If You Have a Business, You Should Have an Exit Strategy
So you have successfully started your own business and have it
up and running. Have you also planned your exit strategy? Many
business owners who are working for themselves for the first
time answer this question with an emphatic no. However, it is
critical to remember that every owner will eventually exit their
business, and just like an employee making long-range plans for
retirement, you should consider and plan for what happens next.
Not having an exit strategy before, or very soon after, starting
or buying a company is a risky proposition. An exit strategy is
very important to your personal as well as your business plan.
It prepares you for the long-term future, and also helps you
handle the unexpected, such as an unsolicited offer for your
company to be bought out, or a health issue that prevents you
from continuing to run your business.
Knowing how you want to exit your company, and having a
tentative target as to when, will allow you to build it
successfully. Exiting can include selling to an outsider, an
investor, a partner, an employee, or a family member. It could
also mean not completely leaving but just selling, or sharing
enough interest to relinquish day-to-day control while still
maintaining an income.
Without planning for these things, you will probably not have an
effective structure to get full value for your company, or be
ready to share it with a family member. Having a consultant help
you establish an exit plan is usually a very good idea. Here are
a few of the many things to consider:
How would you like to exit
your company (full sale, partial sale, asset sale, etc.)?
Who would you like to sell your company to
(competitor, experienced owner, family member, etc.)?
How long are you willing to stay on to help the
What is your target profit on the sale after paying
off any debt?
Are you willing to hold a note for the buyer?
What are your plans for your employees?
What do you want to do once you are no longer
involved in the company?
Where will your income come from once you exit the
Setting yourself and your company up to
reap the rewards of your hard work, and to retire or move on to
other ventures, is not something to be taken lightly. Whatever
the reason, be smart about how you make your exit.
More information and tips on planning your exit strategy are
offered by the Small Business Administration at
http://www.sba.gov. Or, contact a
Baylake Bank Business Banker.