Most business owner’s start planning an exit strategy when they are thinking about selling their business or franchise, the problem is that this is too late. By this time the owner is usually full entrenched in the business and to plan and execute an exit strategy at this time may cause drastic changes to the business in a short period of time.
This can cause a reduction in sales and the disruption to the staff through reallocation of work or employment of new staffing will notify your employees of a major change. This can cause dissatisfaction and uncertainty of their security under a new owner and could potentially cause the collapse and reduce the value of the company.
So the question is, “When should you plan an Exit Strategy?”
The answer is now, but the best answer is before you start your business, or soon after.
You May ask “Why Plan an Exit Strategy, when I haven’t even started?”
By planning an exit strategy as soon as possible, it doesn’t mean that you want to sell the business now, it simply allows you to plan ahead. This idea also means that you may eventually like to sell, or it allows you to make the business less reliant on you, so you can work on the business, instead of being entrenched in the business. Your business is always worth more if the new buyer doesn’t see you as the cornerstone of the business, where it can’t operate without you.
This makes your business more of an investment option where the business buyer has a choice to either work on the business or leave it running as it is with minimal direction or involvement from the new buyer. It also offers your employees a better sense of security for any transitions between owners, as it usually means that the business will run as smoothly no matter who is running the business.
By planning now, you can focus on where you want the business to be 5, 10, 20, or 50 years in the future. This way you can set up a plan in the future of where you want to be and plan backwards. You will understand what systems and procedures need to be put in place, what staffing you need and what positions need to be filled, along with an idea of the required services and suppliers that you will need at each stage.
This creates a plan for a business with options. Dare to dream of what your business can become and by the time you reach each goal in the business, you will have the right managers and staffing with the right planning, you will have the option to either sell to an outside prospect for a higher value, sell to someone within the company, or simply retire and let the company run itself.
This is a better option than having to sell quickly for a lower price because you have to move, or you want to retire quickly. On top of this, if the business is running well you can sell the business as it is currently running as a good investment and the staff will be more relaxed knowing that their job is fairly secure under a new owner.