It’s critical to plan ahead, whether you’re an investor or a business owner. This includes
thinking about your exit strategy, which is a method of selling ownership or ending a
business in a way that maximises advantage or minimises harm. Business entrepreneurs
can make a lot of money if they know what they’re doing.
Why should you have an exit strategy?
Planning an exit is crucial for maintaining and protecting the value of the business you’ve
built. It creates a smooth transition for your management team and other stakeholders
and reduces the risk of losses by being prepared.
Types of Exit Strategy
Here are a few different types of exit strategies, some more common than others:
Selling Your Stake
You can sell your stake to a partner or investor while the company continues to run
normally. This has the advantage of allowing the company to continue operating as usual
with minimum disturbance to revenue streams. You can also ensure that you sell your part
in the company to someone you believe will look after it.
Family Succession
The aim behind a family succession exit is to keep a profitable business in the family.
There are many pros to this strategy because as a family member, it’s likely this person
will have a good knowledge of the business and a good understanding of how it’s run. By
keeping the business in the family, you can keep close connections to the business,
possibly choosing to remain in an advisory or consulting capacity and checking in once in
a while.
Acquires
Different from a traditional acquisition, this exit strategy business plan is one in which
the company buys out your business simply for the sake of acquiring its talented or skilled
employees. You’ll be able to negotiate the terms of this special acquisition, which hopefully
means profit for you and a successful future for your employees, whilst giving you a clean
exit from your business and no worry about lingering responsibilities or obligations.
Take You Company Public (IPO)
This is a much rarer form of Exit Strategy, and one that may be unrealistic for some
businesses, however, we thought it was still worth including. Many entrepreneurs dream of
one day selling their business to the public for a large profit. However, in the realm of small
business exit strategy planning, this method certainly isn’t for everyone—business
conditions need to be just right for this option to be possible. But if it’s possible for you and
the conditions are right, an IPO can be very lucrative. Taking your company into public
status is probably the most profitable strategy of them all, but as we say, this is a very hard
to reach strategy.
Liquidate Your Business
As an exit strategy business plan goes, this one is the most final. If you liquidate, you’ll be
closing your business and selling your assets. This being said, however, liquidation doesn’t
have to mean defeat—just an ending to a chapter. The benefit of this option is you’ll be
free from any stress the business may have brung, and this method of exit is probably the
simplest and quickest.