As a business owner, you should have a strategy in mind for each step of your professional lifecycle. One of the most important is your exit plan.
It’s easy to overlook your exit strategy when you’re focusing on the present day, but this can seriously affect your retirement, especially from a financial perspective.
If you’re unsure how to plan your exit strategy, this guide will advise you on the best place to start.
What is an exit strategy?
An exit strategy is a plan to leave your business when you see fit. While the primary goal of your strategy is to provide a smooth transition into retirement or selling your business, it can also be very beneficial for your current management structure.
With set goals, you’ll be able to focus on hitting your targets with a deadline in mind. This will help you maintain financial stability while you plan for future leadership changes and keep a positive cashflow, which will be essential when you finally get to the valuation and sale process.
How to plan your exit
You need to take a few key steps when planning your strategy. Not only will you need to consider the best next stage for yourself, but for your business too.
Prepare your finances
As we mentioned, the financial aspect of your business should be one of the main areas your exit plan focuses on.
You’ll need to prepare an accurate account of your business’s assets, expenses, performance and general financial health. This will make it much easier to negotiate a good deal if your plan involves selling the business.
Your personal finances will also come into play as part of your strategy. You should make sure you have saved enough money to enjoy your retirement comfortably and by the time you’ve set for yourself. If you haven’t, you may find yourself delaying your exit.
Talk to your investors
If you’ve received financial backing from investors for your business, you’ll need to talk your exit strategy through with them.
For example, you’ll have to address how you plan to pay back your creditors by the time you retire, or how the business will continue to pay them under new leadership. And whether you’re planning to sell the business or pass it on to a new owner, you should outline the way this will change the business and its financial position.
Start thinking about your successor
If you want your exit to go as smoothly as possible, consider the best person to take over your role. You might decide to sell the business as a whole, but if not, you’ll need a suitable candidate to transfer responsibility to.
You should do this with plenty of time to spare as you’ll want to make sure your chosen successor is well-trained and prepared for when they finally replace you.
Your plan should include every aspect of your operation, providing a solid framework for the future and a point of reference for your successor.
Talk to your customers, and team
Transparency is important, so be honest and forthcoming about your decision to leave your business. If you have a successor, your team should know who will be taking over. Be prepared for any questions your staff have, and be empathetic if they’re concerned about any changes.
The same applies to your customers. As they’ll know you as the person in charge, you should introduce them to the person taking your place so they can build a professional relationship.
Talk to us
As you’ll likely be busy still running your business, we can help you plan your exit strategy. Our financial advice will help you set your exit goals and make sure you have enough money set aside to walk away comfortably.
Get in touch to discuss your exit strategy.