Over 600,000 companies launch in the UK every year. This is an incredible number of businesses, many of which will develop a business plan at some point. But few of these businesses will plan for their exit.
Whether you want to build a company that takes over the world or you want a lifestyle business that gives you flexibility and a decent living, you should consider your exit strategy as part of your business development efforts.
In this blog, I explain the importance of outlining your exit strategy to enhance your business development plans.
Think about an exit strategy early on
Starting a business involves planning for the future. Business planning includes target markets, product development and financial forecasts. Many start-ups leave out plans for their exit, that is, how they will end their business.
But creating an exit strategy from the start can help you align your business development strategy, as it helps to provide a clear goal for your business. Setting your exit strategy in the early days will create a solid foundation and a clear sense of direction to work towards.
Align your exit strategy and business development plan
I compare not having an exit strategy to not having a will. You usually wouldn’t wait until ill health to write a will. In the same way, an exit strategy for your business is an important consideration to make from the outset. Don’t wait until your business is in bad shape or your personal circumstances change before thinking about your exit.
You are better off planning ahead to ensure you have a smooth transition out of your business. Thinking about the end from the start is important for me as a Business Development professional. I like to know my clients’ end goals. This allows me to develop a business development plan that gets them to where they need to be within a specified timeframe.
Example of a “sale” exit strategy
Let’s say a client tells me that they are launching a new technology company with a 5-year exit strategy to sell. This information allows me to build a plan to address vital criteria that a potential buyer will require during a sale.
Such criteria might include a strong company brand, a credible management team, business management systems, market research from existing and prospective customers, a strong sales process, healthy cash flow, framework agreements and so on.
Example of a “cash out” exit strategy
Alternatively, say a client tells me that they want help with a lifestyle business, which they will eventually dissolve. This means the client is likely to take out the cash from their business.
Therefore, it is key to drive sales and marketing from the outset with the aim of maximising revenues from the business. All business development efforts will closely align with marketing to ensure a healthy sales pipeline and sales processes to effectively manage new and existing customers.
Summing it up
No matter how much a business owner loves what they do, exiting their business should always be an option. If the founder ever decides to merge or sell the company, an exit strategy allows them to leave the business in a profitable state. This is very important when a business is established.
For instance, any staff could be negatively impacted if the owner does not have a plan in place in the event that the business is sold. Having an exit strategy is a key part of business planning. It is a simple process that documents your plans for the future. Be proactive about this part of business planning.
When you’ve done this, you can get back to the fun stuff: Running and growing your business!