Not everyone wants to run their company forever, so preparing for an exit strategy early on is key. What is one piece of advice you would give on how to do this effectively and why?
These answers are provided by the Young Entrepreneur Council (YEC), an invitation-only organization made up of the world’s most successful young entrepreneurs. YEC members represent nearly every industry, generate billions of dollars in revenue each year, and have created tens of thousands of jobs. More information at yec.co.
1. Eye Up Partners in advance
You’ll have a better chance of creating an effective exit strategy if you start looking at partners early. Many business leaders choose to sell their companies to more prominent brands that are able to increase production, customer support and marketing. Building partnerships early in your career can help build your reputation in the community and help you make a humble exit.
– John Brackett, Smash Balloon LLC
2. Carry out a business assessment and an exit assessment
There are various tips on how to prepare for an exit and maximize the value of your company, but the tactics are different for every business. The first thing I recommend is a business assessment and an exit assessment. This will tell you what your business is worth today, what its potential value is in the future, and what key areas you need to focus on to achieve that goal.
– Jessica Fialkovich, output factor
3. Have a good understanding of your financial situation
A critical 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 a fair 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, Press member
4. Build an organization that is resilient through change
Building something to last necessarily means it should be able to outlive the founders. Knowing this from the start, we should always seek to empower those around us and implement processes and structures to build an organization that is resilient through change, including change that involves a founder leaving for whatever reason. A strong culture is key for an organization to stand the test of time.
– Akshar Bonu, The personalized movement
5. Focus on increasing the value of the company
An exit strategy may be the reason you started your business in the first place, but it’s not an easy process. When you start your business, plan what you can do to make it increase in value over time. One way to do this is by regularly investing in growing your business and making sure you are profitable. That way, you can sell the business for a lot more later on.
– Kelly Richardson, Infobrandz
6. Keep accurate and detailed records
Make sure you keep clear, accurate and detailed books and records. If you’re looking to sell your business, potential buyers want to be able to review all the important metrics related to accounting, legal records, customer databases, marketing systems, and all the essential moving parts of your business. If your books or documentation are incomplete or disorganized, it will be more difficult to find a buyer.
– Kalin Kassabov, ProTexting
7. Always conduct business as if you were going to sell
Run your business as if you were going to sell it. Keep your books clean, employees happy, your interior organized, and overheads 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 the people you have trained and nurtured in the business. This means finding trusted people who know the company well that you can trust if you decide to leave. Leaders need to inspire others, so it’s important to find people with the same skill set and personality to lead your team.
– Bruce Tonic, Lead Nicely, Inc.
9. Have a backup plan
One piece of advice I would give on how to effectively create an exit plan is to have a backup plan. This means having a plan B for your business if your exit doesn’t work out or fails. Consider another investor or have a plan to sell your business to your employees. By doing this, you can be prepared for anything that might happen.
– Syed Balkhi, WPB beginner