Your Exit Strategy – The Importance of an Exit Strategy in Your Business Buying Or Selling Plan

It is necessary for every business owner to have a well planned exit strategy ready in view of an emergency exit from the business.

Some would say, planning an exit strategy is just as important as starting the business. A well planned exit will maximize the existing value of your business when you go to sell. It will also considerably reduce the time needed in the preparation required to sell the business.

“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 following are situations when an exit strategy for business would be helpful:

1) A sudden change in market conditions

2) A 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

5) Your death

6) Or simply ready for retirement

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

An exit strategy for business is a work in process. A well-planned exit keeps the control in your hands and you are able to maximize the benefits from the sale of your business.

The various advantages that a planned exit strategy gives you include:

  • It serves as a road map to others and it can be followed with or without you (in event of death or disability) or a well earned extended holiday – far more enjoyable!
  • A plan will give you an idea about the benefits in case of an exit
  • It will give you peace of mind, as you have planned and are ready to tackle the unknown circumstances.

The exit plan should be well documented and reviewed every year. It does not need to be the size of war and peace keep the plan short and precise. You should discuss your exit plan with your loved ones, professional advisors and key confidants. A trusted family member or friend should have knowledge of the location of the exit plan.

Remember share the exit plan with a potential buyer. Business buyers are reassured seeing a well planned business, and it will also help them with their future planning and be beneficial in unexpected circumstances.