At what point should I start thinking through an exit strategy?
I'm thinking through the business plan for my next venture and I'm not sure what the ideal exit strategy should be. Should I work with a consultant and decide ASAP or can I afford to wait and see how the business pans out first?
I'd recommend thinking through your exit strategy and documenting it in your business plan. While you don't have to exercise it, you will have a clear understanding of what you are working towards and a better handle on when you arrive at that point in time, whether to exit or continue on with the business.
Hi Rob, I agree with most of the advice here that you should have an exit strategy in mind before you even start your new venture. Always be thinking forward, how is your next venture going to move you forward or where will it lead you next.
As soon as you want to ensure it goes off without a hitch.
Ideally it's part of your business plan and end game big picture. That way you know what your business needs to be when it's time.
Working back from the end shows you whether you are on track and your marketing and business development and sales and partnerships and profits are going to get the company where it needs to go.
Your exist strategy also needs to align with your personal goals, too. So you need to reflect on that a bit and not just be driven by the business aspect.
Also remember that anything you decide on now can change in the future. Strategies can change. Markets can change. Economies can change. Priorities can change.
You know all that already, but keep that in mind any time you start thinking things are looking really solid. Plan for the future and expect some unexpected issues now and then so needing to change unexpectedly doesn't crush any hopes and dreams.
As you've seen in the many responses you've received, it's vital to get your exit strategy planned right away. Here is a resource on Exit Strategy: http://www.marketingholt.com/what-is-an-exit-strategy/
It not only covers what an exit strategy is but is also a comprehensive list of what you need to do, what to look out for, and why having a turnkey business can increase your business valuation at time of exit. I hope this helps. Feel free to contact me if you have any questions.
Hey Rob , This post is now 7 months old and Just curious to know .. Did you build the exit strategy?
As a serial entrepreneur; when you begin thinking about a new adventure in business whatever it is, the first thing you better think about is your exit strategy. So here's how you think, "...I am thinking about starting a new business; if I do this, how the heck am I going to get out of it when I need to?". That is when you think about an exit strategy.
I would consider your exit strategy as part of your business planning. You need to determine how you are going to exit (sale, divestiture, etc) and them maximize your business steps to get you there while you still LOVE what you are doing.
From experience I'd advise that you begin to consider the exit strategy from the onset...There may not be an 'ideal' exit depending on the type of enterprise you are starting and the sector. Try using an outcome to purpose review to assess the best and worst case scenarios. This will enable talk yourself in or out of starting the business at all. Good Luck
If you are thinking of an exit strategy, then you have started thinking through an exit strategy. In any case, it is always better to have a plan before taking that exit leap. But then I am sure you already know this. So time to get off of the denial bus and face reality. Unless of course you plan to go down with the ship.....
Every business owner should always have an exit strategy; after all every employee and owner is only temporary. This means that we should wrap our heads around a succession plan while we continue to build value into the business for a potential sale at any time.
There should be at least some idea of an exit strategy as you develop the business. This can be modified as the business matures, but it shouldn't be ignored. I'm not sure that I would spend the time on a consultant until the business has a value other than your own blood sweat and tears - just my two cents.
Do it now. If you are thinking about it then you need to disign it. What, if when you think about it, you don't find an exit strategy. Maybe you would not get into the business in the first place.
Investors love exit strategies, yet they are not necessarily essential at this stage of your business. If the business doesn't pan out, no exit strategy will help.
If the business does succeed, you'll likely have offers. Even though an exit strategy helps, it can also hinder, getting you focused more on that event than making hte business successful.
Draft up a few possible exit strategies and move forward, if you're going to get consulting help get it for growing your business, not for an exit strategy.
Exits aren't rocket science; you'll get acquired, go IPO, or simply continue. While it does help to know who you want to buy you, they will find you if you succeed.
It is always best to plan your exit strategy at the outset of the business as this will inform the structure you need to put into place to allow you to sell/hand over the business.
As you are already in it, then I would be looking at what you want to achieve through your exit and what you can do to the business to prepare for that. Even if you do not leave for a while it will give you time to start changing processes or roles for optimum value and flexibility. If you are unsure about this then by all means get a consultant on board as fixing issues and preparing your business now can save a lot in the long run.
Identify the break even analysis and see whether you are making profit or loss based on the profit margins you make. If loss, see the sales perspective of the business for an year time. Calculate the Returns on Investment that you shall achieve in that period. Also check how much loss have you made till now and options to regenerate from the same business. If you see all negative numbers close it down. If there is any single positive number, then think of what shall be done in improving business.
The points where you think is the right time. No consultant is going to help on this. You have to be just confident on your business plan, market research on your product demand & supply. That's it
One of the first questions I ask of prospective and new clients is – do you have an exit strategy? The detail that the strategy must have differs by how new the business is and what motives the business owner but, I encourage the discussion as early as possible. Do you want to sell to a larger company, do you want a family member to take over, would you like to sell to current management? All these decisions will impact how you prepare for the inevitable exit. Interestingly, how you build the business into an asset that has value are some of the same processes for creating an exit. Do you have a management that can run the business without you? Have you created a business or are you trying to sell your job? Are you able to rely on a broad base of customers selling a range of products or services? Your focus on answering these questions will direct how you choose to build the business
Rob, seems Im a little late to the party, obvious from the comments that consensus is create an exit strategy NOW...As a serial entrepreneur, Ive built out and sold 9 business groups. In ever case my initial business plan included the exit strategy so I knew what I was building and whn I got their (or when I was getting off track) If you plan to exit rather than contiue to own and manage your business, its very important to continue to ask yourself, what would I think if I were buying this business...Those owners that wait to ask that question until they are ready to sell, often are too late to make sure the buyers perspective will be a posiyive one
Rob, knowing with absolute certainty that every business owner is going to leave their business at some point in time (voluntarily or otherwise) its imperative to start the exit planning well in advance of the transition!
To initiate the process, we have a confidential self assessment tool on our website: SunbeltAdvantage.ca which is absolutely free and quick and easy to use. I encourage you to to complete the confidential questionnaire to receive an immediate summary which will help you focus on where to increase your efforts within your business.
In Stephen Covey's book the 7 Habit's of Highly Effective People, one of the habits is to begin with the end in mind. It applies to any business, as you need a road map to get to where you want to go.