Consider your exit strategy when starting up a business
Advantages of having an exit strategy for your business
If you're setting up a new business you'll have a clear vision of what you want to achieve from it. To maximise the value you get from the business it's essential to think about how you'll leave it further down the line.
Benefits of an exit strategy
Carefully planning your exit from the business can help you to:
- mould your business into the ideal shape for your chosen exit option, therefore maximising the value you get from it
- groom successors if they're coming from within the business - whether they're a family member or part of your management team
- exit at a time of your choosing, when the business is doing well and the market conditions are advantageous
Ideally, you should include an exit strategy in your start-up business plan. It can then be reviewed and revised whenever you work on your annual business plan and budget - and you can steer your business in the direction that your exit option demands. See write a business plan: step-by-step.
If you manage an existing business and don't have an exit plan, you should think now about what your preferred exit option might be - and consider whether you could change the way you run your business to help you achieve it.
What is affected by a business exit?
The way in which you exit can affect:
- the value you and other shareholders realise from the business
- whether you receive a cash deal, deferred or staged payments
- the future success of the business and its products or services
- whether you retain any involvement in or control of your business
- your tax liabilities