All security alarm dealers need an exit or succession plan. In fact, many experts advise having one at the start of your business, so that you stay on track with how you grow, plan and manage your business. Even if you are many years from considering retirement, an exit plan will help you prepare if life circumstances, such as illness, force you to step away from your security alarm business.
There is no one-size-fits-all plan for security alarm dealers. Your exit plan will depend on your personal goals. Below are a few options:
- Merger and acquisition. You can merge your company with another security alarm company or larger company. This can allow you to grow revenues, and take a smaller role in the company, or none at all.
- Sell your business. You can sell to an individual, larger company, or even your employees. If you need quick cash, an outright sell may be the best option. You can also do a gradual sale which provides you with ongoing income and the new owner can pay in installments.
- If you need to step away from the business temporarily, you can transfer business ownership via a lease. You can specify the contract terms, length and payments in your lease.
- Shut down. You may choose to close the business and liquidate all of your assets.
- Go public. This is not a typical option for security alarm dealers, but some companies do an IPO and take the company public.
- Keep the company. Another option is to have someone take over running the business. As an owner, you reap a monthly income without being involved in the day-to-day running of the business. You will need to choose and train your successor. If this is an option you are considering, start grooming your successor early on.
Your options may depend on your company structure, so it is important to consult a lawyer to help you with your exit strategy. You will also want to talk with your accountant who can help you to assess and manage the tax implications of each option. For example, if you choose to sell to family members, you will need to consider estate and gift taxes. Finally, if you are selling, a business valuation expert can help you value the worth of your business.
A critical part of your exit strategy is your current operations. To ensure a smooth transition when the time comes, here are a few things that you can do now:
- Have documented operating procedures
- Know the value of your business, this includes assets and RMR
- Do routine account audits to ensure you’re billing what you are monitoring
- Train and empower your team
In our industry, we have seen many small security alarm dealers sell to large companies but that is not your only option. Don’t wait until you are in a situation where you are forced to make a choice. Be proactive and plan your exit strategy long before you need to activate it. Having a plan will give you peace of mind, knowing that when the time comes, you are ready for it.
Businessman maze image courtesy of pakorn at FreeDigitalPhotos.net