All small business owners hope to successfully exit their business one day. If that time is coming soon (in the next few years), you need to have a plan – and exit strategies aren’t “one size fits all”.
For a seamless transition, you need to consider a variety of factors, including exit planning, ownership transfer methods, and your goals. That’s why working with a consultant is extremely beneficial.
At CSI Accounting & Payroll, we’ve worked with small business finances for over 50 years. That means we’ve advised many business owners on exit strategies and have answered questions like:
- What is an exit strategy?
- What are examples of exit strategies?
- How can an accountant help with a business exit strategy? Can anyone else help in the process?
What Is an Exit Strategy?
An exit strategy is a combination of exit planning and considering different methods to transfer business ownership to a:
- Family member
- Employee
- Buyer
You’re likely to use a different kind of ownership transfer method for each of these people.
However, regardless of the transfer method, you’re going to want the business in the best shape with at least three years’ worth of exit planning.
Next, let’s talk about what exit strategies might look like.
Examples of Exit Strategies
When you decide to exit your business, you need to talk to your consultant about your goals. That will help you determine your next steps.
Prioritize Profits
A majority of business owners plan to sell their businesses. That means they will want to prioritize profits. This can be done by:
- Ensuring you’re not overstaffed.
- Not investing in any new assets.
- Not changing any processes.
- Removing perks that are not necessities.
Family Succession & Generational Wealth
If you want to gift your business to your child, for example, you may decide your goal is to cut them the best deal possible. That means ensuring a smooth transition by planning to:
- Optimize profit potential.
- Reduce the business’s debt.
- Minimize taxes.
Well-Rounded Goals
Not sure how to prioritize one goal over another? You can go for something that’s well-rounded, such as reducing debt for the person buying your business but also securing a decent amount of funding for yourself.
An exit strategy consultant can work with you to find the areas that matter most to you.
Who Can Help With a Business Exit Strategy
Who can help you with exit strategies? Quite a few experts can, including:
- Attorneys who specialize in mergers and acquisitions
- Attorneys who specialize in trusts and estates
- Business brokers
- Business coaches with exit strategy experience
- Monthly accountants
Exit Strategy Consulting With an Accountant
Since we offer monthly accounting, let’s hone in on the pros and cons of working with CSI Accounting & Payroll for exit strategy consulting.
No matter the route you choose, your monthly accountant can minimize your tax liability. That can be a huge portion of exit strategy! Plus, they can help you sell your business by:
- Constructing the sale agreement. Your monthly accountant can work with the broker involved to determine the sale price, the length of time the agreement goes over, what kind of payment or financing will be involved, and whether it will be a stock sale or an asset sale.
- Having your monthly financial statements and annual tax returns already done. This is just the standard when working with a monthly accountant, but it’s especially useful in a selling situation so you can do your due diligence.
- Continuing the relationship with your buyer to ensure the long-term success of your business. Your finances will be in good hands if your buyer wants to continue working with your monthly accountant. This way, they’ll get up to speed quickly and your margins will stay good. Breathe easy!
The only downside of working with a monthly accountant on your exit strategy is that they can’t advise on legal ramifications. For that reason, we recommend working with a monthly accountant and an attorney for a complete exit strategy team. Then, they can help with all of the critical consulting areas!
Find Your Ideal Business Exit Strategy
Now that you know about what an exit strategy is, examples of common goals, and how a monthly accountant can consult you, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about how an accountant can help set up your business for future success.
