The Power of a Proper Exit Strategy for Your Business

As a business owner, it might seem unnecessary to have an exit strategy when you are doing well. If your business is successful, after all, you aren't going to leave. Of course, that's not the point of an exit strategy in the first place, and it can take on many forms in the role of a business tool. Having a plan in place is usually for the intention of selling your business, or promoting someone else to manage the company and removing yourself from daily operations. IndustryWeek reports that exit strategies should be part of the business regardless of its stage or business environment.



Even companies that have no intentions of selling or immediate plans for the owner leaving need to consider a proper exit strategy. There are a lot of different things that could come up over time and you have to be prepared. Think of this like insurance-- you have it because you might need it, but there's no guarantee that you will ever use it. It is simply there to protect you from anything that might occur. That's why exit strategies matter so much in business, even from day one.
Prepare for the Unexpected
There are numerous situations that can occur in a business that would result in the company being sold or the owner stepping down from daily operations. Some of those include:

• Unexpected Offers
• Personal Crisis
• Economic or Technology Shift
• Age
• Product Trends Shift
• Wear and Tear

You have little to no control over the things that could affect your business, so rather than wasting energy on prevention, it is always best to just be prepared. Not only that, but if an unexpected offer did occur, you would be able to have an actual conversation and show the interested party that you are aware of and familiar with the value of your company and the exit strategy that would need to take place. Hiring professionals to help with exit planning is critical to your success. Consultants understand regulations, contract negotiations, and valuations of a business, and will be able to prepare an effective strategy and determine a business value. This makes you a more informed owner, as well.

Plan Your Exit Strategy
First, a company needs to define its overall goals and objectives, as does the owner. In the event that you ever want out of the business, you need to be prepared. Assessing your readiness is the first step in creating your exit plan. When and how you will exit should be determined, as well as what level of involvement you have now versus what you will have after you leave the position of invested, full-time owner or CEO. If you know your goals, it will be much easier to create an effective plan for getting out of your business at the right time.
You also have to know your options for exiting a business. It's not just about selling. Companies can also use an exit strategy to transfer ownership to:

• Family members or heirs
• Other management team members being promoted
• Employee stock programs
• Private equity groups or financial partners
• Management team buyouts
• Gifting programs (to charities, employees, or families) 

Once you have explored the options, it will be easier for you to decide how you want to exit your own business. Seek the assistance of professional business consultants to write up and execute your exit strategy so that you can align the plan with the goals and objectives that you stated initially.
The Bottom Line
An exit strategy is going to give a business a safety net. It can provide direction and relieve stress, while also making sure that daily operations align with the overarching goals of the company in the long-term. An exit strategy is about being prepared for life after your business, and it is critical to have in place as early as possible so that the business operation can meet its goals accordingly.

Jack Copus
IDS
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