Entrepreneurs spend quite a bit of time thinking about ways to successfully launch and grow their businesses. As someone with a huge entrepreneurial spirit, I can certainly attest to that. But another aspect of business-building, which is just as important but often ignored, is creating a detailed exit strategy. An exit strategy helps you to focus your executive decisions and business activities to meet your ultimate goal of a successful exit. Letting go of a business you have built may not be easy on an emotional level, especially if it is something you have been passionate about. However, it should not be a decision that is anchored in emotion and sentiment. It is crucial to have a clear, well-defined plan.
Think of your exit strategy as succession planning or a means to achieve a smooth transition into the next phase of your life. There are many different types of strategies that can be considered, but the ones that are right for you depend on your unique needs and requirements. Here are some tips to help you create your customized owner exit strategy.
Make a Plan
Planning is the most important thing you can do to ensure you create an exit strategy that:
- Helps you to reduce costs in the most efficient manner.
- Helps you to transfer your business easily.
- Increases the perceived value of your business.
Your exit plan needs to map out clear goals and accountabilities that can be measured, with time frames included. Write down your thoughts about what will happen to the business when you leave. Do you want it to continue to grow, or are you fine with it dissolving? What is your plan for after your exit? Do you want to reinvest into another venture or do you want to retire?
Assuming you know the current value of your business and understand trends and future potential, estimate the value that you want to have at the time of your exit. Your plan should also be flexible enough to incorporate revisions or changes whenever the need arises.
Consider Different Types of Exit Strategies
Keeping it in the Family – Legacies are an attractive option if you want to keep your business within the family. However, it is important to be entirely objective and ensure your business is passed on to the person who is the most capable of running it successfully.
Mergers and Acquisitions – Mergers and Acquisitions are another attractive option that can give you more flexibility in terms of how much involvement you want to continue to have and how much you want to sell for.
Talent Buy-Outs or Management/Investor Buy-Ins – If you are a business owner who is particularly proud of your team, you may benefit from a type of sale where a business buys your talent or your valuable employees’ skill sets.
Alternatively, your management team might want to stake their interest in your company with an option of having you take on a mentorship role. You can also sell to a partner or buyer.
Initial Public Offerings (IPOs) – Selling to the public, while not as common, can be very lucrative. However, your timing and sense of the trends in the industry has to be just right for this to work.
Liquidation – This is the easiest option in terms of never having to worry about your business again. However, your cash in hand may not end up being the best. Ensure you have adequate funds to cover any liabilities and consider all other alternatives before looking at liquidation.
Professional Advice
It’s wise to have your own team of reliable, professional experts in key areas such as business brokering, legal aspects, accounting, and commercial real estate. Having the help that you need will enable you to take steps in the best possible direction to execute your exit strategy effectively.
Are you a part of our National BPO Contact Center Registry?
CH Consulting Group is offering a BPO Contact Center Registry and you are invited to join. It is 100% FREE! When you join, you can receive benefits such as priority consideration for our clients who need a BPO, access to buyers who are interested in buying YOUR call center, intra-industry networking, and a gold mine of contact center resources – plus a chance to win $500! To learn more, Visit the Registry Page.
