How to Create Exit Strategies for Your Business?

Business plan

An exit plan is a way of reducing the stakes of the owner from the business and simultaneously getting profits from it if the business is successful. Every entrepreneur needs to have an exit strategy in mind because it will require at some point of time or the other. You might want to diversify from your field to some other field of business. You might want to explore some new unchartered territory and put aside the old business. Your business might not be doing so well then you have to move ahead and exiting becomes your only option. But businesses usually do not put much thought into planning exit strategies while starting up a venture. This is where they go wrong. One must put aside an exit plan for the business in the very beginning itself. With time your exit strategy will change. But this is not an issue. You can keep revising the exit strategy that you planned every six months. But having one is more important.

Now that you know the importance of having an exit strategy let us move on to the part where you get to know how exit strategies are created.

  • Make a list of buyers

When you decide to sell of your business or reduce your stakes in the business then the first thing that you require is a buyer or someone who is willing to take over or ready to buy the shares and stakes of your company. People live under the illusion that when the time comes they will easily find the appropriate buyer because there are always willing parties waiting for you to make the move. But as I began, it is an illusion. According to an online survey only 25% of the start-ups have any company that is willing to take it over. That leaves behind a whopping 75%. It increases your chances of being in the unfavourable other half of the pool pretty sharply. So from the very beginning track down potential buyers and keep a list always ready up to date.

  • Pay attention to maintaining excellent records

Having the perfect records is the best thing that a buyer can expect because they are not accustomed to get one. Most companies while buying a company receive their records in a bad shape. Encourage good book keeping culture from the beginning so that it does not stand in your way when you have to sell your business.

  • Organisation of your revenues

A business has revenue that needs to be settled properly when planning to exit the business. The form in which you have those revenues matters. One thing that you can always do to attract buyers is to bill automatically.

  • Outright sale

Once you have a business that has a good growth pattern, has proper records, whose revenue is organised in a suitable manner and is at the stage where you want to sell it, then it has a few options if it is a small scale business. You can sell it outright to a buyer. This is a very simple exit strategy but it comes with a drawback. By liquidating all your assets, that is selling your venture outright, gives you minimum returns from the revenue. But there are other options as well like liquidating the assets gradually over time or keeping the business in the family only. These might prove to be better than the former option.

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Mark Holland

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