Every business needs an exit strategy. While it may seem like you’re planning for the end when you have barely gotten started, an exit strategy can be a way to scale your business with more efficiency and effectiveness.
An exit strategy is most commonly known as a plan to help end a business through a dedicated process. While there are several options, the most common expected ways are selling, merging and acquisition, initial public offerings, and liquidation. Other options might include acquihires, family succession, or even employee buyout.
However an exit strategy can also be a way to plan for long term business goals and create more intentional transitions into new maturities of the business. Creating an exit strategy allows everyone to keep moving in the same direction and have a sense of security knowing what possibilities are available in times of uncertainty.
Planning an exit strategy before it’s truly time to leave is not only necessary to be prepared for unexpected challenges but its also necessary for growth in your business
Your exit strategy should propel your business forward
While an exit strategy may not be of use for years (or even ever) an exit plan can and should help your business continue to grow and move forward. The strategy should at the very least maximize profitability and minimize loss. Ideally though, your plan should also create purpose in your business.
An exit strategy can be used to help guide your critical business decisions. For example what kind of technology you choose to implement, needs to also be in consideration of your exit strategy if you plan on leveraging it for the business valuation. Longer lasting technology with higher costs may be worth it in the long run for you the business owner as it could be of higher value to have a system that is scalable for a potential buyer not looking to spend a ton right away on upgrading technology.
Additionally, it can and should help you, the owner, remain committed to your business value. When you know you are delivering impact and value, it is easier to navigate how and when you choose to use your exit strategy. Preparing and documenting ahead of execution can help create smooth change management processes all over your business. It can also give your team the empowerment to take ownership and responsibility of tasks that were otherwise left unclaimed.
Lastly, we believe that having a solid exit strategy creates an unintended benefit at times, it feeds vision. And without vision, the business will never reach its full potential.
Knowing your deepest “why” matters the most
So how or what should you be planning an exit around? An exit strategy is going to look very different for every business, and often these plans are just that- plans. They can change and morph as we and the world changes and morphs.
Knowing your core values – your deepest “why” factors – matter the most in creating an exit strategy. As Frederick Nietzche said “He who has a why can endure any how.”
Why you became an entrepreneur matters and it will continue to matter well after an exit a business. Discovering your reasoning behind what you love, what drives you, what you hate, and everything in between is single handedly the most important part of your plan. Through this discovery you not only are able to truly know yourself , but you are able to continue refining and honing your vision for your business to match your deepest whys.
Start there. Once you know your “whys”, the “hows” becomes easier – like merging or acquisition vs funding. Or pivot vs closing the doors. It also will encourage you to take a step back from your business and appreciate all the work you put into being here.
Remember an exit strategy doesn’t have to be a forever good-bye. It can be the start of something even more amazing.