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In the first part of the Best Way to Sell Your Business, we talked about why you should start to think about your exit strategy. In this final part, we work through the specific steps to get going.

Step One: Obtain A Current Business Valuation

A business valuation provides you with a snapshot of your company’s current value. Many business owners estimate value based on guesswork or revenue multiples paid for transactions in their industry. While this may occasionally align with what an informed buyer would pay for the business, it usually doesn’t. In addition to providing a “reality check” on value through a cash flow-based analysis, a valuation advisor can work with you on value scenarios under hypothetical assumptions, such as adding new product lines, opening new locations, expanding your workforce, or even considering the impact of emerging technologies like AI and automation. A valuation advisor can also help you identify areas for improvements to cash flow, such as better inventory and accounts receivable management, as well as adapting to the ever-evolving digital landscape. Armed with this information, you’ll be able to make well-informed strategic decisions to maximize the value of your business in the current market.

Step Two: Consult With Your “Team”

As a business owner, you have a team of trusted advisors that supports you in the company’s operations. This includes your management team, your family (who may also be employees or even board members), and your external advisors such as your CPA, attorney, wealth manager, insurance broker, and other consultants. In 2023, it’s also crucial to consider the role of technology experts and digital transformation consultants as part of your team. Once you know what your most valuable investment is worth, and have formulated a strategy to grow or unlock that value, you’ll be equipped to have informed discussions with your “team” to establish the exit plan.

Step Three: Formalize The Plan

Since your exit plan involves a number of “teammates,” consider drafting a document (it could be as simple as a short memo) formalizing the plan and each teammate’s role. Share it with the team. Review it regularly: quarterly is best, but at least annually. Don’t forget to consult with your teammates annually, to ensure that the plan is still the right one given your current situation and the rapidly changing business landscape in 2023 and beyond. Be prepared to adapt your plan as needed to account for technological advancements, shifting market conditions, and evolving personal circumstances.