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Business Exit Strategy

A business exit strategy is an important consideration for any small business or startup because it is the plan that determines when, and how, the owners will realize the maximum return from their investment in the business. For many business owners, the ultimate goal and principal motivation for the hard work behind setting up and running a business is the potential for financial gain and an exit strategy provides the means to achieve that.

An effective plan should be based on the finance and resources available, the goals and aspirations of the business - and of course the market conditions at the time of sale. It is also essential that a business owner plans and implements their exit strategy as early in the life of the business as possible, to ensure they capture the maximum value when the event occurs.

An important decision to make when creating an exit strategy is deciding when to make the transition away from the business. An experienced business advisor can help a business owner determine the right timing, looking at elements such as the current market conditions, and how much money the business can generate for each investor.

Most exit strategies come with both pros and cons, and these have to be carefully weighed. Strategic acquisitions, for example, may cost more to begin with, but could result in further growth down the line. Owners must also consider the tax implications of any specific exit strategy.

When it’s time to exit a business, a thorough exit plan can provide the framework needed to ensure the transition is a smooth one and results in maximum return. It is essential, however, to ensure all the relevant stakeholders are informed and given the right amount of time to evaluate the proposition.

Though not easy, developing and executing an effective exit strategy can mean the difference between simply surviving and actually thriving in a business world that is constantly reshaping and redefining itself. By mapping out a plan and taking the time to evaluate all the applicable options and risks at the beginning, the exit strategy can help the owner obtain the desired outcome when it’s time to close the doors.

Developing an exit strategy should be an ongoing process that is discussed and revisited on an annual or bi-annual basis, taking into account the changes or shifts in the market, technology, or competitive landscape. This can be helpful in determining the right time to leave, or when to make alterations to the original plan. With a sound exit strategy in place, business owners can ensure they will be able to capture the most value from their investment and secure their future however they want it.

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