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Playing the Long Game: Businesses Urged Not to Delay in Getting Their Exit Strategies in Order

Paul Gilsenan

A Wynyard-based wealth management company is urging local companies to not delay in getting their business exit strategies in order – even if selling up isn’t on the cards for a while.

From those who have recently set up a business, to those who have been running one for years, every decision can contribute to the value of a company, so it’s essential to know how it will influence your goal of selling in the long run.

Paul Gilsenan, Director of PSG Wealth Management, commented: “Growing a business to sell at a later date is a long game with many considerations to be taken into account.

“There are a few key things to be aware of if that’s where you want to channel your entrepreneurial spirit. As always, having a plan is everything and is something we can offer expert advice and knowledge on at PSG Wealth Management.”
A few tips and considerations for businesses include:

1. Get to know your industry

Every sector has its own intricate machinery of key players, buying patterns, processes, important networks, major calendar dates/seasons, emerging trends – to name just a few of the moving parts. If you’re going to buy, grow and sell a business effectively then you need to understand all the ins and outs of the engine that drives it so that you can make smart investments.

Immerse yourself in market data as well as consumer reports and feedback; attend key conferences and networking events; and enrol on training courses to gain the depth and breadth of knowledge and understanding required to succeed.

2. Nurture keystone elements to grow: customers, staff and the bottom line

Even if your ultimate plan is to exit the business, you must fully commit yourself to ensuring the quality of its core components, and doing so as if it was your life’s work and great masterpiece. Those dependencies are the customers, staff and the bottom line.

Establish contracted, recurring revenue streams that will allow sustainable growth. Review assets and costs to see how you can automate or cut back to operate more effectively. When it comes to customers, nurture those both old and new by carefully monitoring the end-to-end customer journey. That goes for your main suppliers too. This will alert you to any issues that could damage the business, so they don’t end up affecting the saleability.

Remember, all your business dealings could bring opportunities to build useful relationships with influential people in your industry who could lead you to a sale in the future.

And don’t forget the obvious – your staff! Skilled, productive, loyal employees are the lifeblood in every business and something future acquirers will view as a major asset. Build a strong management team and incentivise them to nurture their teams in a way that makes the whole workforce a major selling point.

3. Refine processes and systems

No matter what sector you’re in, clear, well-documented and transparent processes and systems will allow you to show a buyer just what an attractive proposition your business is when you come to sell it.

The future business owner will be attracted to the reassurance that documented process brings. It means they and their staff can hit the ground running when they buy the business. After all, a disruption to customer service could cost them business at a critical point. Robust processes and systems help them mitigate that risk.

It’s good business practice to make sure that all financial and corporate records show the same attention to detail. Any serious potential acquirer will do a thorough audit and they’ll be deterred by any nasty surprises – or even just by question marks in your paperwork.

4. Build a strong exit strategy

If you’ve just bought a business, an exit strategy might not be at the forefront of your mind. However, even if you aren’t thinking about selling for another 10 years or more, that exit strategy should act like a compass in everything you do.
Every decision you make could have a potential impact on the value of your business in the long run, so it’s crucial to consider how it will influence your eventual goal of selling.

PSG Wealth Management offers advice on how to maximise your investment, including:
• Establishing recurring revenue.
• Streams that allow sustainable growth.
• Attracting potential acquirers.
• Entrepreneur’s Relief and how it affects Capital Gains Tax.
• The reliefs available for your individual circumstances.