Here are 6 steps to take to properly exit your business.
Step 1 is to determine the value of your business. Typically, the value of a business is based on cash flow (quantitative data). It is also important to look deeper into qualitative analysis.
Step 2 is to do a SWOT analysis. This is where you analyze your business’s strengths, weaknesses, opportunities, and threats. Overall, the analysis can be very enlightening when it comes to discovering the weaknesses of your business.
Step 3 is to discover what your personal plan could look like when you sell your business. The best ROI is always your business, so analyzing the effect the sale of your business will have on your wealth is imperative.
Step 4 is to create an exit strategy. You may or may not prefer to pass your business on to the next generation of your family. It is important to determine whether they want to assume the risk of the business or even want to be involved.
Step 5 is to review your estate planning. It is important for business owners to be properly protected. There are major income tax consequences involved when it comes to estate planning and you as a business owner have to understand all of it to be fully prepared to develop your exit strategy. How you structured your company initially can have a significant impact on taxes when you exit.
Step 6 is to create a post-ownership plan. Oftentimes, you will feel surprised when you learn that new ownership doesn’t perhaps do things the way you did. If you sell to the wrong buyer, you may regret who you sold it to. For this reason, it is important to create a plan for doing what you can to make sure you’re happy with the outcome after you sell the business. In post-ownership planning, when planning to sell, it is important to engage with multiple buyers at the same time, in order to determine if you are getting the best price and terms.
Want to learn more about how you can make way more money and pay way less in tax? Book a call with the team at TFW Advisors® today!