Many tech entrepreneurs think about their business exit from day one. Acquisition is central to their business model. But most smaller business owners don’t think about it at all… they are too busy getting into business or staying in business! An exit plan should be a part of every entrepreneur’s business planning process — though this is the least understood part of the business plan and often ignored.
Don’t wait. Think about a business exit now.
No matter how successful you are in business and how much you love our work, you should think about what will happen to your business when you no longer actively manage or run it. At some point down the road—a couple of years or decades from now—you will leave your businesses (or your businesses will leave you). Personal circumstances might change or burn-out could happen. You may be ready to pursue a new endeavor or want to retire. Or someone could approach you about buying your business.
Business exit options
You may not be able to predict your business’ success, your future interests, or the direction of the marketplace. But you can start thinking about the business exit options that could be a good fit for you. There are a variety of ways to exit your business. You could pass it to a family member, partner, employee, or other business stakeholder. You could sell it to an outsider. You could liquidate it and sell the assets, or you could file for bankruptcy. How will you figure out what is best for you and your business?
Envisioning the future options
We encourage you to think about your business and what it might look like when you are not at the helm.
- Is your goal to create a legacy business that will last forever?
- Do you ultimately want to pass the business on to a family member?
- When you are ready to stop running the business, do you hope to sell it?
- Would you want the business taken over by an employee(s), partner, or other internal stakeholder
- Would you want to sell to an outside party?
The vision for your business will change as your business develops and circumstances change, but thinking about your business’ trajectory, including your exit, is a key part of strategic planning and business growth. (If you are in a business partnership, it is important that you have an ownership agreement, from the beginning, which spells out what will happen if one or more partners wants to exit the business.)
Planning your transition
When you are ready to think seriously about transitioning away from your business, you need a
business exit plan. Just as a good business plan is an important part of business start-up, a good exit plan is key to a smooth transition away from the business.
There is an ownership transition planning process. This includes identifying or clarifying your motivations and goals, assessing the current strengths and weaknesses of the business, and creating a transition or business sale timeline with clear benchmarks. Then, the business owner can stay accountable to their plan. It is key that every small business owner feel ready for every next step and also include a feasible and straightforward plan to guide them through their ownership transition.
