As you set up a new business, an exit strategy is the last thing on your mind. However, it is always to have an exit strategy ready when you are about to leave the business. A business exit plan ensures that you have a secure financial future.
So, even as you carry out your daily business operations, you need to think about your exit strategy. The question that most entrepreneurs ask is: How do you do business exit planning? This article offers you the answer.
What Does Business Exit Planning Involve?
As you prepare your business exit plan, there are three main considerations you have to make. First of all, you have to decide how long you plan to stay involved in the business. Secondly, you must think about your financial goals. Also, you need to consider whether there are investors or creditors you need to pay off before you exit. Once you’ve considered these three factors, you can start thinking about creating your business exit strategy.
Steps to Developing a Successful Business Exit Plan
Developing a business from scratch is like raising a baby; you will develop a very strong bond along the way. Therefore, such a business can be quite overwhelming and emotional. That’s why a proper business exit plan is necessary. It prepares you both emotionally and financially because you already know when and how you will be leaving. Here are the important steps you need to take when planning your business exit strategy.
- Preparing your finances – before you exit your business, you need to prepare an accurate account of your finances. Consider both your personal and professional finances.
- Considering your options – once you’ve put your finances in order, consider the various exit strategies available for you. Make sure you choose the best option.
- Talk to your investors – you don’t just wake up one day and decide to leave the business. You need to sit down with your investors and explain to them your exit plan. Your exit strategy should explain to your investors how they will be repaid.
- Appoint new leaders – your exit strategy should include the appointment of new leadership. Make sure you transfer your responsibilities to the new leadership before you exit the business. This allows for a smooth transition.
- Talk to your employees – once you have put in place a succession plan, talk to your employees about it. They might have many questions about your exit, so be prepared to answer them.
- Inform your clients – if a new owner is taking over your business, it is vital to introduce them formerly to your clients.
By following these steps, you should be able to come up with an effective business exit strategy.