Every business owner will need to create a business exit strategy at some point during their journey.
If you’re not planning to exit any time soon, it’ll be a task for a later date. But for instances like looking for investment, it’ll be an early essential as many funders will expect to see a clear exit plan.
Exiting your business is probably the last thing on your mind when you’re starting up. Trust us when we say it’ll help you with your businesses direction, risk evaluation and future planning.
But how can you create a smart business exit strategy? What do you need to consider? We’ll cover it all.
First, what is a business exit strategy?
It’s a plan for the transition of business ownership. That may sound a bit daunting but hear us out, it’s likely to happen at some point during your business journey.
You might not want to be a business owner forever, or you may wish to leave one venture and start another. This means you’d need to sell up, leave your business to someone else or have a larger company acquire it.
A well thought out business exit plan can really be beneficial when the time comes. It’ll make the process much smoother.
So, how do you create a smart business exit strategy?
Prepare your finances
You’ll need to know your numbers and have your finances completely up to date, for both your business and as an individual. As a starting point, you’ll need to know your expenses, assets and figures like your profit and loss.
It’ll be much easier if you have a clear overview of your finances at all times, no matter what stage your business is at. This is where working with a cloud accountant can come in handy right from the start.
Set objectives
There are a few things you’ll need to consider and ask yourself. What do you want to achieve by exiting your business? How do you want the business to run without your input?
You’ll also need to weigh up your options in terms of what will work best for you. Is it a direct sale, a merger or a family member taking over? Make sure you’ve thought about all your options and know exactly which route you’d like to take.
Be aware of the business market
You’ll need to be able to give a clear insight into your current and future business market at the time of exit. This means you’ll have to report on supply and demand, an outline of the future such as potential buyers or clients.
Outline a timeline
It’s beneficial to have a timeline for your business, along with when you’d ideally like to exit and how long you’d like the exit process to take. Be realistic with your expectations and allow for flexibility – things can change quite suddenly so it’s best to incorporate this into your original timeline.
Set clear business intentions
You need to outline what you’d like to happen with the business once you exit. This should help make it clear what your best route of exit is. Ask yourself, would you want the business to dissolve? Or would you prefer it continues to run under a new owner?
And when the time comes…. Communication is key
Once you’ve put your plan together and it’s time to either sell up, dissolve or handover, we really recommend that you clearly communicate with your team, stakeholders and customers. The exit shouldn’t come as a shock to anyone!
If everyone is in the know and communicated with regularly throughout the exit process, you’re more likely to retain staff members in the event you’re handing over to someone else. Communication will also help protect your business reputation and overall employee wellbeing.
Need help with your business exit strategy?
We’ve helped put together and implement many exit strategies over the years, for businesses of varying sizes, across sectors. Feel free to get in touch with us if you need help putting a strategy together or some guidance on navigating your exit.
