The Importance of Having an Exit Strategy Plan

Importance of Exit Strategy

The day you open the doors to your business is an exciting one, full of promise for future success. The last thing on your mind is selling the business or walking away. It is, however, vital that every business owner keep in the back of their mind that the day might come when you want to sell it off or turn over management. You should know from the get go how you’re going to handle this turnover. Learn why having an exit strategy plan is vitally important to your business from the very first day you open your doors, and how you can develop one.

Why Have an Exit Strategy Plan?

There are a ton of reasons why you should have an exit strategy plan in place. You could receive an unexpected offer at any time, which could be too lucrative to refuse. You could end up with an emergency—health problems, family crises and the like crop up all the time. You could find yourself in trouble with hard financial times.

Trends in business and life change all the time and at some point you may just feel worn out. All of these sudden and unexpected situations could see you in need of a way to get out from ownership. An exit plan will help ensure the transition is as seamless and smooth as possible.

Elements of an Exit Plan

When designing your exit plan you’ll need to understand several factors about your business. Each of these play into the company’s value, which is a combination of your cash flow, product value, customer base, industry trends, sales—both physical and online, internal infrastructure, organizational structure, social media popularity and activity, and overall industry marketing metrics.

Each of these elements is complex and constantly shifting, so simply having a strategy in place on day one isn’t enough. You’ll need to keep on top of it, always re-evaluating where you stand. Having these figures at the ready is essential to determining the sale value of your company when the time comes to turn over ownership or management.

Transition Time

You also want to plan for transition time. No sale is one-and-done. You’ll need to stay on board or at very least available for at least a year to help transition to the new management, teaching them how your supply chain works, what your policies and procedures are and why you do things the way you do. Again, these are things that you’ll need to re-evaluate periodically as you do business.

Continually maintaining and upgrading your exit strategy also offers you a window into your ongoing success. It forces you to look at your business with a critical eye and determine if there are things you could be doing better. If you’re looking for help on crafting an exit strategy plan for your business, don’t wait. Check out our business consulting services and get in touch with us for help today!

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