Strangely enough…the exit strategy of your business often times is the true measure of its success. The lack of an exit strategy is usually an indication that you, as an entrepreneur, need to spend some time on your business plan. Here are a few reasons why you should implement an exit strategy — even if you have no immediate intention of selling your company.
Unexpected offers may arise.
The business climate is highly competitive and changes rapidly. Larger companies are often looking for growth through acquisition. Smaller companies may look for mergers to gain a larger market share and buying power.
Health or family crisis.
A sudden illness or family issues such as divorce, death or required relocation may force you to sell your business. Having an exit strategy in place can make the selling process much easier if such a situation arises.
A recession may negatively impact your business. Having an exit strategy can maximize the value of the sale by allowing you to act quickly if the situation arises where you are forced to sell.
If you decide to sell, you‘ll want to have options beyond selling to a competitor at a low value and also time the sale for optimum return.
Informs strategic decision making.
With no planned endgame, it’s easy for business owners to get caught up more in the “job” they’ve given themselves rather than the long-term strategy behind running the business itself. An exit strategy keeps that endgame in view and allows for you to make day-to-day decisions that are more strategic in nature.
Having an exit plan is a crucial component of owning a business. Nowadays, most startups are often sold within two or three years of inception. Regardless of the type of investment, trade or business venture that is entered into, an effective exit strategy should be planned for every positive and negative contingency. Creating an exit strategy with the help of professional advisors, including a business broker, attorney, commercial real estate broker, and accountant provides a solid framework for the entire business lifecycle. Contact The Powell Group to speak with a qualified business broker about creating an exit strategy for your business today.