Many business owners put in a lifetime of hard work developing their business only to fritter away some of the rewards by failing to think through how they will exit from the business.
It’s wise to put an exit strategy in your business plan and review it regularly; after all by planning an exit, you can ensure that you make the most of your business.
Planning an exit is about determining what you want out of your business and how you will execute your objectives to meet your strategic goals. We’ve drawn up some initial thoughts around planning an exit.
Identify your goals
Some individuals go into business knowing precisely what they want to accomplish in the long-term, some want to grow a business to a point that when the time is right can be sold, while others prefer to nurture a family business that can be passed on to their children when they are ready to step down.
Think about what you want from your business and not necessarily just the financial objectives; consider why you setup in the first place as this may influence your thinking.
Explore the options
If your business is in a prosperous sector with a solid growth span, then the option to sell when you are in the position to do so may appeal, after all the interest from would-be buyers may already be there.
It’s essential to be realistic. Many business owners have a puffed up idea of the real value of their business. If you can’t think of a good reason why someone would want to buy your business, then you will struggle to sell it!
Selling though isn’t your only choice. Think through floating your business on the stock exchange (so long as it has a substantial turnover), passing your business on to a family member, merging your business, or even closing your business down. All these are options to consider based on your own personal objectives.
When is the right time?
Pinpoint a level of sales, particular year or other objective (e.g. if you plan to pack it all in at 55, you might want to start looking at your exit at 50). You can always alter your plan later if you need to. If you are thinking about selling then always aim to exit when profits are growing and likely to increase further.
Thinking about your finances, lifestyle choices and preferred retirement age can all play a part in determining when to make your exit.
Keep in mind that by including your exit strategy in your business plan and by regularly assessing it, you can review your ongoing options.
If you have any questions around this topic, please feel free to get in touch with us directly on 01789 263888 or email email@example.com.