Similar to Will’s and Funeral Plans, many people don’t think to make one until the obvious is staring them in their face. Same is true for exit plans, critical to securing the business owner’s future financially, they help to ensure a lucrative and smooth exit when it comes time to leave the business. Don’t be caught unprepared. Help guarantee the best for yourself and your business when you leave start planning your exit strategy now.
What exactly is an exit strategy?
While many people misconstrue an exit plan as a way to end the business when they are ready to retire, the best methodologies actually create a plan to move the business forward towards it long term goals but with a new owner. It sets up the business to create the necessary environment for a smooth handover when it is time for the current owner to step away.
A comprehensive exit strategy considers all the business partners and investors, standards of procedure and finances and breakdown all the necessary steps to sell the business when it is time. If the business is struggling a good exit plan with help to cut losses and if the business is successful then it will help to maximize profits and ensure a smooth turn over for the longevity of the business, new owners and employees if desired.
Steps to Developing a Good Exit Strategy.
1. Straighten out the business finances. The first and most important step is to get a good rand accurate view of the finances of the business. From expenses to assess to performance this will help to valuate the business and set up the business for an offer that is aligned to its true value.
2. Research your options. Know what life after business looks like for you and how your business does or doesn’t fit into that picture. Once you have a good idea of this then choose an exit strategy that aligns best with your personal goals.
3. Look to the future leaders. Once you have a plan in place it is time to start shifting some of your responsibilities and duties to the new leadership. Having documented standards of procedure will greatly help in transitioning these duties.
4. Let your investors know. If you have investors and stakeholders set a time to discuss with them your plan to leave the business. Be sure to create a strategy that let’s them know how they will be repaid.
If you need assistance developing your exit strategy, please reach out. We are happy to answer questions any time. Call us at 469-569-8347 or email us at Allen@PacificMergerGroup.com