If you’re relatively new to the world of business-ownership, you may not have realised the importance of an exit plan.
But what is an exit plan? An exit plan is a strategy put in place for a business owner to exit their company, with the aim of maximising the value of the company ready for sale and increasing the sellers financial reward.
“The best day to create an exit plan is five years prior, the next best day is today.”
According to The Finance People CEO Anita Tweats, an exit plan should be put together while the business plan is also being built. An exit plan should then help to guide the business direction and can also be adapted if needed as the business progresses over the years.
So if you’re a business owner and you lack an exit plan, here are four important reasons to get started.
1. You stay on track with your business objectives and goals
By having an exit plan, you’re more likely to stay on track with your business objectives and goals. Having a clearly defined understanding of when you will exit, a forecast of what your business will be worth and what you will receive as a result is an extremely valuable incentive for reaching your business goals YoY.
2. Strategising your exit plan can take years
Exit plans don’t just appear overnight – and they’re also not just a quick decision. Exit plans require a significant amount of preparation – from clear reporting and forecasting on YoY financials to full operational handovers and more. Your exit strategy can take years to fully plan and integrate into your business.
3. You know your next move post-business
The idea of exiting your business can be daunting, particularly if this is your first time exiting. But exiting your business is inevitable – whether you’re exiting at a younger age to financially benefit from your business growth, or you are exiting for retirement. Creating an exit strategy can help you better plan and prepare mentally and emotionally for your departure, as well as open your mind to future projects and opportunities.
4. It demonstrates business value to your future buyers
Finally, having an exit plan in place will highlight to your future buyers that you have committed to your business goals and objectives, putting your business in the best possible position ready for sale. It also highlights that you have worked for a seamless transition and that they won’t be purchasing a business that is disorganised.
Ready to plan your business sale?
If you haven’t yet created your business exit strategy, now is the time to do so. At The Finance People, we provide SMEs and larger organisations part-time or full-time FDs, suited to their needs. All our FDs have years of experience in building exit plans from the ground up.
Alternatively, we've put together a comprehensive guide to exit planning - including the various exit paths a business owner might take and a step-by-step guide on building your exit strategy. Download the full guide today to learn more.
Our FDs cover a wide range of financial support and guidance, not just exit planning. If you’re looking for a part-time or full-time FD to:
- Scale your business
- Plan your business exit
- Drive revenue
- Raise funds
- Manage cash flow
- Forecast and report
Get in touch today for your FREE no-obligation consultation.