Read time: 3 min read
There are three basic considerations for an entrepreneur wishing to ensure their financial future when planning an exit:
- personal finance plans, with assumptions about the ‘pot of money’ needed to strengthen your financial future and fund retirement
- a business plan, which will spell out how the value of the business will be built
- how that value will be turned into cash (i.e. how and to whom the business will be sold)
These plans must be flexible enough to survive the uncertainties faced by entrepreneurs and their businesses – and in 2022, there is no shortage of those. The economic impact of COVID-19 continues to be felt, with the added challenges of runaway inflation and rising interest rates. Add to that the never-ending Brexit fallout and the war in Ukraine, and the importance of properly planning an exit becomes clear.
What are the key elements of an exit strategy?
How you choose an exit strategy is one of the most important parts of selling your business. Get it right and you can increase the value of the sale and gain control of your financial future.
“You need to be prepared,” says Martin Brown, founder and Chief Executive of business advisers Elephants Child. “That means emotionally, commercially, legally and financially.
“It’s also important to keep the business performing while going through a sale. These processes do take time and you might promise you’re going to hit certain milestones, so it’s vital you keep the business trading strongly.”
Martin adds that when devising an exit strategy, it’s essential to properly articulate your business story, including why you started it, what it stands for and its purpose. Having a trusted team around you is also a crucial element of an exit strategy.
“You need to get your team together, both those in the business who know about the transaction and your group of advisers,” says Martin. “A high-quality team of experienced people is paramount and it’s often worth paying extra for that.”
Considering environmental, social and governance (ESG) is an increasingly important part of planning an exit strategy. “If you’re not ESG ready, your competitors might be,” says Martin.
“You can’t greenwash it,” he warns. “It’s about understanding what the elements are, being able to measure and prove them, and knowing what it means for your business.”
What are the common exit strategies a small-business owner would consider?
Exit planning is important because it can give you more control over what can be a stressful process.
When working with your financial planner, you should be trying to establish how much money you need for your chosen retirement lifestyle, which will, in turn, set a target ‘exit value’ for your business. This is often calculated using the current tax regime and prevailing financial conditions as a base case scenario.
No one has a crystal ball, but it’s important that any personal financial plan considers potential changes to the tax environment. Business Asset Disposal Relief, formerly Entrepreneurs’ Relief, allows you to pay 10% tax on the first £1 million of gains when selling your business, rather than the standard 20% Capital Gains Tax.
What are the effects of economic uncertainty?
With so much unpredictability in the economy, it can be easy to think the whole world is against you. Yet it’s vital to keep focused on growing your business, which is what potential buyers will be interested in when it comes to negotiations.
“In a sense, we’re talking ourselves into a recession,” says Martin. It’s useful for small businesses to know what’s going on, but it shouldn’t stop you on your growth journey. It’s important to keep the mindset of driving the business forward.
“Business leaders tend to listen to what’s going on and then do nothing, and that cannot be the right thing to do,” says Martin.
It can be difficult to maintain focus with so much going on in the world, but you should channel your energy towards those controllable factors that impact your business rather than become distracted by the daily twists and turns of the economy.
If you’re trying to sell your business during times of economic uncertainty, it pays to be agile and challenge the sacred cows. Some businesses, especially family ones, can be too wedded to their traditional business models, leaving themselves vulnerable to changes in the business environment. In times of uncertainty, it’s useful to question the fundamental modus operandi, which might not have happened before. It’s often most helpful to have that thinking challenged by an outsider to bring a fresh perspective.
Finally, it’s wise to revisit your business plan and make sure it’s aligned to your personal finance plan. With the disruption to businesses caused by inflation and fears of a recession, it becomes even more important to ensure these two plans are coordinated.
Contact us
We can review your personal finance plan with you so you can be sure your business sale can fund your future goals, and work with specialist advisers to help you navigate towards a successful exit.
Read time: 3 min read
There are three basic considerations for an entrepreneur wishing to ensure their financial future when planning an exit:
- personal finance plans, with assumptions about the ‘pot of money’ needed to strengthen your financial future and fund retirement
- a business plan, which will spell out how the value of the business will be built
- how that value will be turned into cash (i.e. how and to whom the business will be sold)
These plans must be flexible enough to survive the uncertainties faced by entrepreneurs and their businesses – and in 2022, there is no shortage of those. The economic impact of COVID-19 continues to be felt, with the added challenges of runaway inflation and rising interest rates. Add to that the never-ending Brexit fallout and the war in Ukraine, and the importance of properly planning an exit becomes clear.
What are the key elements of an exit strategy?
How you choose an exit strategy is one of the most important parts of selling your business. Get it right and you can increase the value of the sale and gain control of your financial future.
“You need to be prepared,” says Martin Brown, founder and Chief Executive of business advisers Elephants Child. “That means emotionally, commercially, legally and financially.
“It’s also important to keep the business performing while going through a sale. These processes do take time and you might promise you’re going to hit certain milestones, so it’s vital you keep the business trading strongly.”
Martin adds that when devising an exit strategy, it’s essential to properly articulate your business story, including why you started it, what it stands for and its purpose. Having a trusted team around you is also a crucial element of an exit strategy.
“You need to get your team together, both those in the business who know about the transaction and your group of advisers,” says Martin. “A high-quality team of experienced people is paramount and it’s often worth paying extra for that.”
Considering environmental, social and governance (ESG) is an increasingly important part of planning an exit strategy. “If you’re not ESG ready, your competitors might be,” says Martin.
“You can’t greenwash it,” he warns. “It’s about understanding what the elements are, being able to measure and prove them, and knowing what it means for your business.”
What are the common exit strategies a small-business owner would consider?
Exit planning is important because it can give you more control over what can be a stressful process.
