When you start a business, you don’t always have a clear plan for how you will eventually leave it. This is especially true when you’re an enthusiastic entrepreneur fulfilling your lifelong dream. You can’t imagine being anywhere else, nor do you want to.
While it may seem counterintuitive to start a business while simultaneously planning on how you will sell or otherwise pass it on this approach is a smart one, especially in today’s rapid-pace economy. Many business advisors and brokers recommend that you incorporate an exit strategy into your initial business plan for reasons like those below.
1. It Creates an Action Plan for Business Success
As the saying goes, if you don’t know where you’re headed, you won’t know when you finally get there. A well-planned exit strategy can help you define success. Will you be ready to leave when you’ve opened a specific number of outlets? Achieved a certain degree of personal wealth? These goalposts for success may change over time but having them in place will provide a sense of direction.
2. It Provides Guidance
Your exit strategy can provide some guidance when unexpected events occur. What if your spouse suddenly files for divorce and the company is part of the marital estate? Or you experience a severe injury or illness that forces you to depart early? If you already have an exit strategy in place, you can ensure that appropriate action is taken without causing the business to lose value.
3. It Informs Your Decision Making
When you don’t have ultimate goals to work toward, it’s too easy for you as a business owner to adopt the “tomorrow is another day” attitude. Your energy and drive are more caught up in the day-to-day details instead of the long-term strategy that should be guiding the company. An exit strategy reminds you what you want to accomplish and results in more informed decision making.
4. It Can Eliminate Stress
When you create an exit strategy with assistance from a business attorney, accountant, business broker, and other qualified advisors, you have a firm framework for the entire company lifecycle. It establishes parameters for both practical operations and strategic decisions, giving you peace of mind and a sense of purpose when you run into roadblocks or the daily stress of building a business becomes too much.
If you’re starting a new business or thinking about buying an existing one, it’s essential that you also plan your exit strategy and make sure that it includes all the elements needed to protect the company and give it purpose. Even if you’ve run companies before, each one is unique, and an exit strategy will give you both direction and peace of mind as you bring your current enterprise forward.
If you need help putting together a realistic and practical exit strategy, contact the business law team at Rosen Law LLC. We will discuss your goals, provide insights and suggestions that support them, and assist you in creating a plan that supports the future of your company. For more information, please call (516) 437-3400 today.