Getting The Exit Strategy In Place

If you’re a new small business owner you probably concentrate on trying to grow your business, and might not even be in a position to think of selling it or getting out of the business. You probably don’t want to run the business for the rest of your life, and will probably want to retire at some point. Making sure you get an exit strategy in place is important as it will help you maximise the value of your business when you come to sell it.

First of all you need to decide how much longer you want to work in your business before selling it or passing it on. This can be based on priorities, for example if you have other more profitable priorities to concentrate on, or if you have financial commitments that need to be met. In the last few years of your business you will want to try and build its value, so you get the best deal at the end of it. Whilst you can focus on building revenues, more specifically you want to try and focus on building cash flow to increase its final value. Increasing the cashflow and increasing your customer base are two of the most effective actions to follow.

Getting an exit strategy in place also involves deciding and planning how you will pass on the management tasks of the businesses, will you train an existing set of employees or will a new group be hired from the incoming owner? Your ability to sell the business will obviously depend on the industry and type of business you run. If your business is a ‘personal’ business offering an individual service, for example a sole physiotherapist, then it is the reputation you have built up individually that is important, and you might not be able to realistically sell the business.

As well as attempting to increase the cashflow of the business, trying to streamline the business operations is also important, to make potential future management as easy as possible for people looking to take over the business. By ensuring that training and manuals are available for future staff, and that operations are as easily transferable will help to smooth the process and encourage buyers.

Of course selling a business isn’t the only ‘exit strategy’ possible, there are a range of other strategies: You might want to keep the business in the family, delegate operations completely, pass the business on or just close it. For any potential exit which involves either selling the business or involves new staff taking over then the above tips will hopefully be relevant.

Whatever you decide, the key is to plan well in advance.

Related Small Biz Blog Posts

Tags: exit strategy, planning your exit, small business, exit strategies, business exit