What Most Business Owners Forget: Building an Effective Exit Strategy

Why Your Business Needs an Exit Strategy

One of the primary things that most business owners overlook is planning an exit strategy. I see it all the time with a lot of my clients. They are so deep in the day-to-day operation of their business that they can’t imagine it without themselves. And the primary reason for that is that most business owners only look at an exit strategy as a way to end their business. But the truth is that an exit strategy is a lot more than that.

What Is an Exit Strategy?

Don’t get me wrong, an exit strategy can be a way to end your business. But it doesn’t have to be. It’s better to think of your exit strategy as a way to move your business forward towards long term goals, allowing it to operate without you as a critical part of the day-to-day, and securing your own personal financial future.

In simple terms, an exit strategy gives a business owner a way to reduce or liquidate their stake in the business and either retire or move on to the next venture.

No matter your goals or what your plan is, there are certain questions you need to ask yourself and actions that you need to start taking as soon as possible.

How Will You Exit Your Business?

There are a lot of different potential exit pathways that business owners can choose to take. We’ll cover some of these specifically in future editions of The Scoop, but, no matter which option you ultimately choose, you have to ask yourself:

• Will you make money when you exit your business? How much money will you make?
• What will happen to your business after you leave? Will it continue under new ownership?
• Will you continue to make an income from your company once you’re gone?
• How long will your exit take? What kind of transition period is involved?

These questions get to the heart of what you want out of your business and what type of exit strategy you need to implement.

What’s the Most Important Part of ANY Business Exit Strategy?

No matter how you choose to exit your company, the most important thing is, first, that you build a successful company. That one might seem obvious. The second most important step you can take now is to ensure your books are and remain “in order”.

What does that mean? It means, among other things, that you have transparent cash flow records of money coming in and going out, that you handle accounts payable and receivable correctly, and that you standardize your books so they are clear, easy to understand, and up to industry standards.

Treat Your Business as If You May Sell at any Time

Your books need to be in order no matter which exit strategy you ultimately choose. Whether you’re selling your business or passing it to a family member or something else, everything will go more smoothly, and you will get more out of your business, if everything is organized and easy to understand. Otherwise, you may not even grasp the full value of your business or how financially secure you will be when you exit.

Keeping tight records might seem like a daunting task, but you are not alone! My team is here to help you get and keep the books and financials in order, so you can create the exit plan that works best for you.

Have questions about how to actually do that? You’re in the right place. Click here to schedule a call with me .?

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