Why Every Business Owner Needs To Plan For An Exit
Bruce Hakutizwi of the BusinessesForSale.com marketplace explains why every business owner needs an exit strategy.
While it may seem counterintuitive to plan on starting or buying a business and simultaneously plan how you’re going to sell or remove yourself from it, this really is the smartest plan in today’s fast-moving economy.
Benefits to planning, he argues, include having a blueprint to guide direction and growth, define success, create goals. Having a plan informs strategic decision making and increases the value of the business.
Also today is an article by Andrew Blackman, previously of the Wall Street Journal, on the same subject explaining why you need an exit strategy and providing the barebones for creating one. There’s a link in there to his previous article on the most effective exit strategies.
All of the different exit strategies available have their pros and cons. Some options allow you to retain a financial stake or various levels of involvement in the business, either in an advisory or day-to-day role. Some give your company a better chance of surviving in its original form, while others may see it broken up.
Both authors go to great pains to explain that planning for the exit is not an admission of defeat and is not a sign of pessimism. On the contrary, planning your exit makes sound management sense and allows you to control what will always be your inevitable departure from the business.
Wikipedia describes exit planning as “the preparation for the exit of an entrepreneur from his company to maximize the enterprise value of the company in a mergers and acquisitions transaction and thus his shareholder value, although other non-financial objectives may be pursued including the transition of the company to the next generation, sale to employees or management, or other altruistic, non-financial objectives”.
Divestopedia has a good piece on timing the exit.