Exit Planning

As a MAUS Business Systems Accredited Partner, Sustainable Operations Management provides exit planning services to many small and medium businesses.

Have you worked hard in your business for several years? Have you had some ups and some downs in terms of profitability? What about the monetory, physical and emotional costs? Did you know you can make more money from selling your business than running it? Think about it, if you could earn the next 6 to 8 years profits at today's level or better, would you sell your business and do something else? You could retire, change your lifestyle or buy another business. When you have a saleable business you have options.

Did you know that on average Australian businesses sell for only 1-2 times their annual net profit? Research also shows that around 40% of business owners will sell their business within the next five years, but less than 12% have a detailed plan to maximise the potential value of their company.

A business is valued based on its return on investment for the buyer. A multiple of earnings factor is used to determine the return on investment, and therefore the value of the business. A business with a low return on investment will be valued at 1-2 times its annual net profit. A business with a high return on investment will be valued at 4-6 times its annual net profit. The other underlying factor in the valuation process is the perception of risk by the buyer. Should business owners demonstrate that there is little risk of the business producing similar or better returns after the sale, a much higher price will be achieved.

Our consultants perform what we call Vendor Due Diligence on your business, applying the same scrutiny to the areas that a potential buyer will be looking at when evaluating your business and making the decision whether to buy it or another business. Our consultants will assist you to improve your systems and processes and provide the basis for increased profit and returns on the sale of your business, up to 4-8 times annual net profit. We analyse 17 critical business functions and areas and develop a detailed action plan that addresses the issues in all these areas. We then coach you through the process of implementing change, systems, processes and documentation. The process we use is the result of extensive research conducted by our International network of business coaches, consultants and brokers. We use a proven and structured approach that substantially reduces the perception of risk by a potential buyer during the due diligence process, maximising the sale price of your business, at the same time as helping you to improve your monthly returns through our unique profit building program.

Do you know what your business is worth? Would you be happy to sell for that amount? How much money do you need for your retirment? What will you do after you exit the business? Will the funds from the sale of your business be enough to provide the security you need? If you worked on your business in the lead up to putting it on the market, could you sell it for more? How attractive is your business to prospective buyers? These are all very relevant questions to ask if you are contemplating selling your business in the future.

Consider a business with annual revenues of $1m and net profit of $200k. In a poor state of readiness, the owners might expect to sell their company for around $200-$400k. However, should they enlist the services of our consultants to undertake a structured process of improving their returns, systems and processes, the owners could reasonably expect between $800k-$1.2m for their business. Now that's retirement income! And, this without even considering increased revenues or net profit.

Not thinking of selling your business in the immediate future? Your business is an asset and should be viewed in the same fashion as other investments such as property or a share portfolio. We all want the value of our family home or share portfolio to increase, even though we may not have immediate plans to sell. The same goes for your business. Build the equity in your business by increasing it's value through our unique process and profit building program.

Contact us to arrange your free Attractiveness Index appraisal today.