Ready to Sell Your Business? Follow George Otte’s 5 Exit Strategy Tips

All good things must come to an end. No matter how much you love your business or how hard you’ve worked to build it into something that’ll endure long after you’re gone, there comes a point when you’re no longer willing or able to carry it on.

Don’t reach that point without a plan — or “exit strategy,” as it’s called in the business world. Every exit strategy looks different: some involve transfers to heirs, others require outright sales, and still others are simply glorified liquidations.

As you start thinking about your exit strategy, keep these five tips from entrepreneur George Otte in mind. They’ll guide you to the right conclusion for your needs — and your employees’, customers and heirs.

  1. Make Sure You Have a Fallback Plan in Place

You’ll hopefully have many healthy, prosperous years left after your exit. Make sure you have the resources to stay in it for the long haul by setting up and contributing to a tax-free retirement plan well in advance (at least 15 years) of your exit. Ideally, you’d do this as early as possible — starting in your 20s, for instance, can make a huge difference over a lifetime.

  1. Consider a Succession Arrangement

If you have kids or a trusted group of employees, consider handing over the keys after an appropriately long transition period. Before you do, though, be sure to talk to a succession planner who can help you deal with potentially thorny legal issues, such as how to transfer ownership shares.

  1. Analyze Your Competitive Landscape

Normally, your goal as a business owner is to stay ahead of the competition. But, in this case, it might be better to work with the competition. If your company has something to offer competing businesses, consider putting it up for sale.

  1. Take Care of Your Employees

No matter how you choose to exit your company, remember to take care of the folks who made it what it is (or was). Give your employees plenty of warning about any impending ownership change or closing, and be sure to provide fair compensation to anyone who’s been let go.

  1. Maximize the Value of Your Inventory and Assets

If you’re shuttering your business for good, take pains to maximize the value of its inventory and assets: unsold merchandise, equipment, real estate, vehicles, you name it. Consult with a finance professional to determine the best way to dispose of your assets quickly and fairly.

Heading for the Exit?

When starting a business, it’s absolutely critical to follow tried-and-true tips for building a business, even if you think you have everything figured out.

But it’s arguably even more important to honor conventional wisdom when you’re on the way out. So, when in doubt, consult the experts. Start by giving the Small Business Administration a ring. They have a host of resources for business owners thinking about closing up shop (or actively in the process of doing so), and they’re happy to provide advice and guidance. You’ll be glad you took the time to speak with the experts about your options.

Looking for Opportunity? Here’s How to Spot It in Any Industry

If you’ve got street smarts, ambition, and the willingness to work harder than your most diligent competitor, you don’t need to be a degreed expert in a particular industry to get a business off the ground there.

At the same time, you can’t simply pick a field out of thin air. You need to do your due diligence to ensure that an opportunity exists.

This presents a chicken-and-egg problem: if you don’t have expertise in a given field, how can you identify genuine opportunities in it? Many businesses fail, after all, because entrepreneurs fell for an apparent temporary opportunity riddled with underlying weaknesses.

This is how. These five tips and best practices should help you identify an opportunity wherever it’s to be found. Although, it’s important to remember that every company, industry, and entrepreneur is different, and absolute generalizations aren’t advisable.

  1. Identify Secular Shifts

Look for a major, lasting shift in consumer tastes or business decision-making processes, then start a business that exploits it. For instance, restaurant chain Chipotle is widely credited with bringing wholesome, high-quality, sustainable ingredients to the fast food business, essentially inventing a new segment — fast casual — in the process.

  1. Bundle Existing Products or Services

Many of the world’s most successful startups are in the business of bringing basic services to a wider audience, as opposed to trying to reinvent the wheel with a flashy new idea. Some popular new inventions “bundle” two or more existing functions in the same product or service package, adding value for customers and boosting margins for manufacturers. For instance, the camera smartphone merges the desktop computer, telephone, and camera. Scan/copy/print machines blend the scanner, copier, and printer.

