10 Jul Starting a New Business With an Exit Strategy
Entrepreneurship is all about planning for the future, but budding business owners also need to remember to prepare for the end. Creating a well-thought-out exit strategy can help align long-term decisions and lead to smoother planning, as it provides a clear and attainable final goal. Building an exit strategy during the initial business development stage will create a solid foundation and a clear sense of direction.
Identify Possible Exit Scenarios
An exit strategy does not mean the owner intends to shut down the business. Rather, it can indicate an eventual merger with another venture; selling to a future owner; or even taking the company public. By planning ahead of time, the entrepreneur can align the short-term goals with the long-term strategy to keep the business on the track to success.
Plan for the Greater Good
No matter how much a business owner loves what they do, retirement 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 especially necessary when a business grows to include a large staff that would be negatively affected if the owner did not have arrangements in place.
Prepare an Estate Plan for the Business
Estate planning may seem excessive in the early stages of a starting a business, but is important when an owner-dependant business is at stake. It is crucial to put this in place sooner rather than later since life is full of unexpected events. Laying out plans for what should happen to the business and its assets upon the owner’s death will be in the best interest of the owner’s family, employees and other stakeholders.
It is difficult to build a successful business without an end goal to work toward. Establishing an exit strategy early on will set clear expectations for the business and serve as a guideline when creating business plans. Consulting with an experienced business attorney will help keep the strategy air-tight to ensure a smooth, profitable exit.