Tu-Exito » What Is Your Business Exit Strategy? ? Why having an exit strategy ready is necessary

Tu-Exito » What Is Your Business Exit Strategy? ? Why having an exit strategy ready is necessary

In my experience, it is of the utmost importance for every business owner to have a well thought-out and detailed exit strategy ready should an unexpected event or emergency take place and you need to remove yourself from the business quickly.

In fact, many entrepreneurs are of the same mind and say, planning an exit strategy is just as important as starting the business. If you are fully aware and prepared from the start, your business stands a better chance of success. If your exit strategy is well planned you will maximize the existing value of your business when you have to sell.

You will also find that the time it takes for preparing a business for sale will be significantly reduced and a much smoother process.

“You cannot overestimate the need to plan and prepare. In most of the mistakes I have made, there has been this common theme of inadequate planning beforehand. You really cannot over-prepare in business!” Chris Corrigan

Even though everything may be running fine in the business, you never know when you need to sell your business and move on.

The situations below are examples for when an exit strategy for a business would be advantageous:

1) A sudden change in market conditions, perhaps a much larger competitor moves in next door and you are no longer able to attract customers due to their competitive position

2) An accident, resulting in disability or critical illness – loved ones or yours

3) Loss of customers, suppliers or key employees running the business

4) An offer too good to refuse – Yes, this does happen.

5) Your death – Leaving no relative or options but to sell your business

6) Or simply ready for retirement – In this case it is especially vital to ensure your business is at its maximum value

Should this happen, how long will it take to sell your business?

The time required to sell your business in such circumstances will be specifically related to the complex nature of your business. It also depends on the market conditions and your reasons to exit the business.

A business exit strategy is often a work in progress and can be ever changing, so once you have it in place ensure you keep it up-to-date as needed. Having a well-planned exit strategy ensures the control is maintained with you and you are able to maximize the benefits from the sale of your business.

Your business exit strategy, if planned well, will give you attractive benefits such as:

Your business exit plan should be well documented and reviewed every year. It does not need to be the size of ‘war and peace’, so keep the plan short and precise. You should discuss your business exit plan with your loved ones, business advisors and confidants. A trusted family member or friend should have knowledge of the location of the exit plan so it is quickly and easily sourced.

It is equally important to share the exit plan with a potential buyer. Business buyers are reassured seeing a well planed business, and it will also help them with their future planning for unexpected circumstances.