Aside from choosing what entity to form your business as, one of the most important considerations in the early stages of forming a company is the exit strategy. Examples of exit strategies going public, selling your company to your employees, business partners, or to the highest bidder, or retiring. Planning your exit strategy for your small business or startup. The reality is, if you want money quickly it is better to get a job than start a small business. Here are seven exit strategies for small businesses to choose from. What we know about exit strategies practical guidance for developing exit strategies in the. For several years he worked in the fields of insolvency and reconstruction before spending the last 15 years as a consultant providing specialist services in mergers and acquisitions, business sales and exit strategy planning. The legal fees should be divided by the same ownership percentage. Developing an exit strategy the exit strategy is the plan that clarifies how the wsi will end or transform e. Exit strategies for small business owners 5 examples of getting out. In the event of a death, catastrophic injury, or personal differences. By thinking rationally about various exit strategy from the outset, entrepreneurs can maximise their take home return on their investment and sweat equity. Have an exit strategy before committing to a business partnership.
From strategy to business models and to tactics ramon casadesusmasanell joan enric ricart november 2009 abstract the notion of business model has been used by strategy scholars to refer to the logic of the firm, the way it operates and how it creates value for its stakeholders. The function of a viable exit strategy in a business plan is to maximize the worth of the business enterprise in advance of commencing the final process of converting your investment or ownership interests into cash. Exit strategies for familyowned businesses accounting, tax. This typically includes furniture, books, hardware, specialized equipment.
I am on my second startup, and this book has me thinking much more clearly about how a specific exit plan affects all facets of strategy, from marketing, to product development, to financial bookkeeping, to corporate governance. Business exit reasons and strategies startupdecisions. Then you can start reading kindle books on your smartphone, tablet, or computer no kindle device required. Its never too soon to start planning your exit strategy.
However, in the realm of small business exit strategy planning, this method. Fostering sustainability and mitigating risks of failure lie at the heart of. The first step in a successful business succession planning process is to look at the available options and decide which one best suits your needs. Business partnership essentials a stepbystep action plan for. Identify business exit strategy options, including various selling options or liquidation, and advantages and disadvantages of each option.
An exit strategy is how entrepreneurs founders and investors that have invested large sums of money in startup companies transfer ownership of their business to a third party. When do entrepreneurs exit their business when a business is declining i. The exit strategy handbook and millions of other books are available for amazon kindle. Exit strategies examples, list of strategies to exit an. The business plan needs to include alternative exit strategies. Yet exit strategies are rare among small businesses, largely because most small business owners spend most of their time concentrating on starting and building their businesses instead of leaving them. Selling the business is the preferred strategy of 52 percent of the respondents, which 41 percent plan to do within five years. Mar 27, 2015 how long in advance should business owners begin to plan their exit strategy. There are only a few exit strategy options for most business owners. For most people, that means readying the business for a change of owner. Selling a small business and succession planning for a small business participant guide small business financial education curriculum page 3 of 17 welcome welcome to the selling a small business and succession planning for a small business module. The owners of sarricas market will exit this endeavor after they have created a flourishing business that could be sold for a substantial profit andor as a franchise that could serve rural communities across the country. Planning a few years ahead can radically improve your lifestyle in retirement.
As you and your partner work on a partnership agreement, dedicate time to crafting a dissolution strategy. A combination of debt and equity part loan and part investment in the. Your small business exit strategy is one of the most important parts of running your business. You may be reading this tutorial because youve already decided to create an exit strategyif so, feel free to skip to the next section to find out how to do it.
Although there are many variations, there are really only a few realistic exit strategies for most business owners. Business level projections contributing to industry attractiveness attractiveness threats formulation of the business strategy budgeting and operational budgets strategic programming definition and evaluation of identification of opportunities and the mission of the business definition of business scope. First, owners must identify a vision for the business and for. Reasons for exiting a business include decreasing profits, increasing competition, changes in health or life goals, retirement, passing it on to family members, or cashing in on your goodwill and success. Its never too early or too late to start planning your exit strategy.
Adopting an exit strategy means that the company wants to terminate an existing relationship and perhaps sets. Exit strategy plan template the template provides a minimum requirement. The author offers a wealth of information and insight about the process of selling your business. A business exit strategy is a plan for what will happen when you want to leave your business. Nov 27, 2018 ideally, an exit strategy allows an entrepreneur to plan how to optimize a good situation, rather than get out of a bad one, but it is used to plan for both scenarios. And if youve been running your business for a number of years and you havent planned your exit which may be 20 years or more in the future, do so now. Identify ways to make your small business more marketable to potential buyers. But if youre still not sold on the idea, heres a quick look at why every small business owner should have an exit strategy in place. Well feature a different book each week and share exclusive deals you wont find anywhere else. As with any strategy, exit strategy planning follows a predictable pattern. This is the close up shop and sell all the assets exit strategy. This includes an employee manual, an automated accounting system, a crm system.
