Not many business owners have an exit plan. In fact, in our own experience, less than 10% do. So that kind of proves the point – if the majority don’t have an exit plan you don’t need one either.

Take on the other hand less than 20% of business owners achieve the valuation they expect when they sell some or all of their shareholding. Coincidence? We don’t think so.

But the fact remains, you don’t need an exit plan.

Here is a typical scenario, again based on the hundreds if not thousands of conversations we have had since Henchards started in 2003.

You start a business – sometimes through circumstance, sometimes a long-held ambition – and before you know it you are working full-on either trying to win new business or frantically trying to cope with your customers’ requirements. What you didn’t do, unless you’ve done this before or had good advice at the outset, is to ‘begin with the end in mind’.

You battle through the cash, team and time pressures of the start-up phase and now have some momentum and presence in your market. Your next focus is on scaling the business – again that needs cash, but also a team, more process and systemisation and more ‘business management’ on your part. In addition to rolling your sleeves up you now have other ‘business stuff’ to do and with a team comes demand on your time as a leader. So still no capacity to think about how this might all end up.

As you grow you hit several ‘bumps in the road’: the loss of a major customer, a cash squeeze as you try to manage growth, the resignation of your trusted ‘number two’ (not to mention a pandemic, supply chain crisis, inflation or war). Some of these bumps can be existential – still no time to contemplate stepping back, but the attraction of doing so starts to grow as each 3am wide awake moment builds on you.

This phase of business with its cycles of growth and contraction, good times and challenging times can characterise many businesses for many years. It can have the effect of ‘training’ you to think only of the near term. However, at some point you have had enough or at least want to see an end in sight. The tough reality for some who reach this point is that although they may have a ‘successful’ and profitable business it’s not worth as much as they thought and they have become trapped with a business that’s overdependent on them.

Here they have a choice – try and sell for the best price they can get knowing it won’t deliver for them or their family the future they hoped for or stay longer in the business than they want to try and build it for sale. Now the absence of an exit plan hits home. You don’t NEED an exit plan and leaving your business may seem something you can leave until you are ready to go, but life would be so much better if planning to leave started that much earlier.

In our experience two to five years is a good timeframe depending on how much needs to be done to get your desired outcome. Contact Henchards to find out how we can work together now – and in the future.

(Photo by SaiKrishna Saketh Yellapragada on Unsplash)