with a feasible and straightforward plan to guide them through their transition.  Learn more about our ownership transition consulting services.