Every business owner wants the best possible return once they decide to sell up a business and move on to new challenges. Whether you grew your company with the goal of selling it, want to explore new pastures or have an eye on your retirement, the key to achieving the best result is to plan ahead.

The earlier you start to consider your exit plan, the greater range of options there will be available to you and, most importantly, the more time you will have to build value.

Your exit plan will change over time, so it is important to review it regularly. You should consider the following eight vital steps in your exit planning:

• Financial performance

The stronger your historic financial performance, the greater the value of your business. Your business valuation will be a multiple of your profitability over time. It is vital that you have maintained a good set of books to support this. Few people will invest in a business that has poor financial records.

• Growth potential

You need to demonstrate to a potential buyer that your firm has strong growth potential. Concentrate on developing and highlighting products and services that are not dependent on you and are teachable to others, those which are aligned to your most valuable clients’ needs and ones that are straightforward to repeat for customers who repurchase regularly.

• Independence

It is important that your business is not overly dependent on any one customer, employee or supplier. It is good practice that no one customer makes up more than 15 per cent of your revenue. You should be able to switch any of your suppliers without impacting on your business. It is also important to minimise your reliance on one or two key employees wherever possible.

• Recurring revenue

Revenue is the bedrock of every business; not only how much you have but also the form in which you receive it. Subscription-based products and services that produce reoccurring, predictable, revenue are more attractive to potential buyers. The important thing is to recognise which parts of your business provide the best recurring revenue and to focus on these to build maximum value.

• Point of difference

How well differentiated is your product or service offering? And how would you describe your USP to a buyer? Trying to be the cheapest is difficult to sustain, particularly for a small business. Identifying a defined position can work well, but requires constant focus to maintain. Finding yourself a niche market is by far the most attractive option. In this place you have lower levels of competition and higher margins.

• Customer satisfaction

Having satisfied customers adds value to your business, but being able to demonstrate this is vital. There are recognised survey techniques that can allow you to demonstrate the level of customer satisfaction. Having regular access to this type of data will not only assist you in growing your business but also make it more attractive to potential purchasers.

• Transferability

If you don’t have a set of detailed standard operating procedures that are written down for your business, you need to develop them. It is always good practice to build your business to the point where you can step away without any disruption.

The key points to have in your standard operating procedures include your vision, mission and core values. Think about the strategy that unites them and management practices that support them.

Your marketing plan is another vital part of these procedures. A potential buyer needs to understand the strategy and tools used to attract your customers. Related, and just as important, is your sales plan, which needs to include the tools and processes to convert prospects to customers. Make sure you also include day-to-day business processes and customer delivery.