Building your business to the point of a successful six or seven figures can be an exciting rush and form of exhilaration for an entrepreneur. Unfortunately, far too many people overlook the importance of creating an exit plan. In the rush of doing things on a day to day basis, it’s easy to overlook the importance of developing a comprehensive exit plan and strategy for passing things on to a new owner.
Be Prepared for a Possible Exit
Anyone who has encountered a family business might have experienced the sudden departure of a person in a business without a proper exit plan. Unconventional or unexpected exits can do significant damage to the business, especially if the person was intending to sell the company and in the sudden departure of a person leaving it was revealed that the right strategies and tools had not been put in place. It is always best to have a plan or things can quickly become very complicated for those continuing to operate inside the business or to grow the brand.
An exit plan outlines who will be responsible for some of the most important components of running the business on a day to day basis. If you are contemplating selling your business, then your exit plan might also include further details about what kind of person would be taking over the company, what employees might be transitioning into different roles to take on greater responsibilities, and the transitionary period in which you would be able to train the new party buying the business.
At What Point Do I Need to Develop an Exit Plan?
The truth is that as soon as you launch the business, you should create a comprehensive exit plan. Your exit plan can be adapted based on whether or not you have chosen to depart voluntarily, such as selling the company or retiring or involuntarily such as suffering due to a disability or business concerns being tied up in a divorce. All of these issues are serious and worthy of sharing with your business broker. If you have not already developed a comprehensive exit plan, now is the time to sit down and think about how the company would be different if you were no longer physically there to run it. This can also be an important exercise for identifying whether or not your company is in a position to be sold. This is because the success of the company might currently be contingent on your own abilities to protect and to serve on a daily basis. You might not realize how much you have become tied into the company and the key component of the strategies and systems until you remove yourself, for example, to go on vacation or to take a sabbatical from work.
If you do not have other team members, procedures, and tactics in place to ensure that the company continues on an upward trajectory, this could be catastrophic not just for your own business interests and financial future, but for your ability to paint a compelling picture when listing your company for sale with the help of a knowledgeable business brokers. Establishing an exit plan is one of the most important steps you can take to protect the brand and value you have worked so hard to build.