Five Reasons Why Every Business Owner Needs an Exit Strategy

Posted by Webmaster - August 6, 2012 - Blog - No Comments

Having a good exit strategy is crucial for every business owner – even if you don’t intend to sell anytime in the near future. Having a solid exit strategy makes it easier to run your company day to day, as well as sell your company once you’re ready to realize the value of it.

Here are the top five reasons why every business owner needs an exit strategy.

==> Reason #1: It Builds Systems into Your Company

In order to successfully exit a business, your business needs to be systematized. It can’t be done simply by you or a handful of employees who’re “winging it.”

Instead, your company needs to run like a machine. The process of turning instincts into systems is a difficult yet extremely valuable one. Having these systems in place, even if you never exit your business, will make your company run smoother.

==> Reason #2: Helps Get Your Finances Straight

When’s the last time you did an internal audit? When’s the last time you double checked your cash flow and expenses? When’s the last time you looked for excess spending? When’s the last time you checked for employee theft?

When you run a private company, it’s easy to get sloppy on your finances. On the other hand, when you run a company that’s planning to exit, you need to be meticulous. Again, even if you never actually sell your company, acting as if you will can really help you get your company in good financial shape.

==> Reason #3: Enables You to Make Sudden Strategic Sales

If someone suddenly comes and makes an offer for your company, are you in a position to accept? If your systems and finances are a mess, it’s very hard to make a quick sale.

Quick sales can come from unexpected buyers, or they can come from necessity. If a competitor suddenly launches a product that could put you out of business, making a quick sale to another competitor is a very valid choice. Again, you need to be ready should that ever happen.

==> Reason #4: Allows You to Build Buyer Relationships Early

Knowing that you plan to sell allows you to build relationships with potential buyers years in advance. If your potential buyers are Google, Microsoft, Cisco and Apple, you can actively court relationships with those buyers long before your company is on the market.

==> Reason #5: Allows You to Raise Investment

If you’re looking to raise investment from professional investors (angels, venture capitalists, etc.), you’re going to need an exit strategy.

When a company exits is when an investor can make a profit. Investors want to know what your plan is for them to eventually make money. If you don’t have a solid plan, chances are you won’t get the investment.

These are five powerful reasons why every company needs to plan for their exit – whether you plan on selling in the near future or not.