While most entrepreneurs who buy a franchise usually don’t place “Create an exit strategy” in a top spot on their to-do list, many business owners who are nearing retirement sure wish they had!
Having an end in mind and at least a rough timetable of your future plans can affect how you operate your business. This, in turn, may influence the ease with which you will eventually sell it and the price you’ll ultimately obtain from its new owner.
Looking ahead, you’ll exercise any one of several options: Sell your business to a family member, a key employee or to a budding entrepreneur. Leave it to your heirs. Or, simply shut it down.
If gaining maximum value from your business is your goal, most of these choices will be made easier if you have an exit strategy in place well before it’s time for you to retire or otherwise move on. Here are two tips:
- Operate your business with a goal of expanding services, developing a strong book of business, gaining the loyalty of key workers and creating a stellar reputation. Each of these qualities will make it look all the more attractive to a potential purchaser whenever they come calling. A diverse client base plus some qualified “holdover” employees along with a track record of steady growth and good profitability will draw many an interested party!
- Run your franchise as if a prospect is arriving the next day. This means keeping careful financial, records that can be easily understood by potential purchasers and readily shared by them with their accountant, lawyer or other advisors. Of course, good record-keeping also applies to facility leases, employees and equipment, too. Notes on the back of an envelope won’t cut it! Maintain good records in electronic form on a computer.
As a new franchisee, you may not go so far as to develop a written exit strategy, although it can’t hurt and most likely will help immensely! Keep the following information in mind as you operate your franchise with an eye toward eventually formalizing your exit intentions with a plan.
Per the FPA/CNBC Business Owner Succession Planning Survey, 78% of small business owners intend to sell their operations to fund their retirement. They’re counting on the proceeds to cover anywhere from 60% to 100% of their “golden year” expenses. However, less than 30% of owners have taken the time to develop a written succession plan.
An additional word on exiting a franchise
Not all franchisors assist franchisees with exit planning, but the Allegra Network takes this extra step for owners of our marketing, print and mail centers.
Current owners of Allegra Centers who are contemplating an exit can take advantage of our Allegra Resale Program. Sellers are introduced only to highly qualified prospects. Working directly through us, they also enjoy commission-free sales.
Meanwhile, buyers benefit from owning an Allegra-branded location while gaining the chance to operate it on their own. Of course, they also take advantage of the many support programs offered through our proven franchise business model.
To discover how a retiring husband-and-wife team of Allegra owners benefited from our assistance, we invite you to read our blog, Succession Planning from the Seller’s Perspective.