I recently did a presentation “Small business pitfalls & how to overcome them” to a group of small business owners. Of the twenty people, only one had an exit strategy. Why? I believe this is due to a misunderstanding about the purpose of exit strategies. I want to use this forum to dispel some of the myths and also give some more insight on why an exit plan is a MUST for every business owner.
In my opinion, no business planning process is truly complete without giving due consideration to how you intend to exit the business. One of the myths about having an exist strategy or plan is that it means you plan on failing or at the least are receptive to failure. An exit strategy is not about failure? This failure mindset focuses purely on involuntary exits. Exiting your business can be a choice. An exit strategy is about succession planning. It implies that you are proactive and realistic about your options as a business owner. This mindset will enable you develop a business that is self-sustaining, leveraging it to meet your ultimate aim (whatever that is).
What is your ultimate aim for your business.
- Do you intend to keep it in the family by passing it on to the next generation? Is there a successor?
- Is it to ultimately sell it? If so, is there a market for your business? Do you have business partners who may be interested?
- Do you intend to float it on the stock exchange?
- Do you intend to simply shut down after achieving your goal?
Start grooming your business for whatever you want to get out of it. Giving the exit process some thought will minimize any future disruptions. Don’t wait till you are ready to step aside before considering this. You may find that you are unable to do so or even if you are, you may face a significant drop in earnings.
Exiting your business need not be disruptive for you or the business. Any disruption caused by either a voluntary or involuntary exit will depend on your “preparedness”. There are tax implications for what ever route you decide on so it is best to start planning NOW. Don’t let your hard-work go to waste. Plan your exit today.
Give this some thought. I’ve taken the liberty of revising William Shakespeare poem “All the World’s a Stage ” replacing world with business. This pretty much sums it up.
“All business is a stage,
And all the men and women merely players:
They have their exits and their entrances;…”
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