Starting a business with an exit strategy in mind

It might sound odd, but one of the best decisions you can make when starting a new business is to begin thinking about when you might exit the company, what form this exit might take and what you plan to do once you’ve completed your exit.

While this isn’t to say that you shouldn’t plan to be at the business for the long term, incorporating a potential exit strategy into your business plan can deliver numerous benefits – both in the long run and at the outset of your journey.

Make your business plan as comprehensive as possible
Crucially, having potential exit strategies outlined in your business plan from the beginning will mean that it is more comprehensive and detailed, something that will help attract investment at an early stage.

For investors looking at fledgling businesses, one of the core considerations is when they are likely to realise the full value of their investment and this will typically occur when the business is sold or they exit themselves.

If your business plan demonstrates consideration of exit strategies, then this will increase investor confidence that your plan is clearly thought out and that there is a timeframe in place for their initial investment to bear fruit.

Maximise your exit value
One invaluable thing that planning your exit from the beginning can provide is time. Even if you’re not planning on exiting until many years from now, an exit strategy is still something that will itself take years to properly execute.

Taking the time to plan out your exit will help to ensure that you constantly have one eye on the most important aspect of selling your business: maximising value. Your business exit is likely to be one of the biggest paydays of your life and taking the requisite time to plan for the exit and prepare your business for sale will lead to an even greater windfall.

A long-term exit plan that focuses on building value-adding elements such as brand strength, geographic scale, operational diversity, intellectual property, market share and other factors will mean that when the time comes to exit, your company will be more attractive to buyers and the sale more lucrative for you.

Prepare to succeed
A business exit is a complex, lengthy process and one that can be highly unpredictable and, ultimately, difficult to accomplish. The main thing that arguably scuppers many exit strategies is inadequate preparation and a rushed sale process.

Working on your exit strategy long before you plan to execute it will mean that, when the time does come, you are more likely to have everything in order to make your exit as swiftly and successfully as possible

An exit strategy that has been developed over the long term is more likely to result in an orderly sale. For one, potential buyers will be encouraged to proceed if they can see that everything is in place for ownership of the business to be transferred in an efficient, properly planned-out manner.

If you have all the necessary documentation and records organised and ready for bidders to peruse, then their due diligence process will be far easier than if you were forced to trawl through years of disorganised paperwork. In turn, this will mean you can sell up and make your exit sooner.

Plan for your future
Part of a successful exit is what you do afterwards. Many business owners who make a sale without having a clear idea of what they want to do next will find themselves at a loss once the process is complete and they no longer own their business.

Developing an exit strategy over years will give you the time to consider what to do next and how you can use the money you generate from your sale. Whether you decide to retire, take a sabbatical or immediately plunge into a new venture, thinking about this in advance will mean you aren’t stuck for ideas once you’ve finally made your exit.