One day, maybe a very long time ago, you had a great idea that also happened to be a great business. You made a few sacrifices at the beginning and worked many an 18-hour day, but now your small business is ticking along smoothly. You might even have time and breathing room enough to sleep eight hours a night! Finally – your small business dream is now a reality.
So – how will you get out of it?
Why developing an exit strategy for your business is important
Aside from figuring out your business’ pricing strategy, location and HR policies, one of your most important responsibilities is the planning of an exit strategy. We know it seems kind of odd – you plan to spend years growing and nurturing your small business. Why would you ever stop? But an exit strategy ensures you’re prepared when the end comes. And it will come – every business has a lifecycle. Family businesses in particular need a well-planned exit/succession strategy.
On that note, a family-run business that plans to transfer ownership to a next-of-kin will likely operate much differently than a business that has its eye on a ritzy IPO in five years. Your exit strategy will inform how you run your business.
Tips for planning an exit strategy
You must have a clear understanding of how you’re going to get out of the business, whether it’s a few months off or many years away. You should take as much time and effort planning the exit of your business as you did in starting it. This won’t be a fast and simple process – planning your exit strategy may take weeks, months or years. Leave no situation unexamined.
Consider who may be interested in purchasing or taking over your company. If there isn’t anyone within your company that may be able to continue with it, consider family members, people within your network, or others looking to purchase a new business opportunity. You’ll want to get as much out of the exit as possible, considering everything you’ve put into your business. You may need to gradually downsize before finally withdrawing yourself completely.
The situation surrounding an exit will be quite different for different types of companies. Whatever you decide, make sure that your strategy is well thought out, planned and implemented properly. It wouldn’t hurt to consult people in your network who may have exited their own businesses – pick their brains to see if they can give you some useful advice.
Did you create an exit strategy for your business? Have you exited a business in the past? Let us know in the comments!