How to Write a Business Plan of Your Exit Strategy

Writing a business exit strategy

It is sometimes difficult to think about exiting a business when it has not yet been started. But the exit strategy is an important part of the business plan and the overall business strategy. Business owners should put as much thought into how they will get out of the business as how they will get into the business. This strategy may evolve over time as the business evolves and other events occur.

Instructions

1. Consider the possible alternatives for exiting the business and decide on the most logical scenario based on the business and your own personal goals. Exit strategies can include passing the business down to family members, acquisition or merger and taking the business public. Every strategy has its pros and cons that need to be considered. Once the strategy has been chosen, think about what needs to happen to accomplish that strategy along with a time frame.

2. Keep excellent records from the beginning. No one wants to buy a business when they cannot tell what they are getting with the business. Commit in the beginning to maintain thorough financial records including inventory, profit and loss and cash-flow statements. All agreements entered with vendors and suppliers should be able to be assigned to a new owner if at all possible. Make sure that any intellectual property can also easily be signed over to a new owner when the business is sold.

3. Make yourself, as the business owner, expendable. Many entrepreneurs pour their sweat and tears into building the business only to later discover that the business has been built in a way that it cannot run without them. This makes selling the business nearly impossible. Be sure that the business is developed in a way that any owner could come in and experience the same level of success. If the business is built around you, it will be difficult to sell. If you plan to pass the business down to family members, start grooming the family members early in the business life to take over the business.

4. Determine the time line for selling the business. From the beginning, you should have an idea of how long you would like to remain in the business. This not only gives a time line for implementing marketing strategies and reaching certain goals, it determines when the business should be marketed for sale in order to find a buyer according to your time frame.

Tips & Warnings

• If your plan is to pass it down to family, have a frank conversation with family members to determine their interest level in the business.

References

• SCORE: 5 Tips on Exit Strategies
• Grow Think: Business Exit Strategy