Not everyone wants to run their company forever, so developing an exit strategy early is key. What is one tip on how to do this effectively and why?
These answers are provided by the Young Entrepreneur Council (YEC), an invitation-only organization of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue annually, and create tens of thousands of jobs. Learn more at yec.co.
1. Eye-up partners first
If you start looking at partners early, you have a better chance of creating an effective exit strategy. Many business leaders choose to sell their companies to well-known brands that can boost production, customer support, and marketing. Building partnerships early in your career will help you build your reputation in the community and help you get out there with dignity.
– John Brackett, Smash Balloon LLC
2. Conducting business price and exit evaluation
There are various tips on how to prepare for exit and increase the value of your company, however, the methods are different for each business. The number one thing I recommend is the Business Review and Exit Review. This tells you what your company is worth today, what its potential value is in the future, and what key aspects to focus on to achieve that goal.
– Jessica Fialovich, Reason for exit
3. Have a strong understanding of your financial situation
One important tip is to have a good understanding of your financial situation. This includes knowing how much money you need to live comfortably, as well as how much your business is worth. This information will be critical to negotiating the right price for your business. By having a backup plan and understanding your financial situation, you can be prepared for anything that might happen.
– Blair Williams, Member Pres
4. Building an organization that is resilient to change
It means that in order to build something that lasts, it must be able to surpass its founders. Knowing this from the start, we always empower those around us and implement processes and structures to build an organization that is resilient to change, including founder departures for any reason. A strong culture is the key to an organization standing the test of time.
– Akshar Bonu, Custom movement
5. Focus on increasing the value of the business
An exit strategy may be why you started your business in the first place, but it’s not an easy process. When starting your company, plan what you can do to increase its value over time. One way to do this is by regularly investing in your company’s growth and making sure you are profitable. That way, you can sell the company for a lot more later.
– Kelly Richardson, Infobranch
6. Keep accurate, detailed records
Ensure you keep clear, accurate and detailed books and records. If you want to sell your business, prospective buyers want to be able to go through all the necessary parameters related to accounting, legal records, customer databases, marketing systems and all the important moving parts of your business. If your books or documents are incomplete or disorganized, it will be difficult to find a buyer.
– Kalin Kasabov, ProTexting
7. Always conduct your business as if you were selling it
Run your company like you sell it. Keep your books clean, the staff happy, the interior organized and the bottom line low.
– Mary Harcourt, Cosmoglo
8. Find trusted team members and help them grow
As you grow and start hiring, your goal should be to help others climb the career ladder. The best successors will be people you have trained and nurtured in the business. This means finding trusted people you can rely on if and when you decide to leave the company. Leaders need to inspire others, so it’s important to find individuals with both the skill set and personality to lead your team.
– Tonic Bruce, Well Driven, Inc.
9. Have a backup plan
One piece of advice I can give on how to effectively create an exit plan is to have a backup plan. This means having a plan B for your business in case your exit doesn’t go smoothly or fails. Consider another investor or plan to sell your business to your employees. By doing this, you can be prepared for anything that may happen.
– Syed Balki, WP Starter