You’re a business owner who has fought off the voodoo and misfortune which has plagued many startups over the past five years or so. You’re turning over a generous profit and you’re looking to expand in the next twelve months. So why on Earth should you be planning your exit strategy?
The truth is that we don’t know what tomorrow will bring for any of us. Should a family crisis render you unable to support the business, should you fall ill and be unable to work, should the economy shift and render you irrelevant, should you receive an incredible offer from a larger player looking to mine your expertise, or should you be faced with an offer to buy out the business entirely, you may need a fool-proof exit route to ensure that the business can succeed and thrive in its new form without you.
There are a great variety of options available when it comes to exit strategies, including:
- Keeping the business in the family
- Selling the business on an open market
- Selling the business to another business
- Selling the business to employees
Each of these has its merits and advantages, and every business owner will have an instinct which one they’d choose. All investors look for exit strategies, even for businesses with sole proprietorship. They give the business owner control when it comes time for them to move on, and they ensure the continued success of their business once they have left.
Start the planning as early as possible. The entire point of exit strategy and planning is to discover how to optimise a business’ value, and investing time and energy in an exit plan will place the owner in a better financial position when they eventually leave. Those without an exit strategy often find they are selling at a loss, which could easily have been rectified by creating a fool-proof strategy.
There are numerous ways in which owners can hatch a strategy that will suit them. Business mentors and coaches can assist with the process, and other board members and important figures in the business can pitch in. Once an approach has been decided upon, it should be reviewed on a regular basis in order to ensure it’s still appropriate and would still yield great results even years after it was created.
It may be difficult, when starting a business, to think about leaving it behind, but exit strategies are a crucial element of business, and even if you never use it, it is paramount that there is an efficient one in place.