Any business owner who has forward vision for their company should have a well defined exit strategy. It’s just good business practice to know when and how you would get out of your business if the time or circumstance presents itself.

When that time does come and you are ready to put your business on the market, you need to act like you have no exit strategy at all.

Why? Here’s an example.

A seller with a small transportation company really wants out, and against the advice of his business broker, he tells every prospective buyer who comes in the door just that. He offers up the bottom line number that he would accept, and tells buyers he is completely burned out and totally ready to sell. He thinks that by seeming eager to sell, buyers will be eager to buy. The exact opposite is true.

His attitude and actions give the impression that the business is a disaster he is trying to run away from – fast. He never gets any offers because buyers don’t want to take a chance on a business that the current owner doesn’t even want. He never sells the business, opting instead to close the doors.

This situation could have ended very differently and in a positive way. The business was in good shape and had room for growth.

When you put your business on the market and begin to get offers from potential buyers, it is critically important to keep your exit strategy under wraps. You need to behave as if you don’t need to sell. A seller doesn’t want buyers to think they have to sell, that they are in any way desperate or that they are trying to get off a sinking ship before the business folds. Sellers that seem too eager to accept any offer will get just that – any offer (or no offer at all).

In the business market it is a seller’s job to put their business in the best light so they can get top dollar. The buyer’s job is to drive the price down as much as possible. A seller who seems too ready to get out of their business will attract buyers who are looking for a cheap steal, not the motivated buyers who will be willing to negotiate.

Instead of making buyers aware of your exit strategy, you should have in place and ready to implement a three year plan. This plan should include ideas for growth, new marketing strategies and plans for any necessary improvements.

Even though these are ideas that you have not yet implemented, they will be ideas that a prospective buyer can use to visualize the future of the business under their leadership. These plans will also be a powerful negotiating tool as they will allow you the power to walk away from any deal where a buyer refuses to negotiate for a fair price. Better still, if you are not able to sell your business these plans will help you grow your business for a sale at another time.

When you are ready to sell your business, you need to keep your focus on the growth of your business if you want to instil faith in potential buyers that the business has a successful future. If the seller in our example had done just that, he would have sold his business and not had to close the doors. Keep your exit strategy to yourself, and you will have a better chance at a successful sale.

Are you a seller who wants out, but would like help showing buyers that your business has room for growth?  Do you have questions about how to make a three year plan? Please leave us a comment or question here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com