3 Benefits of Having an Exit Plan for Your Business

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Exit Plan for Your Business

“As much as you might love running your business, you must have an end-goal in the plan. At the very least, an exit strategy keeps you from turning your business into a glorified job – working from home, but with longer hours.” 

--Kevin J. Donaldson

I found that very interesting quote from Kevin J. Donaldson. He is the CEO of Real Wealth Solutions and the author of the Best Seller 10 Secrets of the New Rich.

What he said in that quote is something that we, as business owners and founders, need to really think about. This is because many of us spend so much time focusing on how we are going to start a business that we do not even think about how we are going to exit that business.

It might sound strange to think about, but when we start our business, we should also plan how we are going to exit it. In other words, when you started your business, did you plan to work in it for the rest of your life? Or did you start your business so that you can get it to a point where you can travel and do all the fun things that you want? I bet you are thinking about that exit plan now!

One of the biggest blocks to exiting a business is that many of us do not have a strategic plan that involves how our company would run without us. 

There are several benefits of having an exit plan that many of us do not consider. So in this article, I want to share three of those benefits with you. 

Why Have an Exit Plan?

But before jumping into the discussion about the 3 benefits of having an exit plan, let's talk more about why we should have an exit plan for the business that we started. 

Recently, I have been in conversations with different business owners and various stages of their businesses. We have been talking about why they started their companies and what they wanted to accomplish with their companies.

As we talked about their goals and their vision, we discussed all of the actions that they believe will help them with scaling and diversifying their businesses. They were sharing such great plans, and we were identifying how they could improve their plans using specific strategies.

Then I asked them, "When would you retire and walk away from the business that you worked so hard to build?"

It was when I asked that question, that the business owners or founders went silent and took a pause. For some, the pause was 30 seconds, while for others, it was more than a minute!

I have had that reaction with business owners and founders who identify as male and those who identify as female. I have also had that reaction with those who are from different generations, races, and cultures as well as those with different sexual orientation and speaking more than one language. They were also from different industries and at different stages in thier business. 

Each time after the pause, I was told “I didn’t think about that.”

Hearing that response so often helped me to realize that there so many of us that focus on how are we going to turn our idea into a business and then how we are going to grow our business, but we don’t think about how we are are going to leave that business that we grew.

A big block to why we don’t think about how we would leave our business is that many of us are not aware of the benefits of having an exit plan.

It might have to do with the fact that many of us didn’t even have an exit plan for when we left the company that we were working for before we started our own business.

For many of us, there was some event or something that happened one day in our previous job that was the final straw…our breaking point. I am talking about being passed up for a promotion for the fourth time...

Or yet another time when some supervisor took credit for one of our ideas....

Or having our performance review and being told about all the things that we didn’t accomplish when we know that our supervisors knew that they were putting more tasks on our plate than we could handle...

So regardless of if it was one of those situations or some other thing, it became the final straw for us and we put in notice and left that job.

Then we set out on our entrepreneurial journey starting and building our own business that we were dreaming about for a while.

It is great that we are scaling and growing our businesses. But do you have an exit plan from your own company? Do you plan on working in this business for the rest of your life?

As Kevin J. Donaldson said “As much as you might love running your business, you must have an end-goal in the plan. At the very least, an exit strategy keeps you from turning your business into a glorified job – working from home, but with longer hours.”

I know that learning the benefits of doing something has helped me with making decisions, especially decisions in my company.

So I want to share 3 benefits of having an exit plan regardless of if you just started your business or if you have had it for a few years.

Before I jump in and share those 3 benefits, I wanted to share that completing your exit plan means that you achieved those big goals that you set out with when you started your company. In other words, having an exit plan is a positive thing and a reflection of your greatest business accomplishments.

3 Benefits of Having an Exit Plan

We discussed why we should have an exit plan, so let’s talk about 3 benefits of having an exit plan.

1. Helps you to stay focused on the direction that you want for your company

When you are focused, you improve our strategic actions. When you include your exit plan in your strategic planning, you starting your business with the end in sight. This helps you to take actions in your business that will get you to those outcomes that you desire. Ultimately, your exit plan gives you the strategic direction that you need for your business.

2. Stay committed to the value of your business

Did you know that you when you are building your company, you are also building the worth and value of your business? This is important because it is that value that will help you to determine the best option to take if you get to a point where someone is offering to buy your company.

When you have an exit plan, you will be in a better position to know when you receive an offer that is commensurate with your business or when someone is giving you a lowball offer for your business. This is because you would have created your exit plan with information about the value you want your business to have before you sell it. 

As you stay committed to increasing the value in your business, potential buyers are more likely to become attracted to your business because they are noticing your commitment to the vision, mission, and goals that you have for your company.

3. Protection against bankruptcy

A high percentage of small businesses fail because of cash flow issues. By the way, you can end up bankrupt if you accept an offer for your business that is by far lower than it is worth. Having your exit plan allows you to map out how your strategic plan will help your business generate revenue and identify the metrics that you need to pay attention to that are impacting your finances.

When you do your program evaluations that you included in your strategic plan, you get to identify any risks plus your program evaluation will help you to see if you are on-track with your exit plan for reaching the revenue that you indicated as your goal before you exit. Think about it this way, none of us want to exit our business because of bankruptcy. 

Summary

Many of us started our own businesses so that we would be set in retirement! So since that is one our reasons, then this is where having an exit plan will help really to covered in retirement. Plus, we will have the money to do all the things that we said that we wanted to do. 

Through our consulting and coaching services, we offer support to micro business owners to develop and execute their exit plan.

Additionally, we have partnered with tech company that offers a DIY option for your exit planning if you are a DIY type of person.

Thank you for taking the time to read my article.

Regards,

Dr. Priscilla "Dr. P" Kucer

Solutions+Actions=Results! (SoAR!)