“All owners leave their business at some point. That’s inevitable. But only some do so on profitable and timely terms”, says Christian Muntean, a Forbes Councils Member.
So, if you are a business owner and you still don’t have any exit plan, now is the best time to start planning it. Maybe you are thinking that you are serious with your business and that you intend to stay with it until the end. An exit plan, you think, is something that doesn’t benefit you. Why would you plan the end of your business anyway?
Well, entrepreneurs and business owners recommend to have an exit plan because the business market is highly erratic. It is always better to be prepared than be surprised with how your business goes. Moreover, an exit plan will also allow you to understand your company’s value, which of course, can be helpful in your future plans as a small-business owner. By keeping track of your company’s value, you will be able to have a general prediction of its performance, which in the end, can allow you to make the most strategic and profitable move for you.
We all want to be successful. And planning is a key ingredient of that success. Businesses have their own characteristics and special peculiarities; thus, the right exit plan for me may not be the right exit plan for you. So, what are the factors that you have to consider in order to make the right exit plan for your business.
Your Business Value. A good exit plan is one that is anchored on your business value. Upon its determination, you have to make strategic choices that will maximize your profit. If your business value is high and further projections indicate that it will rise higher in the next few years, then you should be able to consider what you want to do with your business. Do you want to sell it because your skill set might render invaluable in the face of your business growth? Do you want to sell stocks or enter into a merger? Or is your business slowly dying? Is it just better to liquidate your assets (asset sell)? Or do you just need a better management team? If your exit plan is dependent on your business value, then you might have a good chance if your exit plan is created in the right way.
Your Objectives in life. What do you really want to do in the long-run? Do you intend to retire early? Do you want your business to be inherited by your children as your legacy? Or do you just want the thrill of starting up businesses but don’t like getting caught in its management? These are the questions that you have to look into before you start creating your exit plan. Your objectives in life matters the most, and your exit plan must reflect your own desires and what you want to do in your life.
The timing. An exit plan should be well thought-out. The timing to exit your business should complement your objectives in life. Defining the right exit time is a crucial factor because you also have to keep important tabs on the current trends in the market. This factor necessitates you to look both internally (reflecting your goals in life) and externally (reflecting the business market economy). Thus, you need to find that important intersection point in the timeline where both your internal and external factors will coincide. Realize that selling a business could take years.
Your financial capability. You cannot just exit your business if you aren’t prepared financially. Exiting a business means a change in lifestyle; and in order to avoid suffering tremendous losses, you have to be prepared for your exit. Does your current status support your lifestyle even without income? Will you be able to live a life without incoming, fully relying on the liquidated sales of your business? When will you be debt-free?
Your team. Your team is already a part of your business, and whatever you do with your business, they will surely be affected. You also have to consider if your team is strong enough. Do they have the necessary skills to undergo a transitional phase such as your exit plan? Or if you plan to liquidate your business, do they have somewhere to go. At the end of the day, your team will have to relent to your decision. Regardless of which, it is important that you think of the fate of your employees within your exit plan.
Remember, having an exit plan may be quite daunting for any business owners. However, it is best that you be proactive and always stay ahead of the game.