Exit Strategy In Business Plan

Exit Strategy In Business Plan-71
That being said, every exit strategy is going to incorporate an appropriate combination of the following elements, with minor variations for unique circumstances: - Does the owner expect to see the business continue indefinitely after they leave, or are they comfortable with seeing it dissolve?This important factor will help determine if the business is to be sold, merged with another business, set up for transition through succession planning, or simply liquidated.

Conversely, if your most likely exit strategy is to sell your company, list potential buyers.

Discuss not only who they are and their current financial positions (e.g., estimated total revenues if a private company), but the reasons they’d want to purchase a company like yours.

It’s called an “exit” when you sell the company because that is how you exit the business.

That is how you end your ownership and the equity owners’ (i.e., investors) ownership of the business, and that’s how they “cash out” (get their money back plus their return). An investor gives you $1 million for 50% of your business.

Today, most business brokers and advisors recommend incorporating a thorough exit strategy into the business plan from the very start.

While it may seem counterintuitive to plan on starting or buying a business and simultaneously plan how you’re going to sell or remove yourself from it, this really is the smartest plan in today’s fast-moving economy.

This is why the exit strategy section of your business plan is so important. Take a moment to think about your most likely exit and then document it.

There are two main components to include in the exit strategy section of your plan. The second component is most important, and it is to prove the likelihood of your exit strategy to the best of your ability.

Let’s briefly discuss what an exit strategy involves, and why it’s necessary for every business owner.

Planning an effective exit strategy is going to be necessarily different for every business.


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