When working with your financial planner, you should be trying to establish how much money you need for your chosen retirement lifestyle, which will, in turn, set a target ‘exit value’ for your business. This is often calculated using the current tax regime and prevailing financial conditions as a base case scenario.
No one has a crystal ball, but it’s important that any personal financial plan considers potential changes to the tax environment. Business Asset Disposal Relief, formerly Entrepreneurs’ Relief, allows you to pay 10% tax on the first £1 million of gains when selling your business, rather than the standard 20% Capital Gains Tax.
What are the effects of economic uncertainty?
With so much unpredictability in the economy, it can be easy to think the whole world is against you. Yet it’s vital to keep focused on growing your business, which is what potential buyers will be interested in when it comes to negotiations.
“In a sense, we’re talking ourselves into a recession,” says Martin. It’s useful for small businesses to know what’s going on, but it shouldn’t stop you on your growth journey. It’s important to keep the mindset of driving the business forward.
“Business leaders tend to listen to what’s going on and then do nothing, and that cannot be the right thing to do,” says Martin.
It can be difficult to maintain focus with so much going on in the world, but you should channel your energy towards those controllable factors that impact your business rather than become distracted by the daily twists and turns of the economy.
If you’re trying to sell your business during times of economic uncertainty, it pays to be agile and challenge the sacred cows. Some businesses, especially family ones, can be too wedded to their traditional business models, leaving themselves vulnerable to changes in the business environment. In times of uncertainty, it’s useful to question the fundamental modus operandi, which might not have happened before. It’s often most helpful to have that thinking challenged by an outsider to bring a fresh perspective.
Finally, it’s wise to revisit your business plan and make sure it’s aligned to your personal finance plan. With the disruption to businesses caused by inflation and fears of a recession, it becomes even more important to ensure these two plans are coordinated.
Contact us
We can review your personal finance plan with you so you can be sure your business sale can fund your future goals, and work with specialist advisers to help you navigate towards a successful exit.
Read time: 3 min read
There are three basic considerations for an entrepreneur wishing to ensure their financial future when planning an exit:
- personal finance plans, with assumptions about the ‘pot of money’ needed to strengthen your financial future and fund retirement
- a business plan, which will spell out how the value of the business will be built
- how that value will be turned into cash (i.e. how and to whom the business will be sold)
These plans must be flexible enough to survive the uncertainties faced by entrepreneurs and their businesses – and in 2022, there is no shortage of those. The economic impact of COVID-19 continues to be felt, with the added challenges of runaway inflation and rising interest rates. Add to that the never-ending Brexit fallout and the war in Ukraine, and the importance of properly planning an exit becomes clear.
What are the key elements of an exit strategy?
How you choose an exit strategy is one of the most important parts of selling your business. Get it right and you can increase the value of the sale and gain control of your financial future.
“You need to be prepared,” says Martin Brown, founder and Chief Executive of business advisers Elephants Child. “That means emotionally, commercially, legally and financially.
“It’s also important to keep the business performing while going through a sale. These processes do take time and you might promise you’re going to hit certain milestones, so it’s vital you keep the business trading strongly.”
Martin adds that when devising an exit strategy, it’s essential to properly articulate your business story, including why you started it, what it stands for and its purpose. Having a trusted team around you is also a crucial element of an exit strategy.
“You need to get your team together, both those in the business who know about the transaction and your group of advisers,” says Martin. “A high-quality team of experienced people is paramount and it’s often worth paying extra for that.”
Considering environmental, social and governance (ESG) is an increasingly important part of planning an exit strategy. “If you’re not ESG ready, your competitors might be,” says Martin.
“You can’t greenwash it,” he warns. “It’s about understanding what the elements are, being able to measure and prove them, and knowing what it means for your business.”
What are the common exit strategies a small-business owner would consider?
Exit planning is important because it can give you more control over what can be a stressful process.
When working with your financial planner, you should be trying to establish how much money you need for your chosen retirement lifestyle, which will, in turn, set a target ‘exit value’ for your business. This is often calculated using the current tax regime and prevailing financial conditions as a base case scenario.
No one has a crystal ball, but it’s important that any personal financial plan considers potential changes to the tax environment. Business Asset Disposal Relief, formerly Entrepreneurs’ Relief, allows you to pay 10% tax on the first £1 million of gains when selling your business, rather than the standard 20% Capital Gains Tax.
What are the effects of economic uncertainty?
With so much unpredictability in the economy, it can be easy to think the whole world is against you. Yet it’s vital to keep focused on growing your business, which is what potential buyers will be interested in when it comes to negotiations.
“In a sense, we’re talking ourselves into a recession,” says Martin. It’s useful for small businesses to know what’s going on, but it shouldn’t stop you on your growth journey. It’s important to keep the mindset of driving the business forward.
“Business leaders tend to listen to what’s going on and then do nothing, and that cannot be the right thing to do,” says Martin.
It can be difficult to maintain focus with so much going on in the world, but you should channel your energy towards those controllable factors that impact your business rather than become distracted by the daily twists and turns of the economy.
If you’re trying to sell your business during times of economic uncertainty, it pays to be agile and challenge the sacred cows. Some businesses, especially family ones, can be too wedded to their traditional business models, leaving themselves vulnerable to changes in the business environment. In times of uncertainty, it’s useful to question the fundamental modus operandi, which might not have happened before. It’s often most helpful to have that thinking challenged by an outsider to bring a fresh perspective.
Finally, it’s wise to revisit your business plan and make sure it’s aligned to your personal finance plan. With the disruption to businesses caused by inflation and fears of a recession, it becomes even more important to ensure these two plans are coordinated.
Contact us
We can review your personal finance plan with you so you can be sure your business sale can fund your future goals, and work with specialist advisers to help you navigate towards a successful exit.