Benefits of a Successful Exit

Whether you intend to hand over your company to family, managers, partners, private equity, a third party, or a strategic buyer, exit planning is well worth it. Here's why;

You Leave Clean Legal Breaks with Clear Contracts

No one wants to start a new life entangled in a nasty legal battle. But, in the wake of handshake agreements and implicit arrangements, friends and families frequently tear one another apart.

An exit helps you get everything down on paper so you can enter the following chapter with a clear conscience and a clean slate. In addition, it will be easier to unwind and enjoy your retirement if you are confident in your strategy.

Avoid Unfavorable Tax Implications

Reducing your tax obligations is one of the main advantages of having a business exit strategy. In addition, you can benefit from special tax breaks and deductions by putting an exit in place.

Give Yourself Some Attention Before Venturing into a New Business

A successful exit helps you take a break before you start working toward a new company. It's normal to feel pressed, but you must understand that life outside the startup world doesn't move as swiftly as you were used to. So, you can take a moment to breathe and consider your priorities.

Take into account the time you have at your disposal, how much of it you want to invest in new endeavors, and the aspects of your life you'd prefer to leave in the past.

Accomplish your Goals

Developing an exit strategy will allow you to consider your exit goals. Before transferring ownership or closing down operations, you can estimate how much money you'll require. The best thing about this is that you may modify your exit strategy to meet your specific requirements and objectives.

Signs You're Ready To Exit Your Company

One of the entrepreneurs' most challenging decisions is whether to exit their business. The thing is, your company is not a standard 9 to 5 job. It is your child. That's why most business owners are reluctant when it comes to exiting. So, how do you know that you're ready for an exit?

·???????If you're mentally ready- Very few business owners are ever psychologically prepared to exit their company (except for tech startups explicitly created with a lucrative exit in mind). However, psychological readiness generally follows after planning begins. Then, you consider the possibility of moving on and performing different tasks.

·???????If you're plateauing- If your company's growth is stalling or you feel like you've run out of fresh ideas, this could be a sign you're ready to exit. For example, you may be losing the motivation to grow your business.

·???????If the company is ready- Your business must be in good form to attract buyers willing to pay the price you want. That calls for a track record of financial success, a strong balance sheet, efficient operations, a strong clientele, market conditions, and a growth strategy. So, if you feel that everything is in order, you're ready to exit.

Be Aware of the Role you Wish to Play After a Successful Exit

Exiting a business is something many entrepreneurs aspire to do—why not? The act of exiting and sailing off into an island is idolized in the media. You see reports of life-changing exit sums alongside images of happily shaking hands and clinking champagne glasses.

But what is left for the post-exit entrepreneur once the paperwork is complete and the business is under new management? Post-exit entrepreneurs tend to fall into a few different categories. Which one are you?

·???????Investor- An investor "enjoys dabbling in the entrepreneurial environment, but they never want to be a CEO all over again." They keep their toes in the game without getting their hands dirty. After "injecting funds," the investor will only "advise other entrepreneurs or business owners on what to do."

·???????Recreationist- This type of post-exit entrepreneur prizes consumption. They "buy luxury items, such as homes, and cars, frequently soon after the exit." They cash the check and then go shopping. They desire the items to serve as proof of the sale.

·???????Do-it againer- The PExE in this category "loved what they were doing as an entrepreneur and were skilled at it." They feel that since the exit was such an affirming experience, they should repeat it. After they exit, the do-it-again player wants to return to the arena. They want to relive the "highs" of creating a business.

·???????Discoverer- A discoverer PExE can be "uncertain about where they would like to go and what they would like to do in the long term." While weighing their alternatives, they could experience a sense of limbo.

·???????Philanthropist- "Creating social impact with their time, talent, and treasure" is the main goal of this kind of PExE. They give back by giving their time and money. Giving their time and energy to charitable causes could lead to a fruitful and significant post-exit lifestyle.

Bottom Line

A strong exit strategy ensures that the business has the correct value,?uses resources effectively, and enables it to provide more opportunities. It also prepares for unexpected circumstances, focuses on goals, and ensures the company has a sense of purpose.

For an exit strategy to be successful, it should give value, protects loyal employees during and after the transition, ensure that your legacy continues after the sale, and be well-planned.