Opening your first home care franchise business is an exciting time. You’re learning and experiencing new things while investing in growth opportunities for you and your employees. You’re meeting new people, executing your plans and paving the way to a future of prosperity for you and your family.
But with every chapter’s beginning comes the knowledge that it will someday end. Your thoughts may be full of all the exciting possibilities that come with starting your own home care franchise, but you should also consider how you will end this exciting chapter when the time comes to enter the next phase in your professional and personal life.
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- Why Should You Have a Franchise Exit Strategy?
- Stage 1 — Identify Your Goals
- Stage 2 — Develop an Exit Franchise Plan to Meet Your Goals
- Stage 3 — Implement Your Exit Plan
- Exit Strategy for Business Owners — Possible Options
- HomeWell Will Help You Craft Your Exit Strategy
Why Should You Have a Franchise Exit Strategy?
At first glance, you may think having a franchise exists strategy before even starting your home care franchise is a little early to consider such a thing. The truth is that there are two important reasons for having an exit strategy you must consider before involving yourself with a franchise.
First, having a franchise exit strategy will help you reach your goals. As you start your franchising journey, you should have a comprehensive list of short, medium and long-term goals. These goals should include your ideal scenario for the day when you step away from your business.
Secondly, having a franchise exit strategy will make life easier for the people whose lives your business impacts. This includes employees, partners, successors and other parties who will operate and continue the business after your departure. Franchise exit strategies are especially considerate to these individuals in the case of an unforeseen event that removes you from your position and leaves someone else to pick up the pieces.
The good news is that you can make plans now for how you will exit your franchise, whether that day comes sooner or later. Starting a franchise comes with some risks, but you’ll be in a better position from day one if you prepare for every eventuality now — including your exit.
The Exit Strategy Process
Having an exit strategy is a wise decision for every home care franchisee. Here are three stages to help you make an exit strategy process of your own.
Stage 1 — Identify Your Goals
When you plan your exit strategy, you get to decide how the process will go for you and your entire business. Here are some areas you can set goals for your exit strategy:
- Your target exit date: Set the desired end date for when you will step away from your involvement with the day-to-day business operations. Consider whether this timeline aligns with when you will hand over official ownership of the business.
- Your involvement: An exit strategy process lets you leave your franchise on your terms. Do you envision an abrupt end to your involvement, or will you take more of a gradual exit? Will you stay on the books as you help transition the business to the new owner? These and other possibilities are up to you.
- Your financial needs: Selling an established business is a lucrative financial opportunity. You want to sell it at the highest value possible, considering factors like when you want your cash, how much money you want after exiting and whether you’ll accept various buyer financing options.
- Your successor: You can choose your ideal successor to take over the business after you leave. See the section below titled “Exit Strategy for Business Owners — Possible Options” for more information about this crucial consideration.
- The legacy you leave behind: People within your community may continue associating your franchise with you even after you leave. For this reason, you want to preserve your legacy by intentionally considering your answers to the above goals.
Stage 2 — Develop an Exit Franchise Plan to Meet Your Goals
After determining your goals, the next step of the process is to make a plan to achieve them. Here are three ways to do this:
- Conduct a business valuation: This will inform you of your business’s worth and how that worth is calculated. Use this information to identify any gaps you need to fill to reach the value you want to achieve by the time you exit.
- Update your business plan: Use the information you receive in your valuation to update your business plan. This will help you maintain or increase your business’s value before exiting.
- Create a management succession plan: When you craft a management succession plan, you must consider various options for your business’s future ownership. Outline the tasks you perform as the current business owner and create a strategy to transition those to other people before your anticipated exit date.
Stage 3 — Implement Your Exit Plan
The final step in the process is to put your franchise exit plan into motion. After understanding what needs to happen within your business to operationally and financially achieve your goals, create a timeline with key milestones you need to hit for a successful exit. As you progress down this path, revisit your exit plan if you decide to shift strategies or need to make a change to reach your goals.
Exit Strategy for Business Owners — Possible Options
One of the most important factors to consider when developing a franchise exit strategy is the person or party you’ll sell your business to. Here are four of the primary options to consider:
- Sell to an existing franchise owner: One of the easiest possible transition scenarios involves selling your business to another franchise owner in the same system. An existing franchise owner will already have the experience and knowledge needed to run your business while understanding the true value of your offer. This may result in an easy, short negotiation period.
- Sell to a new franchisee: New franchisees are also a solid option when looking to sell your business. Often, new franchisees want to start their business journey quickly, and buying an existing franchise can help them do that. Plus, your franchisor may already have leads in your area, finding you the perfect qualified candidate to buy your business.
- Sell or leave the business to a family member or heir: If you’re thinking of leaving your business to a family member or heir, then chances are high that you’ve considered this option from the beginning. Start guiding your successor now to prepare them for the day when the business becomes theirs, if that’s something they want, too. Only 45% of businesses transferred to the next generation stay in business for more than a few years, so you want to do what you can to set your successor up for success.
- Sell the business back to the franchisor: You can sometimes sell your franchise back to your franchisor. Ask your franchisor if this is even an option before entering their system.
HomeWell Will Help You Craft Your Exit Strategy
The team at HomeWell strives to give each of our franchisees the best chance possible to make a difference in the lives of their clients in the home care sector. We know the day may come when you want or need to step away from your business. We understand your desire to continue giving your clients the care they’ve come to expect from your business.
That’s why one of the benefits of franchising with HomeWell is that we help you craft your exit strategy so you can achieve your personal goals while continuing to make a difference in your community. Contact us today for more information.