Choosing to sell a company is never going to be an easy decision. Can you get more? Do you want to cede control? Will the buyer do what they say they’re going to do? These questions are the underlying reason why it helps to have an exit strategy in place. Here’s why you need to at least sketch out a plan as soon as you can — preferably the moment you get your business off the ground.
A Clear Path Ahead
The focus of your business is allowed to change or pivot as you see fit, but a hazy focus can also kill a company quickly. Whatever your goals are, be honest about them to yourself and your employees. Are you hoping to be bought by a certain company? Will you be using the money to secure your family’s future? Do you truly understand what it will mean to let another company take over? Answering these questions in detail makes it easier for you to see what’s down the road of course, but it can also make it easier for you in the short-term as well.
Multidimensional by Nature
When you start the company, you likely have a certain idea of how you want to come across to the public, and another idea of how you want to come across to other businesses in your industry. All of the channels you use, the points of contact, and the major decisions you make should stem from the original idea. Marrying the original idea to the end goal will make your vision that much clearer though. It can even make your brand profiling and media strategies run a lot smoother once everyone is on the same page and working toward the same eventual outcome.
Testimonial Warnings
Those who own businesses state that not having an exit strategy can ultimately create a lot of extra work. Neglecting it will lessen your chances of success, lengthen the transition period should you choose to sell, and typically net you less money for your company. Startups today may end up selling just 12 months after they open their doors. Even if it takes your company several years to sell, it helps to understand how you want everything to look once you do.
Easy as 1, 2, 3
Exit strategies won’t necessarily take away from the more pressing matters that your company faces on a daily basis. When you approach the strategy the same way you might approach a new marketing idea or budget, you’ll find a lot of similarities. The key is to think about the situation from a variety of angles. The original questions about what you want are crucial, but you’ll want to look at your strategy through the eyes of a shareholder, the seller, or an investor too. Once you have all those ideas in your mind, start laying down the groundwork that will eventually become a plan in case of evacuation. Strategies can be as simple as wanting to sell the business for a million dollars within 5 years.
Potent and Profitable
The biggest reason why you should consider having an exit strategy is that it may do more to make money than literally any other decision you make. This is the time to get cash for everything you’ve worked to create. In fact, a well executed plan could net your company 50% more of its original valuation. To maximize your profits, start doing a little research into those you think may ultimately want to buy, or let someone else give you a hand. Certain parties may only work with a few types of exit strategies, and a lack of cohesion can take down even the most successful of businesses.
Final Thoughts
Experts and strategists say that it’s not enough to build a great product or service. You need to understand how your business fits into the market, and what exactly you’re bringing to the table. Exit strategies made at the start of the business can make the staff and management team feel far more powerful because everyone is on the same page. It can even be a motivating factor to get more people to believe in what the company is doing, and where it’s going.
