Having a business exit strategy is a vital part of running a business. You may think, “But I’m not planning to sell my business”, but that doesn’t mean you shouldn’t have an exit strategy.
It’s absolutely guaranteed that you will exit your business at some point. You may exit willingly, or you may die or have to quit running your business for health or other reasons, but you can guarantee you’ll exit eventually.
It’s also fairly common for the strain of running a business to get too much, and if there is no business exit planning in place then business owners may end up just closing the business and walking away. An exit plan gives the business owner more options.
Exit strategy for small business
There are a number of reasons for developing an exit strategy:
1. Protection: Having an exit strategy for a business protects the value of the business you have built and can also protect you from unforeseen events and changes in the marketplace
2. Business Success: An exit plan for business means you will naturally focus on elements that will make your business stronger
3. Stamina: By putting in place exit planning you should be able to escape the daily grind and stay enthusiastic and motivated to run your business for longer
4. Value: Planning for your business exit should help you to release more value from your business when you do sell.
At the moment you may have no plans to exit your small business, but ultimately you may want to retire or pass control of the business on to a family member.
You may go through life events such as illness or divorce that force you to sell the business, and there’s no planning for these kinds of things, so it’s a good idea to already have an exit strategy for your business in place.
In an ideal world you’d have thought about your exit plan before you even start your business, and this would influence the kind of business you create. But if your business is already going then it’s something to start work on sooner rather than later.
What will someone pay for your business?
This is very much influenced by the way in which your business is set up and the business growth potential. If you are pivotal to the business then this will impact on the price you can get for your business, so if this is the case then it’s one of the elements you will need to change.
The changes most business owners need to make to create a successful exit plan take time – these are not things that can be put in place overnight. Hence, it is good to start planning your exit well in advance and ideally several years before you want to exit.
You can get your own Value Builder Score, and see how you compare on the eight key drivers of company value, by taking our 13-minute survey here.