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Your Five Step Business Exit Strategy

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You may not want to sell your business right now, but you should always want to safeguard your options. See a five-step exit strategy here.

Having an exit strategy in place is not a sign that your business is in trouble or that it is underperforming. While somewhat of a morbid comparison, having an exit strategy for your successful business is like having a will. You may not need it anytime soon, but you may eventually. You don’t know what your personal, professional, and financial situations will look like in the year to come, so having the preparation work ready means that should the opportunity arise to sell your business, you are ready to pounce on it. Here we outline five common steps that should be taken in terms of assembling an exit strategy so that you protect your current interest and maximize your potential return on these interests and investments (i.e. your business). An exit strategy also includes a smooth transition between business owners which can help ensure that the deal does not fall through.

1. Obtain Valuations

Start by getting an independent valuation of your business at this moment in time. This will show you how much your business is worth as a sellable entity as it currently stands. If you make any major changes to your business you will need to get it valued again as there will be new and different elements to assess and audit.

2. Implement your Paradigm Shift

If your exit strategy is at the forefront of your mind and you are thinking to float your business for sale in the foreseeable future, waste no time in rolling out any and all new features that you are planning. In terms of the valuation as touched on above, this shift will reflect the worth of your business. For example, after six months of expanding into selling products online to the UK, will your business be valued higher or will your profit margins decrease?

3. Crunch the Numbers

One of the best and most measurable ways to prove that your business is sustainable and scalable is to illustrate this with numbers. Mobilize all of your efforts to show profit and customer numbers increasing with each successive month. This demonstrates that your business is a viable frontrunner in your industry and is far from being on its last legs. Keep Google Analytics logs here to this effect as recorded numbers are tangible and accessible in this form.

4. Bookkeeping + Accounts

To assist with a smooth transition over to whoever may purchase and then run your business, it really helps to have all of your accounts work up to date and above board. This signifies that there is nothing to hide or no nasty surprises awaiting the new buyer once they own the business. Having your necessary historical and legal paperwork filed and archived accordingly is also a great asset to this effect as it projects the image that yours is a well looked after and attentive business aware of its corporate responsibilities.

5. Stafforce + Projects

If your business has employees, where do they fit into the exit strategy? Will you need to offer redundancy packages or will they be absorbed by the new owner(s)? In tandem with this, the various tasks and projects that they are working on need to be addressed in that should they add growth and potential to the business, you must ensure that they are not interrupted and abandoned during any change of ownership.

An exit strategy is imperative to ensure that you get the best value for your business should you choose to sell it, but also to safeguard the business so that it stays profitable throughout the transition. A thought out and quantified exit strategy also allows for a smooth transition as it gives a sense of clarity and transparency to proceedings that is backed up by facts, figures and foresight. This five step breakdown gives you a basic understanding of what has to be considered and implemented when strategising, suffice to say the exact stipulations will differ per business.

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Learn how you can unlock the hidden revenue already in your eCommerce website by implementing the improvements professionals make on client’s websites to increase sales.

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