A common question we get asked is “What is an exit plan and why do I need one?”
We find that most business owners are working away, growing their businesses, without ever thinking about what happens at the end?…
The end of what? You might be thinking…
Well, the end of your business’s life!
Realistically, there are only 4 ways you will exit a business:
- You sell it – either a share sale, merger, acquisition or IPO
- You pass it on – to a family member, as an example
- You liquidate – or worse, file for bankruptcy.
- You kick the bucket!
Thats it!
What we also find is that business owners are rarely prepared for any of the above.
This is why you need a comprehensive Exit Plan (or exit strategy) that prepares you AND the business for whenever you are ready to move on.
A well-crafted exit plan or strategy should include the following:
- a decision on what you will do with your business (sale/transfer to family etc)
- an end or sale date – which then determines your exit timeline
- up-to-date financial statements
- a plan for how you will remove yourself from the business
- a documented way for how your processes will run the business so it is autonomous
- a review across your legal obligations and insurances etc
Why go to all this hassle?…
Put simply, to protect you and the asset you’ve spent years building (your business), to lift the value, sell for more, and to have a plan in place should your family or employees need to take over if necessary.
Either way, having an Exit Plan makes good business sense.
Don’t have one? Don’t panic…
In my next blog, I’ll show you the perfect time to start creating your own.
Till then.