Eight in 10 small business owners have no exit plan – Do you?

There comes in time in most business owners' lives when they need to move on from the business they have built.

This might be a result of a change in personal circumstances or for economic or business reasons, but it is unrealistic to assume you will be the one running the business forever.

Even if you have no current plans to leave your business behind, having an exit strategy in place might be the key to keeping your business going should you no longer be in a position to run it.

Why are exit plans so important?

Given their emotional attachment to the business they have built, it is little wonder that 79 per cent of small business owners were found to have no exit strategy in place.

While business owners may not be able to conceive of someone else taking over the business, an exit strategy should still be put in place.

In the event of a sale, buyout or merger, an exit strategy can be the key to ensuring that you have a clear pathway out of the company that is designed to maximise the value at the time of your departure.

Without an exit strategy, many business owners may find themselves losing control of the outcomes of any necessary restructuring and devaluing the company.

Just as a Will is written prior to your death in the event that you perish unexpectedly, an exit strategy can ensure there is a plan in place if illness or a personal change renders you incapable of carrying on with the business.

You have worked hard to build your business and creating an exit strategy before it is needed ensures that your hard work does not get squandered.

What are the exit strategy options?

A good exit strategy allows you to prepare for any eventuality to ensure that the value of your business is maintained regardless of how you depart.

To compile an effective exit strategy, it is necessary to ask the following questions:

• Do you want to seek a merger and acquisition transaction with another business?
• Would an Employee Ownership Trust (EOT) appeal to you?
• Have you considered a Management Buy-In (MBI) or Buy-Out (MB)?
• Are there family members you would like to be your successor?

These questions allow you to construct a versatile strategy that is capable of preserving value even if you do not have direct heirs who can take over the business.

MBIs, MBOs and EOTs are worth considering if you wish to redistribute control of the business to those who currently work within it.

When planning for succession with family members, it is always worth assessing their ability to handle the business and considering the impact their ascension may have on your employees.

Ultimately, there are a few key preparations that must be made for any exit strategy to be truly effective.

It is vital that your accounts are in order and that you have a strong management team in place that could keep things going in your absence, whether they assume control or support your heir.

These are important considerations for when you plan to sell a business, but should be incorporated into your business management strategy to allow your business to grow with confidence.

Like a pre-nuptial agreement or a Will, an exit strategy gives you peace of mind that your assets will be taken care of no matter what happens.

Our team is on hand to help you organise an effective exit strategy so that you can focus on growing your business while you are still in control of it, without fear that your hard work will go to waste.

Speak to our team today for expert advice and support with business exit strategies.