Exit Strategy In Business Plan

Conversely, if your most likely exit strategy is to sell your company, list potential buyers.Discuss not only who they are and their current financial positions (e.g., estimated total revenues if a private company), but the reasons they’d want to purchase a company like yours.

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A well thought-out exit plan must address all these elements as specifically and concretely as possible.

Otherwise, it becomes nothing more than a vague wish list rather than a vital part of the business plan.

Let’s briefly discuss what an exit strategy involves, and why it’s necessary for every business owner.

Planning an effective exit strategy is going to be necessarily different for every business.

- While the initial exit strategy will likely need to be adjusted over time as circumstances change, if it’s there from the start, it provides guidance and benchmarks to use should unexpected events occur.

For instance, a sudden death, divorce, major health problem, or required relocation can cause an unexpected early departure from the business.

- With no planned end game, it’s easy for business owners to get caught up more in the “job” they’ve given themselves rather than the long-term strategy behind running the business itself.

An exit strategy keeps that endgame in view and can make day-to-day decisions more strategic in nature.

- “Value” is a relative term, so this doesn’t necessarily mean having an exit strategy will make a business worth more when it’s finally acquired or sold.

Rather, having an exit strategy enhances the company’s value to the current owner since they will be guiding it toward their own predetermined preferred conclusion.