The most important thing when looking to exit your business is to ensure that your processes and systems are good enough that the business can survive and thrive without you. All the knowledge that is stored away in your head should be documented and easy to find. Your staffing should also be robust enough that they don’t need you on-site to keep them functioning.
In short – you need to make yourself unnecessary.
You need to make the business easy to understand and transparent in how it works. You want prospective buyers to be able to see the value in what they are buying, and you want anyone taking over the business to be able to easily step in.
Take a good look at your business and note the strengths of your business and where improvements could be made.
A good transition plan will look at the makeup of the business and set out solid plans to try to make the transition to the new owner as seamless as possible.
Buyers are looking for an ability to operate with existing staff and with clear processes.
We recommend getting an external coach to help you identify what you need to do to maximise the value of your business and help you work out a realistic selling price. It’s amazing what a difference an informed outside viewpoint makes.
If you are passing the business on to your family, succession can be fraught. You need to be very careful to be fair to all family members. Many families have bitter relationships because of siblings feeling they were not treated fairly in the passing down of the family business.
The earlier you can prepare for selling or succession, the smoother the process will be. The good news is, the steps you put in place will increase the value of your business, improve its efficiency and increase your profit. For a large business you start preparing for this up to 10 years before you pass the business over.
Most of the steps you take for selling your business (above) are also steps you should put in place for passing the business on. You want to know that the business will operate smoothly without you. You also want to be able to step completely away so that the person taking on your business feels free to make their own decisions (although they may come to you for advice).
But it’s not just the business you need to prepare – it’s your family. You need to carefully work through what you think should happen and what they think should happen and come up with a plan where everyone knows where they stand. We recommend getting succession coaching as this can be a fraught process and if it goes wrong you will lose more than just money.
Sometimes it’s best to just walk away. You may have a successful business that is totally reliant on your skillset, or a business that is not doing well and would not be able to be sold.
When making this decision make sure you are aware of the obligations of the business, and any personal guarantees you have made. If you have staff you want to make this as easy for them as you can.
Taking care of your staff
After your business has closed down you may still have obligations to your employees.
If you are making staff redundant there is a process you must follow and support services available such as:
Communicating the closure
Bankruptcy and liquidation
For a business in serious financial difficulty the last step in paying off creditors and dealing with your debt is sometimes a declaration of bankruptcy or liquidation of business assets. The main difference between bankruptcy and liquidation is that a bankrupt is usually an individual or sole trader and liquidation generally applies to a company in receivership.
Settling your legal obligations
Keeping business records
You must keep all records, whether they’re electronic or paper-based for at least seven years.
Support during and after the closure
Dissolving a partnership
Depending on your agreement, usually any partner can end the partnership and effectively bring the business to a close. Partnerships can be dissolved in the following situations: