Like many business owners, you have devoted immeasurable amount of work and resources on developing your business. When you are busy with every day operations, it’s difficult to find the time to think about your exit strategy or retirement plan. Developing an achievable exit strategy is an essential task and too few owners give it proper consideration. An exit strategy can benefit your future. It can help you realise your businesses full potential whilst maximizing its sale value.
74% of entrepreneurs in the UK risk long-term business success by not giving proper thought to their exit strategies’ Deloitte Entrepreneurship: UK 2008
With all that you have invested, doesn’t it make sense to plan an exit from your business to protect your future?
What is an exit strategy?
An exit strategy is a plan on how you intent to leave the business. We know this is not as easy as it sounds. Your business has been a significant part of your life and dreams. Contemplating a future apart from it can be difficult to visualise. As hard as it may be, you need to start thinking about your own goals, targets and timescales to ensure your exit is within your control.
What should an exit plan include?
Your exit plan can be a simple one page document but should include:
- Your preferred exit option
- Deal Structure
- Preferred buyers
- Business valuation considerations
The key is to understand that an exit is a process that may occur over many years and there’s more exit options than simply selling your business. For example you may choose to set up a management team in order to take a back seat while receiving a regular income. To understand more about the various exit options, we recommend you read this blog
An exit strategy ensures your vision of the desired outcome is achieved and helps to minimise the risk of failure or disappointment.
Carefully planning your exit from your business has huge benefits:
- exit your business at a time of your choosing, when the business is doing well and the market conditions are advantageous
- mould your business into the ideal shape for your chosen exit option – maximising the value you get from it
- prepare successors if they’re coming from within the business, this could be a family member or part of your management team
- prepare the 2nd tier management team, if you wish not to sell but draw a regular income from the business
- make your business more appealing to potential buyers, if you wish to sell
If you don’t have an exit plan in place, we would recommend you think about creating one now, even if you expect to work for another 10 -15 years. Preparing a exit strategy is good practice and can help shape your business to achieve your future plans for life beyond your business. To help improve your chances of a successful exit we have complied a short 10 point checklist. Download here