Your Smart Business Exit Strategy
An exit strategy is something that every Business owner should have, even if you are running a one-person sole proprietorship. Perhaps you are ready to retire, or you want a contingency plan in place for the future. It’s not enough to build a business worth a fortune; you have to make sure you have a way to get your money back out.
Planning your exit strategy in advance gives you some control over both your and your business’s future.
For you, and for any investor in business, the questions are the same when it’s time to move on:
- How are you going to get your money out of the business?
- How much money are you going to get?
An exit strategy allows a business owner to reduce or liquidate their stake in a business and, if the business is successful, make a substantial profit. However, if the business is not successful, an exit plan also limits your losses.
Common types of exit strategies include:
- Initial Public Offerings (IPO)
- Strategic Acquisitions
- Management Buyouts (MBO)
The exit strategy you choose depends on many factors, such as how much control or involvement (if any) you want to retain in the business and whether you want the company to continue running in the same way or to see it change going forward. On the other hand, a bankruptcy is seen as the least desirable way to exit a business.
Why you should have an exit strategy:
- Planned exits are significantly more favourable than unforeseen ones
- The longer you withhold investments, the less you’re able to contribute to retirement.
- You are able to take on health problems without having to stress about what could happen to your business and investments.
- You will be prepared for unexpected offers.
- If you find yourself in a situation where you need to raise money quickly, an exit strategy can help.
- When personal time inevitably takes precedence, an exit plan will help you be prepared for that.
One of the first steps in creating an exit strategy is a Business Valuation, and it’s important to work with an expert to understand your personal/professional goals, examine your company’s financials and determine a fair value.
Have you started working on your exit strategy? To find out more about how I can help you build a valuable business that can work without you, book in for a free intro call with me: ac@jonathankeable.com or give me a call on 01752 220 377.
