What Is an Exit Strategy for a Business and Do You Need One?

Running a business takes a lot of time and energy as a business owner. Your business plan likely required months of careful calculation. Plus, monitoring the operating costs and bookkeeping will take up a lot of your time as well. Whether you operate a small business or have grown into a larger enterprise that has begun to hire more new employees, it’s always beneficial to consider an exit strategy for your capital and time. In fact, a strong business plan likely takes into consideration the need for an exit plan at some point in the future.

What is an exit strategy?

An exit strategy is simply a means of leaving the company for a payout in relation to your time and capital input as the business owner. Many successful enterprises begin to grow at an alarming rate and begin to attract potential buyers as a result. Many business owners find that they can no longer manage the business themselves as the product list and client Rolodex begins to grow out of control and must face one of two options. Either you can begin to hire middle managers to take on the day-to-day operations – potentially spending more than you will ultimately bring in – or you can look to sell your stake in the company for a payout and an exit from the small business. A good business plan will include language about a potential business exit strategy for this reason.

The purpose of a startup is to fill a niche in the market, but also to make you money. Once you’ve reached an older age, with decades of experience, you may be considering a move to retirement or simply want to cash out and start a new enterprise in another sector. This is where your exit strategy will come into play.

How do you capitalize on your exit strategy?

Following through with an exit plan takes a lot of work. Many companies work toward an IPO in order to take the company public – and therefore traded on the stock exchange – but others simply seek to sell the product line or supply chain logistics to a similar corporate entity that might benefit from the folding of these assets into their own existing structure.

In order to make the most of a selling opportunity, it’s crucial to understand your business’ strengths and weaknesses. One space in which business owners underestimate the importance of is cybersecurity. Hackers and data miners exist all across the United States and the world. Many are simply pranksters looking to exploit cybersecurity loopholes in pursuit of a trophy of sorts. But many others are working to infect cyber supply chain risk management systems in order to steal financial data relating to clients, employees, or creditors. Utilizing a service like CastleLock is a great way to protect your company’s flank as you look to market the business to prospective buyers (see castlelock.com for more on their offerings).

Firming up your cybersecurity as well as any leaks in business management is a great way to provide a pristine commodity on the market as you prepare for your exit. Whether you intend to sell the business wholesale and make a swift exit or stick around during the transition period, shoring up any gaps in your day-to-day operations is a crucial component of a robust exit plan.

As you prepare to move on from the industry that you have built from the ground up, don’t forget about the small details. These will help you net the best possible sale price for a commodity that began as a figment of your imagination and has grown into the success you see today.

Leave a Reply

Your email address will not be published. Required fields are marked *