The Exit Audit: Your Compass to a Brighter Business Future (No Matter Your Exit Plan)
The word audit typically has a negative connotation. You think of an accountant, pulling up to your office, looking for each and every receipt over the last year. Remember that dinner receipt from your trip to Fleming’s with a client 6 months ago? They want that one and you better know where it is!
Also, Craig and I currently have more hair than those guys from Office Space. However, I expect that my head has a similar future to the guy in the suit. More on that later.
That’s not what we’re doing here.
We promise.
What Is An Exit Audit and How Does it Provide Value to Your Business?
The intention during our Exit Audit is to learn the story of your business over the course of interviewing those that built it or have become essential in running it.
Hearing the stories of how it came to be, the factors that cause customers to remain loyal, and the plans for the future.
How did you get to where you are today and how will you reach those future goals you have plans for? That’s what we get to discuss.
The interview portion isn’t an interrogation, it’s a conversation. A conversation that allows us to paint a vibrant picture of your company and its potential.
These interviews are paired with valuation work. If you want to learn more about the valuation work, we recommend reading The Limited Business Valuation: How to Know What Your Business May Be Worth.
So much of the value in your business is built on the qualitative data we learn about in the interviews.
When we talk with clients about our Exit Audit, the initial goal is to remove the negative association with audits, as a whole. We’ll look at the financials, too. But it won’t be painful.
Personally, I love the interview portion of the process. Hearing the stories of business owners that come out in the hours we spend together, getting to be a part of their story, in even the tiniest way, is one of the most fulfilling aspects of my job.
What if I’m not looking to sell my business right now?
Not looking to exit just yet? Many of our clients are in exactly your shoes. Even if you’re not thinking of exiting right now, your evolution will often require you to make changes and address issues that you would currently consider a stressor or headache. Thus, helping you run a business you truly enjoy.
More than ever, you must know where you are to know where you’re going.
The Exit Audit provides a baseline assessment of your business today as well as a map to guide you through opportunities to improve your business.
Many of our clients start with this audit and then work with us to address the opportunities that come to light through it.
This work may look like strategizing to add additional revenue sources, securing a loan to scale your business, M&A Advisory, or developing KPIs to track and manage your business.
We always say that a business exit ready is a business that’s enjoyable to run.
An Exit Audit can help you navigate unfamiliar financial terrain allowing you to get back to the parts of your business that you enjoy.
4 Questions to get you familiar with our Exit Audit
Here are 4 questions we ask, that help us guide our business owner clients:
Do you have a compelling reason for wanting to sell your business that would be acceptable to a buyer?
The reason behind why you’re looking to sell your business may be clear and typically that means it’s related to your age and desire to bring your present career to an end. However, you may also be at an inflection point with your business where a capital infusion is needed to go to the next level. Whatever the reason may be, it makes sense to you, but have you thought about it from the perspective of a potential buyer? Would it be something that concerns them or does it make sense?
Saying that your business is too stressful or that you’re just overmanaging the day-to-day could be something you personally feel, but it’s not a reason that those taking it over would get excited about. However, if this is indeed the answer, maybe selling your business isn’t the right next step. With many of our clients, we look at projects that serve the dual purpose of increasing value and enjoyment of ownership.
Have you considered new products that can be launched into new markets?
You started your business because you had an idea or belief that you could do things in a new way to solve a problem for your customers. Chances are, that entrepreneurial mindset is coming up with new ideas all the time. We ask this question to see what opportunities might be out there to further diversify your business.
You’ve found success through your current offering, with your current market, and the strategies that helped you build that could be utilized to branch off and start something new. With your proven process and the unique way you do business, there can be opportunities to expand past your current product offerings for a new group of customers. An opportunity like this could lead to growth that drives up value in a sale process.
Have you considered new products that can be launched into existing markets?
In a similar vein to question number 2, there are customers that you already serve, who love your product or service and would love to find another way to buy from you. Are there new products that align with your company competencies that would be interesting to your current customers?
This question allows us to understand how your company accelerate value creation through increasing wallet share with customers who already trust you. For example, let’s say you run a managed IT services company and notice that your current clients also need to upgrade their hardware. Maybe this isn’t something you’ve pursued historically, but adding this to your offering would deepen client relationships.
4. Do you measure employee engagement, and if so, are your employees engaged and satisfied in their work?
As we’ve written before, there are many reasons that culture is a wildly important factor in your business. It provides so much intangible value through the exit process and future success. Many owners would say that they have a great culture and happy employees, but are there metrics to back that belief up?
We recommend that business owners find a way to get a pulse on how their employees are feeling about their day-to-day experience at work. This could be distributed by email or some other method. Gathering employee feedback at least once a quarter is a great practice to keep up-to-speed on how the team is feeling.
As I said, we love the discovery process of learning more about you and your business. The stories of entrepreneurs, their grit and devotion to what they do, are things we’re continuously learning from and inspired by.
If these questions got you thinking about your business or viewing things in a new and exciting way, an Exit Audit may be the next right step of discovery for you and your business’s future.
Reach out, we’d love to chat.
