Exit Strategies: why you need to plan for the end from the beginning

The planning for your exit from your company should start from day one. Yes, this may be a long-term plan and seem a long, long way in the future – but if you don’t plan you won’t know how to run the business. Building the business and working in it – having a clear strategy and realistic action plan can make this process easier for all.

What do you want from the business?

  • Do you want to be a millionaire? Do you want a specific lifestyle, or is the business a short-term goal with a possibility of high yield upon sale?
  • Your start-up reason will affect what you can do with the business in the long-term. A business that gives you a regular wage and great lifestyle might not be something you can sell as a going concern. Whereas a business that demands attention from you day and night for five years may be the one you can sell for a million.
  • Build a brand.
  • Build a team, management structure and ensure that the customer or client is not just buying you. Ensure key employees stay with the business. HR and employment issues must be in place.
  • Ensure that your business has high growth
  • Set up processes and document management systems
  • Ensure you are aware of your supply chain and all contracts are in place
  • Financials must be up to date. Accounts and company records. Know your financials. A ‘Dragon Dens comment, but you must know them.
  • Ensure inventory if relevant is updated.

Options available:

Selling the business

1. The most popular exit strategy is to sell the business:

  • either selling your share to existing management
  • or seeking a new owner for your business. This can take a variety of forms. What is important is does it work for you?

2. Leaving it to family members

  • This must be consider very carefully and is not without pitfalls in itself.
  • How much of the business do I want to transfer now?
  • Type of shares, whether voting or non-voting.
  • What type of transfer structure?

Tax planning

This is very important to consider at all stages. In respect of the above always seek specialist legal and tax advice.

Above all plans are only a guidance of direction you want to take and the actual journey can be so much more fluid. Always explore all avenues.

“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” Pablo Picasso

By Rashmi Dubé

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