Know Which Way You`re Heading
 

One would hope that when you enter your car and turn the key in the ignition, you know your destination. You may not know from the outset every single twist and turn your journey will take and exactly which roads you may use but you know your end destination. Yet, I recently read a report that indicated that 94% of companies do not have a confirmed written exit strategy.  My own experiences within the software tech sector would tend to support that statistic.

So, what is an ‘Exit Strategy’?

An exit strategy should be a written plan so that you can exit your business under your preferred terms and within your own timeframe. It needn’t necessarily mean that the business needs to be sold - but it could be an option.  In simple terms, an ‘Exit Strategy’ (ES) is the means by which the owner / shareholders intend/s to get out of a business and how they will extract the investment they have made. In other words, the exit strategy is a way of ‘cashing out’ an investment / business.

An IPO is one option which gains a lot of attention.  However, unfortunately with regards to a solid exit plan, it’s nearly as risky as putting your life savings into buying thousands of lottery tickets.  It might pay-off big time but………..  They don’t call lottery tickets ‘moron tax’ for nothing.

Whichever route you decide to take, your Exit Strategy should definitely include your succession planning and business continuity plan. This will entail a means for you to transfer operational responsibility for the business from the CEO and other senior executives who may also be exiting, to the future business managers. 

Succession planning could allow you to take on a more strategic role, focused on instilling leadership into the next generation of managers and leaders. Developing a business continuity plan early is, in itself, a value driver in selling a business.

An Exit Strategy Adds Value to Your Business

The Exit Strategy should work in harmony with your strategic business plan. This addresses how you will maximise the value and growth of your business to make the business more attractive to buyers. Your company is likely to represent many years of hard work, not just for you, but for your fellow colleagues / business owners; you owe it to yourself and to them not to drop the ball at a critical stage; as is so often the case with senior executives.

There are many elements within an Exit Strategy that can not only drive the value of your business; but also make you stop, think and look at your business differently. This view will positively affect your ongoing, strategic planning.

It’s never too early tp plan your exit and, the more time you have for planning, the better the outcome. To be more precise, you gain value for your business and increase the odds of success when you start planning 3-5 years ahead of your target transition date.