Why you need an exit strategy
More than one third of business owners are waiting for an
opportunistic approach from a third party before selling their
business, according to research. This leaves owners unprepared and
at a disadvantage. Implementing a clear development strategy from
the beginning, including putting in place a strong management team
to lead the business following the eventual departure of the
entrepreneur, means the company will be attractive to potential
purchasers. This guide outlines the reasons you need an exit
strategy.
- Time to cash in?
- Don't lose out
- There's someone better placed than you who wants to do it
- Time to relax
Time to cash in?
Having set up and run the business, it may be you require a
fresh challenge. Or the economic conditions might dictate when the
time is right to sell. Or you may want to realise the value of the
business. If there is consolidation in your sector, or larger firms
are on the acquisitions trail, these again might be good reasons to
cash in. With the economic outlook fluctuating, picking the right
time to sell could make a huge difference to the price you
receive.
- New challenge
- Sector consolidation
- Obvious buyers
- Right market price
Don't lose out
If you don't have an exit plan, you won't be taking advantage of
the tax implications of a sale. If your exit strategy is about
selling the business, there are tax implications in terms of how
you hold and sell the business and costs associated with that. The
same goes if you are planning a succession to a family member.
Think about the implications on family wealth and on taxable
income. Floating the business on AIM will also dictate certain
financial outcomes, all of which require advance planning and
advice.
- Tax implications of sale
- Tax implications of float
- Tax implications of succession
There's someone better placed than you who wants to do it
Many entrepreneurs are great at growing a business from scratch
but less good at operating a going concern. The initial excitement
and enthusiasm can wane, and the focus can start to go. An exit
strategy from the start means these issues are dealt with. During
the course of the business growing, you will keep in mind the need
to hire, train and promote good people who could take over the
running of the business and who are better managers.
- New blood, new enthusiasm
- Managers can do it better
- Training and promotion
Time to relax
Starting a business is hard work, long hours, stress and strain.
On you and your family. Having a exit strategy in place will help
you and your family realise there is an end in sight. It gives you
and your family a focus so you can plan for the future. There's a
whole world out there away from work, other challenges, charities,
good works, artistic endeavours and family responsibilities. An
exit strategy gives the owner a great life opportunity.
- Take a holiday
- Do some charity work
- Treat the family
- Take a course
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