Giving consideration to your exit strategy today will give you the peace of mind to grow your business to the point where you can reap the benefits tomorrow. Practical guidance for developing exit strategies in the. Oct 19, 2010 when you need to decide on an exit strategy for your business, here are factors to consider and tips for choosing the one thats best for you. Executing a well thoughtout exit strategy can increase your sale price, while ensuring the business continues to thrive after youve left.
Far too many business owners do not realize that, as your business grows, careful strategic planning to sell your business is just as important as a business plan to launch and grow your business. Having an exit strategy worked out in advance helps ensure that you like the answers to those questions and gives you some control over your small businesss future. A business plan explaining the growth potential of the business and the exit strategy contemplated for any investor. His expertise in small business finance, cash flow and exit strategies has landed. John is a director of exit strategies limited, a ukbased consultancy offering exit strategy planning advice. In this paper, we examine exit strategies in the context of the family firm. Exit strategies for small business owners 5 examples of. Mills, cpa, is the founder, ceo and managing partner of b2b cfo. Gourmet food store business plan sample exit strategy bplans.
Aug 04, 2015 y ou get out what you put in when selling a business, so it pays to plan ahead especially when it comes to your exit strategy. Among small and mediumsized enterprises, the most common strategy is. Additional steps may be added to reflect the needs of the partnership. It may surprise you to hear that you should give space in your business plan to a description of an exit strategy the plan for how leaving your business at some point in the future but you should, especially if youre seeking investors, for two reasons. Aug, 2017 how to plan an exit strategy for your small business. Aug 31, 2014 from a small business point of view, a viable exit strategy is a plan that allows the owners or investors in a small business to walk away with what they want to walk away with. By taking this training, you are taking an important step to building a better business. How to plan an exit strategy for your small business quickbooks. Free exit planning tools for business owners your exitmap. Another 20 percent said they plan to leave it to family, 18 percent are going to close the business, and 10 percent dont know. Most business owners dont think about their business exit strategy at the time that they startup their businesses. It may seem odd to develop a business exit plan this soon, to anticipate the day youll leave your business, but potential investors will want to know your longterm plans. Exit strategies for small business owners this article is intended for small business owners who may be considering an exit within the next 310 years.
Here are three common exit strategies for entrepreneurs who want to put up their small business for sale or pass it on. Selling a small business and succession planning for a. An exit strategy is a plan for wrapping up your involvement in a business. A business exit strategy is the method by which a business owner plans to leave the business or close the business. An entrepreneurs strategic plan to sell his or her investment in a company he or she founded. Focusing on how to make a partnership work is clearly good for business, but having an exit strategy is good for you. As a startup owner why think about an exit strategy. Exit strategies are plans executed by business owners, investors, traders, or venture capitalists to liquidate their position in a financial asset upon meeting certain criteria. An exit plan is how an investor plans to get out of an investment.
Have an exit strategy before committing to a business. What is the best possible exit strategy when looking to. When you need to decide on an exit strategy for your business, here are factors to consider and tips for choosing the one thats best for you. Although an exit strategy should have been in writing upon starting the business, some entrepreneurs might not have it. All good business planning documents have a clear business exit plan that outlines your most likely exit strategy from day one. By splitting the costs of dissolving a company, you at least have documentation to show that both parties agreed to end the partnership. The exit planning tools, education and resources available on this site are dedicated to business owners who want their companies to remain competitive, to set their own timeframes for exiting and to remain in control of the entire process.
This is the book every business owner should have readily available. An exit strategy gives a business owner a way to reduce or eliminate his or. Y ou get out what you put in when selling a business, so it pays to plan ahead especially when it comes to your exit strategy. This book is not a book on business startups and so it does not address the finances of starting up a partnership, but rather, it focuses on agreeing on all aspects. In addition to an independent lifestyle and personal fulfillment, a successful exit is the primary motivator for business ownership and entrepreneurship. Many experts also believe that a welldesigned exit strategy will increase the value of a business and help keep the company focused on making returns.
This article is intended for small business owners who may be considering an exit within. In the late 1950s the mill started to develop a partnership with a small finnish paper machine producer. Ideally, an exit strategy is planned at the outset of a business, although because businesses are so fluid, it can be difficult to know what the final version of the business will look like. How to plan an exit strategy for your small business. How to outline an exit strategy in your business plan dummies. If you are at the beginning stage, then its better to wait till you implement the methods above in order to gain a good price for your business.1298 1220 1168 1172 798 557 844 323 1262 1367 1399 1376 275 790 299 727 276 1614 215 1560 224 752 87 1063 118 615 176 1085 1392 471 1017 686 824 344 196 993 594