As a business owner, you should always be planning the future of your business. There will come a time when you want to retire, do something new, or just step away. Creating an exit strategy and knowing who will own your business after you alleviates a lot of stress, and helps you prepare mentally and emotionally.
Why You Should Plan an Exit Strategy
Having an exit strategy prepared protects not only your business’s interests, but your personal ones as well. Since business owners essentially have to decide the future of their business when they retire, their path isn’t like a standard employee’s would be. This makes planning your business’s future that much more important. Having a strategy in place also helps if you need to step away from the business suddenly for any reason – you know what you want to happen and don’t have to plan it all out.
No matter your reason for leaving your business, an exit strategy will assure you that the company you’ve committed your time to will continue to have success, because it’s going to someone who is just as passionate about it. In all likelihood, having your exit strategy planned well in advance will make the process go more smoothly than if it was planned at the last minute.
Some Options for Your Exit Strategy
The main piece of your business’s exit strategy is choosing who will run the business after you. Deciding this ahead of time helps the process go more smoothly and ensures the business will continue to be successful under the new ownership. It also gives you the opportunity to consider which option is best for you and your business, and to prepare accordingly.
One option for your exit strategy is a family member taking ownership of the business. The family member who is taking ownership should be passionate about the business. If they aren’t interested in it, the business will suffer. They need to understand the ins and outs of the business, and what you’ve done over the years. Take the time to teach them about the sacrifices and missteps you’ve made.
Another option for an exit strategy is selling your business to an outside party. Finding the right buyer and finalizing a deal can take time, so it’s a good idea to start this process well before you want to step away. To maximize the value of your business, our blog The Business Sale: Top Financial Factors to Build Value has tips that can help improve the value of your business.
Things to Remember When Creating Your Exit Strategy
- When creating your exit strategy, remember that it’s not written in stone. The world is always changing, and you can’t plan for everything. While it’s important to have a plan, you should also be adaptable.
- If you’re relying on the sale of your business to fund what’s next in your life, whether that be retirement or another opportunity, you should get a business valuation done ahead of time. This way, you get an idea of what you could get in a sale, and whether or not that works for you financially.
As a business owner, you have a lot of responsibilities – making sure your business is poised for success after you leave is one of them. Planning your exit strategy before you want to step away is a good starting point for this. You may not follow the plan exactly, but knowing you have a plan can make the exit less stressful and more successful!
For tips on how to start your exit strategy, the article 4 Go-To Moves to Help Start Your Exit Strategy Now on Entrepreneur has steps on where to start.