Create Your Business Exit Strategy Now

A business exit strategy is as much a backup plan as it is a future goal.  If you decide to change your life by retiring or want to capitalize on your hard work, business exit planning is paramount.

Like most entrepreneurs, you hope to sell your business for millions and retire to a tropical island or mountain house with a killer view.  However, there are many steps between where you stand now and where you can see your million-dollar vista.

Read on to learn how to create an exit strategy.

Who is Your Buyer?

Before selling a product or service, you need to understand who your buyer is.  This is no different when your business is the product you are selling.  Financial buyers have the monetary means to acquire your business but not the know-how.  They may hire you back, with an earn-out as a consultant or for legacy information, as they take the reigns.  Strategic buyers have the expertise to continue your business or, at the very least, absorb it into their current operations.  Rather than fear talking about a business exit strategy, embrace the conversation.

Business Exit Planning and Financing

Once you’ve determined the need for a business exit strategy, it comes down to valuation, followed by execution.  Seeing more profits, fewer losses, a higher year-over-year earnings report, or a combination of the two will make your business appealing for sale.  Stable industries are likely to have a more conservative growth line, whereas tech firms may be a little more erratic — however, with more risk comes more reward potential.  Consider The Shark Tank television series.  Contestants offer a percentage of their company for an initial investment.  Sometimes the Sharks are tied to the operations, and sometimes it’s just money.   Over time, however, the idea is to grow the company and their investment.  With a sale comes the biggest payout.  Some companies are also worth purchasing outright, at which point it simply comes down to the terms of sale.  Transferring ownership is another form of a business exit strategy.

Business Exit Strategy Considerations

Whether you’ve owned the business for decades or you’re operating as a startup, it’s beneficial to understand how you can exit the business.  Small business exit strategy planning now can help save a headache later.

Here are a few business exit planning considerations:

1 – Hire a professional consultant for small business to help formulate the plan

2 – Prepare and clean up your financial reports

3 – Consider your preference between financial versus strategic sale and source your options

4 – Speak with your investors and your management team

5 – Inform all stakeholders, including your employees and investors

Business exit planning is a thoughtful process and should be treated with care.  A fully formed exit strategy considers all business stakeholders, finances, and operations into account and details all actions necessary to sell or close.  Exit strategies vary by business type and size, but robust plans recognize the actual value of a business and provide a foundation for future goals and new direction.

Business exit strategy options are plentiful.  A dissolution is also an option — but one that might anger investors and your employees.  However, assuming you hope your company legacy carries on in a multi-beneficial way, planning to sell it is a noble choice.

Business owners need to focus on the day-to-day strategy while implementing the overarching strategy for growth.  However, an end date will be either by sale or retirement.  Preparing your company and your mindset now will help make the transition that much smoother down the road.  Click here for a free video meeting with Dave to work on creating your business exit strategy.

Coach Dave