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Exit Strategies

How to make a profitable exit from your business

Very few people start their business with the mind-set of how they are going to exit it at some point in the future. However, the time always comes when some form of exit is on their mind, hopefully because they are at a stage they want to exit, (pass onto the next generation, realise the capital value, move onto new projects), but often it is at the point that they have to, (illness, family issues or are just tired of it).

The fact is that the more planning that is done prior to exit, the easier and more profitable that exit will be.  Just look at 3rd party investors like the Dragons on Dragons Den. One of the first questions they ask is “how do I get out?” – and this is before they even “get in!”

We recommend that the planning starts at least 3-5 years before the desired exit date, but really it should start on day one of your business. If you go into business with the thought “how am I going to sell this in the future” and plan accordingly, then you will have a greater chance of selling at a greater value.

The first issue to consider is that most businesses are sold on a multiple of profits, or profit forecasts, not sales, so building a business for Profit is key.  The next consideration is who you are going to sell to. There are 4 main exit routes:

  • To family friends or the management team;
  • To suppliers, customers or competition;
  • To external investors;
  • Franchising.

Each is looking for something different in the business that they are buying and each has its advantages and disadvantages to the seller, but the main rule of thumb is that the more interested parties there are, the more money you will get. 3 people fighting over your business is far better than one who is vaguely interested.

Property investing and financial freedom

Financial freedom is often the ultimate goal of anyone running a business. But what really does financial freedom mean? To us, it is the day that you have invested assets of sufficient size that they are providing you a monthly income that will give you the life style that you want and from that day forward you have the choice whether you work or not.

Now if you own your own business, you can build it to a stage that it will work without your constant input, and that is the real drive behind what we do at ActionCOACH – helping you to build: “a Commercial, Profitable Enterprise That Works Without You.”

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However, the business environment is always changing and while it might be possible for you to leave it for 6 months, 12 months or even a couple of years, if you own the majority of the shares in the business, you will always have to keep a watchful eye and for many business owners who have built the business from scratch, leaving it alone is emotionally impossible. So the only real option is to build the business so that it can be sold.

The other reason for not solely relying on your business to provide financial freedom is that “all your eggs are truly only ever going to be in one basket” and as such the risk for many is too high. For real passive income, you have to look at another source of leveraged income and there is none better than having a property portfolio that brings you in monthly rents and where the capital invested is growing and therefore, “as safe as houses”.

Building a property portfolio is like all forms of investing, full of pitfalls and challenges and doing so without the proper education is dangerous and can seriously damage your wealth. Being property investors ourselves, we can help you understand the do’s and don’t’s and when you are ready put you in touch with people who can make the whole process simple and easy, from mentors to builders to financiers.