Elements of a Great Exit Plan

One thing successful business owners have in common is a set of clear, measurable goals. However, the everyday challenges that come with running a business can often distract business owners from planning for their future and a lifestyle they want after they’re no longer involved in the day-to-day operations of their business.

Waiting to create an exit strategy has cost business owners millions of dollars and years of retirement. On average, good exit plans can still take 3-10 years to execute all of the strategies in them and could take much longer if a business owner has postponed the planning process.
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In addition to planning ahead, in order to successfully exit your businesses on your terms and maximize the value of your business, an exit plan should contain these 5 elements. 

1. Define Measurable Goals

Your goals may change as your company grows, the economy, your personal life changes, etc. It’s still important to set clear goals from the beginning so that you can revise them as you go and measure your progress. These goals may include:

• ​​​​​​​Your target exit date
• Who you want to sell or pass the company on to
• Your definition of a financially successful exit

2. Decide on Type of Exit

Do you want to sell your company to a third party? Sell it to a family member or current employee? Liquidate and close the business? Determining how you want to transition your business is critical to choosing the right operating model to suit your future goals.

3. Determine Company Value

What is your company worth today in cash? Most business owners can’t answer this question, but it’s a crucial starting point to be able to determine the best path forward to get top dollar for your business down the road.

4. Create a Plan to Increase Company Value

A successful exit could require you to be able to attract qualified buyers who are willing to offer the highest price for your business. As you plan your exit, you’ll need to identify ways to increase your company’s value and cash flow in order to attract buyers and exit on your own terms.

5. Incorporate Flexibility Into Your Plan

Some businesses choose not to create an exit plan because they fear their business strategy will be locked into place for the next 10 years. However, a great exit plan is monitored and adjusted regularly as the market changes and the business evolves.

Creating an exit plan doesn’t have to be stressful. Work with us to develop an exit plan that’s right for you, your business, and the life you want after you have exited your business.