How to Plan Your Exit Strategy for Your Cleaning Business
Whether you've just started your cleaning business or you've been in business for a while, if you haven't given any thought to how you will eventually exit the business, you will probably be unprepared when the time comes.
Perhaps you want to keep your business until you're ready to retire. But what happens if you decide you just want to move on and do something else? If your cleaning company has a good reputation, is growing at a steady pace, and the economy is good, you might be able to sell your business and get the price you want out of it. But what do you do when the unexpected happens, such as a death or illness in the family, and you need to exit your business quickly? Having an exit strategy in place can help you to prepare for a smooth transition and make sure the business keeps going once you're out of the picture.
You may feel that your business will always be around. But that's not necessarily the case. Whether you are a one-person shop, a family owned business, or a cleaning company with many employees, a change in circumstances may lead to the end of your company unless you have an exit strategy in place.
The 5-Step Process for Planning Your Exit Strategy from the Cleaning Business
Step One: Figure out what you want to happen to the business after you're gone. Do you want to sell the business or do you want to pass the business on to a family member or trusted employee? Don't make a major decision like this without the input of others who help you run the business. You might not be planning on leaving your cleaning business for many years, but if a major change occurs such as a serious illness, death, or divorce; you might be forced to do something quickly. So it's important to have a plan in place and to know who is interested in taking over your cleaning company.
Step Two: Detach yourself from the business. Many small businesses depend on the owner. If the owner dies or becomes unable to run the business, there is a good chance the business will fail. Make sure you have documentation on all of your procedures and policies. Write down how the business runs in as much detail as you can. Along with your operation procedures, have a list of your customers, suppliers, and employees. Make sure you have a backup copy online of these procedures and that at least one trusted employee or family member knows how to access the documents. Should the unexpected happen, your documented procedures will help to make sure the business can keep running smoothly.
Step Three: If you are going to pass the business along, start working with your successor. Deciding who takes over your business and spending time "grooming" them to understand the ins and outs of your cleaning company will take time. It won't take just a few days or weeks, but months and maybe even years so they can see how the business flows. Deciding who will take over your business, whether it is a family member or employee, should not be an emotional decision. You need to make sure that person is right for the job. It's important to make sure the individual has not only cleaning skills, but leadership qualities. By starting early, you can evaluate candidates and make sure that they can carry out all the tasks necessary to successfully run your cleaning business.
Do you need to look for someone outside the company? There might not be a family member or even an employee who has the desire or skills to take on the ownership role. If that's the case and you want the business to continue, you need to find someone outside the business who wants to step in.
Step Four: Make sure your business is financially protected. Do you have enough life insurance and disability insurance? Do you have a Will or Trust in place? Life insurance can pay taxes and other expenses and give family members or employees the money to continue on if something should happen to you.
Step Five: If your decision is to sell the business, do you know what it is worth? Get your business appraised by a professional business appraiser or consult with your CPA and/or attorney. Most business owners think their business is worth more than it actually is -- or more than a potential buyer is willing to pay. If your business is not where you want it to be, spend some time and energy on increasing revenue and profits. Potential buyers want to see a company that is growing steadily, has long-term customers, and a profitable bottom line.
Do you want a business broker to help you in selling the business? Spend some time researching and finding a broker you are comfortable with and who knows the cleaning industry. Along with a business broker consider setting up a transition team to help with the sale of the business. This is typically your CPA and attorney. These individuals can help to make sure you have all the proper documentation including tax forms that you need to sell your business.
Don't be caught off guard when you decide its time to move on to new ventures. A well thought out exit strategy can keep your cleaning business running smoothly once you decide to pass the business along to someone else or bring you the most profit when you decide to sell.
