Have an Exit Strategy. Before it's an emergency.
- Del Chatterson
- 10 minutes ago
- 2 min read
This year I’m planning more frequent posts from your Uncle Ralph, including revision and updates of some of the most popular articles from the past decades. Last week’s post was on Start-up, this week is on Exit Strategies.
Many entrepreneurs are at the later stages of their careers and working on their
exit strategies. It’s not a good time to discover that the exit is just as difficult as the start-up. It’s better to have a plan in place before it’s necessary to exit on short notice.
I recommend that the exit strategy should include these three steps:
1. DETERMINE THE CURRENT VALUE OF THE BUSINESS
Determine the current valuation of the business as an outsider would see it. Identify the factors that reduce value and the steps that can be taken to improve upon it. Remember that packaging and presentation can make a big difference, but each potential buyer will assign a different value based on their own objectives.
2. IMPROVE ON THE VALUE
Start working on management transition to make the business less dependent on the current owner. Develop your existing team then look to fill the gaps that exist. Stabilize revenue growth, improve profitability and reduce the current business risks.
3. START ANALYSING AND ASSESSING YOUR OPTIONS
Analyze the strategic options for your exit from the business and initiate an action plan to improve on the choices. Your best strategy may be a sale, merger/acquisition or management buy-out. Select the option that is best for you and the business and not just the maximum cash payout.
In brief, improve business value by making it more stable, more profitable, and less dependent on you. Choose to remove yourself from ownership of the business and change your role from owner-manager to absentee-owner to former owner.
It’s not simple to do, but it is important to know where you are going before you have to look for the emergency exit.
Have a purpose and have a plan. Be an Enlightened Entrepreneur.
Your Uncle Ralph,
Del Chatterson
Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com
For more of Uncle Ralph's advice for Entrepreneurs read Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans.
Read the most recent blog posts at LearningEntrepreneurship Blogs.
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