Do you have an exit place in place for your company?
Do you regularly review your exit plan?
Have you written down your exit strategy?
Here are some questions that every small business owner should ask themselves. Not having a detailed exit strategy can be very dangerous for a small business. Keep reading to find out why.
Risk 1 – No financial security
Even if you want to keep your business forever, the market can be unpredictable. There are many factors that can affect the performance of your company and your sales might go down unexpectedly. Moreover, some personal factors such as getting older or ill can affect your ability to run the business. Of course, it is important to hope that these things never happen and your business keeps thriving and bringing you profit for many years. If, however, things do not go as planned, an exit strategy gives you the chance to quit without losing all your finances.
Not having an exit plan can lead to you not knowing how to quit even when the business stops being profitable. That, in turn, can negatively affect your financial security.
Risk 2 – Limited flexibility
Many people who start a small business do so thinking that they want to do it forever. It is great if it actually turns out this way, but many people change their mind after a few years when they find a different income-generating opportunity. Not having an exit strategy can make it difficult to either close down the business or hand it over to someone else.
If, however, you prepare a good exit plan, you can always adjust the way you run your company and quit if you do not want to do it anymore. Thanks to an exit strategy, you will not feel like you have no choice but to remain in your business even if you had a change of heart.
Risk 3 – No vision
When you start your own business, you should prepare a list of long-term business goals you want to achieve. That provides structure and guidance to running your company and helps you stay focused on what is the most important for your business. An exit plan does not mean that one day you have to close or sell your business. It simply outlines possible options for the future. Your exit strategy can be to, for example, pass the company on to your friends or family if one day you can no longer run it.
As your business grows, your goals can change and so can the exit plan. That is why it is important to review it every year. If your idea regarding the future of your company has changed, you should modify it and review it again next year.