3 Essential Tools and Resources for Business Exit Strategies

A significant shift is underway in the beating heart of American commerce. According to the Exit Planning Institute (EPI), over half of American businesses will transfer ownership within the next decade. Amidst this need for exit strategies, most business owners are unprepared. 

Only 20-30% of businesses going to market sell, so what happens to the remaining 70-80%?

These businesses are vulnerable and at risk of leaving their hard-earned legacy unprotected. Business continuity and wealth preservation hang in the balance, teetering between success and missed opportunities. 

Industry data reveals a concerning narrative: many businesses aren’t ready to satisfy market demands. However, there’s a silver lining – it’s a narrative we can change. 

How? A meticulously crafted business exit plan. 

Armed with the right strategies, tools, and insights, we help businesses craft a successful business exit strategy that preserves legacies, honors years of dedication and ensures that a life’s work finds its rightful continuity. As we navigate these layers of strategic business exit planning, we’ll emphasize financial stability, alignment with long-term aspirations, and the creation of a lasting legacy.

What is a Business Exit Strategy?

A business exit strategy outlines how and when an owner plans to sell, transfer, or close their business with the goal of ensuring a smooth transition that preserves value and legacy. If exit planning for business owners is a roadmap, then the business exit strategy is the best route to a destination. 

However, a business exit strategy isn’t just about changing hands or closing doors; it’s a testament to an owner’s vision, a tribute to the collective efforts of a dedicated team, and a plan to sustain a business’s future.

Why Every Owner Needs a Business Exit Strategy

Every business owner needs a business exit strategy to prepare for the inevitable and the unexpected. While a business might be a testament to past achievements, an exit strategy is its safety net for the future. 

It’s a contingency for unforeseen challenges, a guardian for business continuity, and a blueprint for a seamless transition. In essence, it ensures that when one chapter ends, the next begins with purpose, honoring the past while setting the stage for future growth.

Practical Tools and Resources for Business Exit Strategies

At the heart of a successful exit strategy lies a deep understanding of what truly amplifies a business’s value – what makes a business stand out. When you approach exit planning with this outlook, a business becomes more than a commercial entity. It’s a sought-after asset that has a better chance of fetching a premium price.

At BeReady Exit Solutions, we’re committed to guiding businesses and their advisors through this phase, and we’ve curated a selection of insightful tools to help. We credit the International Exit Planning Association (IEPA) for the tools and strategies discussed in this blog. They guide middle-market companies through comprehensive exit plans.

The following assessments are meant to help you recognize a business’s needs, ownership dependency, and long term goals. All of which help you understand the intrinsic value of a business and how you can best position it in the marketplace.

1. Business Exit Readiness Index™ (BERI Index™): Your Starting Point Assessment

Developing an exit plan and strategy begins with self-awareness. Understanding where a business owner stands today is crucial to plotting a successful business exit strategy for tomorrow.

This succinct 20-question survey gauges a business owner’s financial and mental readiness, considering their goals and aspirations. Are they truly ready for an exit? Or do they need to stay and grow their business? 

The BERI Index™ helps you understand a business owner’s perspective by plotting and analyzing responses in a quadrant chart. This visual representation maps out exit options best aligned to their current mental and financial readiness. 

Because a significant number of businesses aren’t primed for sale, this clarity is invaluable. They might require fine-tuning, additional growth, or strategic interventions to make them transferable or valuable enough to meet the owner’s post-exit aspirations. 

By using this tool, you can help business owners make enlightened decisions that reflect their immediate sentiments and long-term vision.

Learn more about Business Exit Planning with the Business Exit Readiness Index™.

2. Owner Dependence Index™ (ODI™): Evaluating Business Autonomy

Owner dependency is an often overlooked factor in a business’s transferability. While it’s commendable for an owner to be the vital cog in the machinery, an over-reliance on them can become a bottleneck, especially during the ownership transition.

The ODI™ is an astute tool designed to assess a business’s reliance on its owner, scrutinizing eight pivotal areas:

• Owner Involvement
• Internal Operations
• Strategy and Planning
• Governance and Ownership
• Financial Matters
• Performance Management
• Sales and Business Development
• Company Culture

By meticulously evaluating these areas, the ODI™ uncovers the level of control or influence an owner has. For instance, if a business owner is heavily entrenched in all areas — an ‘Octopus Owner’ — then in their absence, who keeps the business running and profitable?

The ODI™ reveals these dynamics, highlighting areas needing more autonomy. In doing so, it paves the way for proactive measures such as grooming internal talent or implementing systems to make the business less reliant on the owner.

Using these insights, you can strategize to shape a business that can stand without the current owner for a smoother transition and heightened market value.

3. Growth Planning Index™ (GPI™): Determining Goals

In crafting a successful business exit plan, it’s essential to understand a business owner’s goals. Do they want a streamlined, more profitable operation? Or are they ready to raise business value for a future exit? The GPI™ answers these and other questions

Consisting of a twenty-question survey, it dissects the owner’s perspective in two critical areas: commitment to growth and destination vision. Rather than make assumptions, the GPI™ gets at the pulse of a business owner’s aspirations. 

These insights are then translated into a growth quadrant, spotlighting twelve growth and equity value drivers. Each point on this quadrant guides you on how to align your advisory efforts.

For an owner with a low growth commitment, their focus might lean towards stability, perhaps strengthening their current position or even planning an early transition. Conversely, a business owner with a high growth commitment might zero in on elevating business value, with a strategic exit scheduled for later once they’ve maximized returns. 

The GPI™ brings advisors out of the dark, giving them a snapshot of a business owner’s intent. This understanding ensures that strategies resonate with an owner’s vision and that we invest time and resources appropriately.

These Exit Planning Owner Engagement Tools are proprietary tools developed by the IEPA® that act as conduits to understanding and realization. Designed with precision, they reveal business owners’ internal drivers and goals. 

The insights derived from these tools come directly from owners — no assumptions or external impositions — just genuine, unfiltered feedback. There’s no better compass to business exit planning than the owner’s voice. 

Business Exit Strategies with BeReady Exit Solutions

In business exit strategies, advisors are architects, building structures that ensure businesses don’t just end but transition with purpose, legacy, and value intact. At BeReady, we understand the nuances of this responsibility and are here to guide your strategies. 

Years of honing our expertise have taught us that exit planning is more than technicalities; it’s about understanding the soul of a business. We must acknowledge that beneath every financial ledger is a story of dedication and dreams. How can we best tell that story in the marketplace?

Our tailored tools, resources, and solutions empower you to amplify the value of any business you counsel. As you guide owners through one of the most pivotal phases of their entrepreneurial journey, we equip you with the resources to ensure your steps ahead strategically.

Want to talk strategy?

Schedule a conversation with us. Let’s create exit plans that resonate with owners and honor their legacies.