5 Tips on Exit Strategies

5 Tips on Exit Strategies

Business planning expert and founder of the Bankable Exit, Byron McFarland of the McFarland Group, shares 5 tips on exit strategies for business owners. 

Here’s a quick summary of Byron’s 5 tips for business owners and entreprenuers on exit plans. Listen to the entire conversation with Byron in the above video!

  1. Know your number. This means, knowing how much you need to receive net after tax, net after expenses, net after paying your key employees their incentives, and debt in order for you to be financially independent in the aftermath.  
  2. Know the approximate value of your business 
  3. Know the terms of payment for your transaction, because not every transaction is the same. Depending on who your buyer is will determine the terms of payment. For example. an outside strategic buyer will be predominantly cash vs selling to management which will likely be an exchange of stock for a big note. Knowing this will help with planning.  
  4. Inventory all your resources that will help you realize financial independence. This includes your building, building rents, your 401k, stocks, bonds, and other investments. Inventory all of these assets and have your financial advisor incorporate them into your financial model.
  5. Know how you’re going to provide for healthcare continuation after the sale, because this is the most surprising item that business owners forget to plan for. It’s likely you’ll no longer be on a group insurance plan that provides world-class benefits, but instead under the Affordable Care Act which can be quite different. 

About Byron McFarland

Byron is the founder of The McFarland Group and has over 30 years of experience providing business owners with strategic guidance. He’s a master at simplifying complexities, collaborating with advisors and providing unique solutions that allow his clients the clarity to act with confidence. He’s spent many years as an expert in the financial services field, and is the publisher of the Bankable Exit and the Bankable Buyer. Learn more about Byron McFarland here:  

About The McFarland Group

The McFarland Group specializes in partnering with entrepreneurs as they make plans to leave their business to the next generation. This includes strategies to grow the business’s value, retaining key talent, and creating financial feasibility when it comes time for entrepreneurs to transfer ownership and responsible, call the Bankable Exit. Learn more about the McFarland group here:  

TOTAL ADDRESSABLE MARKET

TOTAL ADDRESSABLE MARKET

Total Addressable Market 

After completing your annual planning session, in order to reach or surpass your sales goals, we recommend understanding your Internal TAM – Total Addressable Market. You have existing clients. Now… it is time to gain more market share from them.
By now, you have rated and prioritized your clients. How well do you truly understand them? Your top 50 clients typically make up 80% of your business. More than likely, however, you aren’t capitalizing on your top 50 TAM. Are you only selling one or two of your services to them? Could you sell them a few more services? Could you offer them more solutions? Could you reach multiple locations within a company?

White Board Exercise:

Of your top 50 clients, what is the opportunity that you have within your current clients?
  • If you are selling $10,000 into a client – but you know they purchases other services or products that you could sell you need to determine the TAM you can realistic capture this year.
  • Assuming you feel they spend $50,000 of services/products that your company can provide then you have $40,000 of available Internal TAM.  
  • Set a goal for this year set at $25,000

Now… your goal is to double this client – HUGE difference!

Do this exercise again for ALL 50 clients. Once you do this for all of your top clients, then rank them. 
Based on the Total Addressable Market, there is a significant difference between the $50,000 and the $10,000. This will give you a list of who to target first. Then, you create a plan on who, when and how often to get in front of or call on these people. 
Start by putting together the plan for your internal Total Addressable Market. It’s a great way to start how you’re going to reach your sales goals.
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