  1. Help Others Help Themselves

Many companies are in the business of helping others also end up helping themselves. Like “bundlers”, these firms don’t seek to reinvent the wheel. Instead, they provide straightforward, understandable services more cheaply and effectively than their clients can provide for themselves.

For instance, telephone answering services take service concepts (receptionist, call screening, appointment taking, call forwarding, and more) that have been around for years, apply new technologies and economies of scale, and create an opportunity for clients who can’t afford to provide those services for themselves in-house.

  1. Go Local

Consumers have always craved local products, services, and experiences, but this trend has lately accelerated. Nothing is off-limits here; whether you’re a great homebrewer looking to sell liquid gold to a local audience or a knowledgeable tour guide who wants to educate others about their own backyard, put your idea to the test with your friends and neighbors.

  1. Use Adversity to Your Advantage

All the market research in the world can’t change the fact that there’s no substitute for personal experience. Learn from negative experiences, and use what you discover to improve outcomes for those who come after you. For instance, the founder of doctor rating service MD Insider got the idea for his revolutionary service after contracting a post-surgical infection that nearly killed him. Years later, he’s at the helm of a successful startup that aims to make the healthcare system safer for all. In other words, when life gives you lemons, make lemonade.

Which industry are you most excited about in the near term?

You’ve Tasted Success. Now What?

Have you checked the stats on business failure rates lately? They’re not encouraging. Anywhere from 70 to 90 percent of newly incorporated businesses fail within five years. Many never even have a chance: they’re hampered by intense competition, insufficient capitalization, poor performance, employee malfeasance, and a host of other problems that keep business owners awake at night.

If you’re one of the relatively few entrepreneurs who successfully navigates the transition from precariously placed startup to successful, profitable business – congratulations! You’re living the dream, even if it feels like you never have a moment to yourself.

You might also be wondering, “what do I do now?”. Good question. To keep your company’s momentum going and to begin the next leg of your journey of growth, keep these pointers in mind.

Nurture Your Employees

Your employees are your company’s most valuable asset. Make sure you’re not giving them second thoughts about working for you. Instead do everything in your power to ensure that they continue to make valuable contributions to your organization. Employee-friendly moves to consider as your company grows include:

  •      Compensating employees above their industry/profession average
  •      Instituting attractive benefits and performance bonus packages
  •      Offering internal talent development programs to convey new, job-specific skills
  •      Supporting external employee education and professional development, such as graduate degree programs and industry certifications
  •      Arranging company outings, theme days, and other team-building activities

Pay Attention to Your Customers’ Changing Wants and Needs

Your customers are just as important to your company’s competitive position as your employees. Make sure you’re listening to what they want and need. Tactics include:

  •      Regular customer surveys and questionnaires
  •      Focus groups and other forms of market research
  •      Sales analytics
  •      Online advertising analytics
  •      Inbound contact and fulfillment services

Don’t Hesitate to Seize Opportunities

When opportunity presents itself, seize it. Don’t make a note to see how it’s doing in a month or two — it could be too late by then. All great growth stories have a make-or-break opportunity at their heart.

Enforce Core Values, Even if it Requires Tough Choices

A company is only as good as its core values. If you’re struggling to uphold your firm’s values as it grows, figure out why and take steps to fix the problem, pronto. Note that this might require you to make some tough choices, including potentially parting ways with key employees who fancy themselves indispensable.

Never Lose Touch With Your Roots

No matter where your career takes you, remember to stay grounded. The higher you rise, the harder it is to remain in touch with the people who contribute to your success. Make a conscious effort to do so by:

  •      Keeping in touch with the mentors who helped you during your formative years, such as important teachers, career advisors, or old bosses
  •      Visiting your family regularly, even if they live far away
  •      Spending time with friends and acquaintances who don’t work in your industry (or work for you)
  •      Giving back to organizations that serve your community
  •      Remembering to take a personal day every once in a while and focus on something other than the bottom line

How do you plan to keep your company’s momentum going as it grows and changes?