Exit planning is about building a business that is efficient, valuable and attractive to buyers – not just preparing to sell
When you still have more to achieve in your business, the idea of an exit plan can feel premature. Why divert time and energy away from the day-to-day if you have no intention of selling any time soon?
However, exit planning is not just about you leaving your business – it’s about building a better one. Done well, it gives you greater control over your future, improves how your business operates today and ensures you are rewarded for the time and money you invest along the way.
Think of exit planning as protecting your investment
At any stage in your company’s evolution, you’re making two finite and precious investments: your time and your money. At some point, you’ll want a return on those investments – whether that’s extracting wealth, reducing your involvement, or creating the freedom to focus on other things.
An exit plan makes these possible.
Working on your exit plan now allows you to benefit from these investments in the future. You may decide to step back, change your role, or take money out of the business without necessarily selling it outright. In that sense, exit planning is about creating options, not forcing a sale as the only outcome.
In fact, good exit planning is really good business planning. It means developing your business in a way that increases its value, resilience and independence over time.
Building a business that buyers want
If you were to sell your business in the future, what would a buyer actually be looking for? What would make your business stand out as a compelling opportunity rather than a risky one?
By thinking about these questions early, you naturally begin to shape your business in a way that improves performance now and attractiveness later.
Thoughtful exit planning is about creating answers to these questions early on, rather than waiting until you’re ready to sell or leaving the work to a future buyer. That way, you benefit from a better business today, and a stronger valuation in the future.
Key questions for your exit plan
To understand how attractive your business is – and where you may need to focus – there are many questions to ask yourself. Here are some examples:
- Can the business function independently of the owner(s)?
- Do we have a great management team?
- Do we have relevant and accurate management reporting in place?
- Does our income come from contracted or recurring revenues?
- Do we have tied-in suppliers?
- Do we have a diverse range of clients?
- Are there new products or services in the pipeline?
- Is our employment record squeaky clean?
- Do we have a strong brand and reputation?
- Have we protected key assets like our intellectual property?
If the answer to any of these is ‘no’, this indicates important areas for improvement and priorities for your exit plan. After all, exit planning is about developing your business to make it as attractive to buyers as possible.
Exit planning to build a better business
The beauty of this work is that you don’t have to wait for an exit to see the benefits.
By developing your business to make it more attractive, you’re creating a company that’s more efficient, more profitable and easier to run. In this way, a good exit plan delivers rewards now, as well as when you sell.
In some ways, it might be better thought of as a ‘business attractiveness plan’ rather than an exit plan.
Bringing it all together
Are you delivering the full package, or is your business strong in some areas and weaker in others?
Exit planning is about asking the right questions early, making improvements over time, and ensuring you are the one who benefits from the value you create – not a future buyer.
Alternatively, talk to Henchards about your exit plan. We’ll work with you to create a business that’s a great all-round package – one that rewards you now and in the future.