When should you start thinking about an Exit Strategy? The short answer is – now! Don’t wait to see how the business pans out first, because that is like waiting to see how large a fire gets before having a fire escape plan. Furthermore, if you begin with the end in mind, you can base business decisions on actions that will help you achieve that end goal.
For example:
1) Are you planning to sell your business to an open-market buyer in the long term? Perhaps you need to look at a strong balance sheet with many assets to boost the overall value of the sale.
2) Are you looking to pass along the business to a family member? Maybe the best course of action would be to employ those family members now so they can learn the business and be ready to take over, come time.
3) Maybe you are looking to sell your share of the business to a Partner. Is this based on a book of business that you can/should carefully cultivate and work on familiarizing your clientele with the other Partner(s) for transition’s sake?
Even if you don’t know what you Plan to do in the end, at this time, recognize that simply shutting the doors and walking away is not a smart option. You will have spent years building your business, why treat it like it was just a job that ends one day? Rather, build it over time with the thought that it will be worth something to you as an additional retirement vehicle.
It is also okay (and entirely normal) to change your exit strategy as time rolls along. In general, start by trying to build long-term value. This will benefit any exit strategy you ultimately land on. You are likely to change your business model several times before you figure out what it will be in the longer term. Once you have a robust business that is producing clear value for customers, then you can have a serious conversation about optimizing it for a buyer.
At Titan Business Development Group, LLC, we work with many clients on Exit Planning. We’d be happy to have a conversation with you. Reach out to us at 973-601-3275 if you would like to sit down and have a discussion.