5 Important Elements Of Your Exit Strategy
You have built a sustainable business that projects continued growth in both revenue and industry position for years to come. You have a trusted leadership team in place that can continue the business on its successful road. But there’s something missing for you. As a result, you are beginning to think of the next steps in your career and life.
An exit plan is an essential element of your business plan. By creating one, you have analyzed the possibility of selling or transferring the ownership of your business.
Here are five elements to include in your exit plan.
Be realistic and prepared
An exit strategy should be able to withstand the unexpected worst-case scenarios such as economic downturns and employee turnover. It is important to understand that there are no one-size-fits-all solutions to an exit strategy, each being as unique as your business itself. However, many will have similar characteristics like the desired exit date, a takeover plan (sale or transfer of ownership), and an understanding of the contingencies that could impact the business in the coming years.
Assess your readiness to leave
If you are dependent on your business for things other than income like health insurance or a company car, you’ll need to determine what you need versus what you’ve saved. Exiting a business you’ve built from the ground up can be an emotional challenge that affects not only you but your family too. It is important to understand if you are financially okay when developing your exit strategy.
Decide on your option
Whether you sell, bring in a financial partner, provide an employee stock ownership plan (ESOP), gift your business, or pass it down to your management team, every option requires careful thought about your future. Each option offers benefits and consequences, thus making sure you clearly understand the pros and cons of each is critical.
Be transparent about your plan
Stop the spread of rumors by letting your employees, clients, and suppliers know when you are planning to walk away. This transparency gives employees the information that they require to make informed decisions about their future. If your plan provides an ESOP, then your employees will need and want to know the details of that.
Execute your plan
Because there are legal and tax elements, along with negotiations and projections, it’s important that your advisory team is aligned with the objectives you’ve laid out in your exit strategy. In aligning your decision making with your objectives and advisory team, your company is best prepared to reach its long-term goals while allowing you to reach your personal objectives with your exit.
An exit strategy in an important element of your business plan, and whether you put it in as you are building your company or before you plan on leaving, you must ensure you have all the necessary elements in it.
If you’d like to discuss different strategies for your exit strategy, call me for a free, no obligation consultation.