A business exit strategy is a plan for how you, as a business owner, aim to disengage from your business – whether to retire or move on to other things. You don’t have to intend to imminently step down to start planning for your eventual exit. Many business owners incorporate exit planning into their business plan from the very beginning, when they might be in their 20s or 30s and not intending to retire for many decades. Others (maybe the majority) don’t think about an exit strategy at all until they’re staring down the barrel at retirement.
Types of exit strategy
Whatever stage of your business career you are at, there are three main options for disengagement:
- Liquidation – in which you simply close the business down, wind up your accounts, and send your employees, suppliers, and customers on their way;
- Succession – in which you pass on the reins of leadership to one of your senior managers, your business partner, or your children; or
- Sale – in which the business is sold to a third party, or to your managers in a management buyout.
What’s the best option for you?
If your business is healthy and profitable, we recommend you aim for succession or sale. This will deliver the most value to fund your retirement, and will ensure that your business, into which you’ve invested so much, continues in some form and that your employees, suppliers, and customers are looked after.
Unfortunately, without a good exit plan in place, many business owners are backed into liquidation as the only available option. This is what we aim to help businesses avoid through our business exit strategy planning service. The more you build your business up today and in the years leading up to your retirement, the greater freedom you have to decide what happens to your company when you step down. And the more valuable you make your business today, the more attractive it will be to potential buyers, and the more you’ll get from your investment when you sell your share.
How you can benefit from an exit strategy
Creating an exit strategy won’t detract from your current sales and growth plans. In fact, it works hand-in-hand with your current sales strategy to maximise the value of your business. By putting an exit plan together this year, in 2022, you’ll reap the following benefits:
- An orderly and smooth transition for when you decide to step down, passing control of your business to a person or third party of your choice.
- By working to increase the future value of your business, you will increase its profitability today, benefiting everyone in the interim.
- A lucrative income to fund your retirement, either from a lump sum from selling your business, or from share dividends if you continue to own a portion of the company.
- Freedom to step down or reduce your responsibilities at the right time – not forced to work beyond retirement age if you don’t want to – and the peace of mind knowing that your business, and your family’s finances, are secure should you become critically ill or die unexpectedly.
- Enables your business to continue day-to-day without you at the helm, continuing your legacy into the future. Several businesses we work with were founded 60-100 years ago and are still going strong: continuity made possible by consistent legacy planning by each generation of business owners.
- Exit planning includes a candid assessment and evaluation of the value of your business on an ongoing basis. Knowing the market worth of your business enables you to set goals for where you want to be in future, and helps you choose between the best offers when you come to sell.
- Having an exit plan starts preparing you psychologically for stepping down. For many business owners this relieves the stress of operating a business and provides confidence for the future.
- The very act of having an exit strategy is a sign of fiscal foresight and responsibility that makes your business more attractive to potential buyers.
What next?
A bespoke business exit strategy gives you the freedom to plan your working hours on your terms as you progress towards retirement age, and to plan financially for your future while also supporting your employees, suppliers, and customers. To find out how to incorporate exit planning into your day-to-day marketing and growth strategy, please get in touch with one of our digital marketing specialists by calling 01332 343281.
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