Determining your exit strategy

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12/07/2017

An ‘exit strategy’ is when you’re considering leaving the business for good. There could be any number of reasons for this; it’s a great time to sell, you have an interested buyer, you want a new challenge, you may be facing health problems, or you have a business you want to pass onto the next generation.

Whatever the reason, leaving something you’ve built up and dedicated yourself to is never easy. There’s lots to consider – leaving the business in a healthy state, protecting employees interests, commitments to financial partners and family, and your own business legacy.

You’ll also want to make sure you exit with a return that reflects all the hard work and investment you put in over the years. To get the most out of your investment, an exit strategy is something you should start planning a long time before you’re ready

Choosing an exit strategy; your main options

• Sell your business – you need to be ready in case someone makes you an offer, even if you hadn’t considered selling at this point. Or you might decide to put the business on the market in a particular year, giving you time to increase profits to increase the sale price. Whatever the reason for selling your business, it’s important to have a strategy in place so that you can make the most of the sale.
• Step down from day-to-day business – you could delegate others to take over your management role and you step down from the day-to-day running. This could be a merger with another business, or a partial sale to a new owner where you decide to retain some of your shares, giving you an ongoing income.
• Pass on to family – maybe you have a family member working in the business who has shown interest in taking over. They may be required to buy into the business, depending on the relationship.
• Close down voluntarily – not all exit strategies involve selling. You can just close the business if it’s difficult to sell, or haven’t been able to find a buyer. This is quite common for consultants or sole traders when it’s difficult to pass customers to another person.

A successful exit from business is, like most things, down to planning. And it’s never too early to start – in fact, it’s best to have a strategy in place as soon as possible, because you never know what surprises might be just around the corner. Even if you don’t leave your business due to an unexpected event, it’s still wise to have everything in place so that your exit goes smoothly and you can make the most of it.

Advice and resources

• Entrepreneur has a great article on selling your business.

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