Every business should have an exit strategy, and it鈥檚 never too soon to start planning one. You must pre-empt how you will move on and how to plan your departure; it鈥檚 all part of having a good business plan.
A well-thought-out exit strategy can help you to maximise the value you get out of your business and can help you to market your business accordingly when you choose to put it up for sale.
When the time comes to sell your business, having a pre-planned exit strategy can make the process much smoother. With that in mind, we take a look at the best way to plan your exit strategy, including:
- Start planning early
- Be realistic
- Knowing when to sell
- Making the business look attractive
Start Planning Early
Even if you鈥檙e not ready to sell your business, or aren鈥檛 planning to sell for a few years, it鈥檚 important that you at least start thinking about the possibility! Having a solid exit strategy can help you get out what you put in; if you don鈥檛 have one, you could end up selling yourself short.
Preparation is key for selling your business successfully, and it鈥檚 crucial to prepare your exit strategy sooner rather than later. This is true no matter the size of your business, from small local businesses to global organisations.
Planning your exit strategy early can help you to understand your reasons for selling and will help to identify what makes your business appealing for someone to buy.
Be Realistic
It is important to be realistic about your exit strategy and the selling process that is to come. Do your research and determine how you want to sell your business when the time comes.
Are you likely to want to retire in the next few years? Is your business in a good place to sell? The sale of your business can depend heavily on its success, so be realistic about your business, why you would want to sell it and what you want out of the sale.
Does your exit strategy include a quick sale to pass it on? Or do you want continued involvement in the business even after the sale?
Knowing When to Sell
There is a skill in knowing when to sell your business. Even if you鈥檙e ready to hand over the reins, the industry or your business performance may not be in a favourable condition for a successful sale.
It is important that you plan to sell when your business is performing well, as this will make your business much more attractive to prospective buyers. Likewise, you mustn鈥檛 hold on too long. If you know you can only take the business so far, for whatever reason, then selling it to a new buyer can ensure it remains a thriving venture.
Making the Business Look Attractive
Preparing your exit strategy should include a plan for making your business look attractive. When it comes to planning your sale, it鈥檚 important that paperwork and financial documents are in order, as well as making sure the physical business is in good condition too.
Your exit strategy should include your reasons for selling, and it鈥檚 important to be honest with buyers about this. Your strategy should also include measures to ensure the company is equipped to survive without you, whether this includes additional training for staff or initiating a handover so that the infrastructure of your business remains sound.
Once your exit strategy is in place, you will feel much more confident about selling your business.
