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Consider your exit strategy when starting up a business or if your thinking of selling in three years time
When you're setting up your business it's essential to think about how you'll ultimately end your involvement with it. Most business owners do not consider this, but it is very important part of the business foundation to consider as you should always have the end in mind. However, if you did not formulate your exit, it is never too late to implement your plan now.
A well thought-out exit strategy can help you to maximise the value you get from your business, successfully market your business to potential buyers or investors and ensure you end your involvement with as little disruption to the business as possible.
Regardless of whether your exit occurs to a planned schedule or you are forced to make a move for unexpected reasons, the decisions you make when setting up can affect how easy it is for you to eventually exit your business.
This guide provides an overview of how some decisions can affect your ability to exit the business successfully, and shows you how to prepare and manage your business to maximise its value. It also covers the different exit options available and outlines their advantages and disadvantages.
Why you need an exit strategy
If you're setting up a new business you'll have a clear vision of what you want to achieve from it. To maximise the value you get from the business it's essential to think about how you'll leave it further down the line.
Carefully planning your exit from the business can help you to:
• mould your business into the ideal shape for your chosen exit option - maximising the value you get from it
• groom successors if they're coming from within the business - whether they're a family member or part of your management team
• exit at a time of your choosing, when the business is doing well and the market conditions are advantageous
Ideally, you should include an exit strategy in your start-up business plan. It can then be reviewed and revised whenever you work on your annual business plan and budget - and you can steer your business in the direction that your exit option demands.
If you manage an existing business and don't have an exit plan, you should now think about what your preferred exit option might be - and consider whether you could change the way you run your business to help you achieve it.
The way in which you exit can affect:
• the value you and other shareholders realise from the business
• whether you receive a cash deal, deferred or staged payments
• the future success of the business and its products or services
• whether you retain any involvement in or control of your business
• your tax liabilities
Subjects covered in Sunbelts' guide
• Why you need an exit strategy
• What do you want from your business?
• Decisions that could affect your eventual exit
• Exit option: family succession
• Exit option: selling your business
• Exit option: float your business
• Exit option: close your business
• The exit process
• Here's how I planned an exit strategy
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