A Mid-Year Checklist For Your Business Exit Strategy

How is your business exit strategy coming along? You do have one, right?

The middle of the year is a great time to take the temperature of any business strategy, and your plan for an exit is no different. You already have a sense of how your business is performing in the current year, and there is still plenty of time to adjust or fill in the blanks before the year-end scramble.

With that in mind, I’ve outlined a mid-year exercise every business owner approaching a transition should consider to ultimately strengthen their exit strategy..

Are you aligned with the rest of your team? Your colleagues and employees depend on you to think about the roles they will play as you prepare to step away from the helm. Are they ready? If not, what kind of training or professional development resources would they need to help facilitate a graceful exit and a business that will thrive without you?

If you haven’t talked to your key people about the future in a while, consider this a reminder to catch up with them. They have their own futures to think about, and in competitive business climates, like Austin’s tech scene, there is always another startup or another equity offering around the corner. Aligning with your employees means showing them they have a role to play in the future of your business.

Is your accounting in good shape? I’ll be blunt: a lot of small- and midsize businesses could stand to improve their internal accounting. This is the time to steer your business toward more formal agreements and fewer handshake deals. Any transaction partners you may wish to court as part of your exit strategy will want to see clear paper trails and a solid grasp of your financials.

This is also a good time to evaluate the service you may receive from any outsourced accounting professionals. A lot of CPA firms are consolidating. As your accounting partner scales up, the quality of their service may degrade. If you are suddenly talking to more junior accountants who don’t know the nuances of your industry, you’re missing out on opportunities to maximize the outcomes of your exit strategy.

How is the business doing? A bird’s eye view is part of any good exit strategy. Look at the performance of your business. Do you have an over-concentration of one particular kind of customer? Are your results still in line with your assumptions? A lot of businesses are in trouble now because they pivoted hard to adapt to the COVID lockdown era, and now have to readjust in order to stay on track.

Keep an eye on outside factors that could impact your business, too. Your competitors, changes in state or federal tax laws, regulations, demographics, and the evolving expectations of your clients all influence your exit strategy. But you can’t account for these changes if you aren’t aware of them.

This is the perfect time for a thorough diagnostic check of your exit strategy. It's not just about preparing your business for sale, but ensuring it thrives up to and beyond that point. If you’d like some help understanding your next steps, contact us. I’m always happy to chat.