Exit Strategy in a Business Plan | Plan Projections


business plan exit strategy sample

In most cases, your written business plan should mention your personal exit strategy. Sketching out how you plan to leave your business, harvest its value, and ensure its ongoing vitality under new ownership is an important first step in guiding the final chapter of your involvement to a positive conclusion. Jul 19,  · The exit strategy is an important part of the business plan, and to avoid costly mistakes and limited options in the future, the plan should be geared towards the exit-strategy from the beginning. Exit Strategy Presentation. There are numerous forms of business plan exit strategies including: Sale – Sell the business to someone else for cash. In manufacturing, there is the vendor exit strategy. In the wider business world, an exit strategy would entail even more scenarios: an exit strategy could be your succession plan, your product phase-out and a new product phase-in, or even the selling of the company after you have reached a certain profit point.

Writing a Business Plan - How to Plan Your Exit Strategy | ProfitableVenture

This article is intended for small business owners who may be considering an exit within the next years. Although there are many variations, there are really only a few realistic exit strategies for most business owners. Most strategies only make sense for certain classes of business, so for any given business, even fewer options are viable.

Here we review these basic options, which types of businesses they work for, and outline the pros and cons of each. Usually there is business plan exit strategy sample asset sale of some kind, business plan exit strategy sample, and sometimes the business name is purchased by someone else for pennies on the dollar and restarted with different owners.

If a business simply closes, this goodwill is usually lost. Even if someone offers to buy the name later, because the business has closed, the value has dropped, and the selling price is lower than what it would have been if the business was still operating. Another option is to just take as much cash as you can out of the business each year, while keeping enough in the business so it can continue operating profitably.

This strategy makes sense where the business generates a lot of cash and requires little hand-holding by the owner. Examples might include certain manufacturing businesses, restaurants, nightclubs, real estate brokerages, consulting firms, and others. It requires very little planning, and it can be very profitable.

A sale is always an option: the question is how much can you get for your company? The key is to find suitable buyers who assign a high value to your company. Generally, the more potential buyers for your business, the better, since then you can establish a market price.

The average time to sell a company in was days according to data from BizBuySell. Most business brokers recommend you start planning for the sale at least years in advance. This may sound overly cautious, but in many cases even 5 years is not long enough.

As a business owner it is very easy to become overly attached to your business and lose sight of what the business really looks like to an outsider. What makes your company valuable to you may not have any impact on a potential buyer. If you do take your time and invest in the business with the goal of preparing it for a sale, you may be able to dramatically increase the value of the business and thus get a much higher sale price. This is when a business owner transfers ownership to family members, friends, or employees.

It is still a sale, but the terms and nature of the transaction are usually very different. The fact that the buyers are close to you makes this both easier and harder to complete.

Easier because you have a much better knowledge about the buyer; harder because you tend to be less objective about the buyer, and are more likely to let your guard down in negotiations and planning. Be sure to engage an experienced professional so you protect yourself before, during business plan exit strategy sample after the sale through a transfer of business ownership agreement. And, as with all other options, start planning early. A relatively infrequent variation is to transition the business to your employees through a worker owned cooperative conversion.

Although IPOs get most of the press, they are actually very rare. In a more typical year the number is more likeor even less. Public companies have to produce detailed reports on their financials, staffing, marketing, operations, management, etc, business plan exit strategy sample. These reporting requirements typically cost hundreds of thousands, or even millions, of dollars each year. The Sarbanes Oxley Act, passed shortly after the Enron scandal, costs even the smallest of public firms several hundred thousand dollars in consulting fees.

Finally, many companies are just not valued highly on the stock market, business plan exit strategy sample. For instance, very few consulting firms go public. Of course there are a very small number of firms for which an IPO makes sense, and may even be necessary.

But for the other Most exit strategies benefit from preparation and planning. Consider the case of a closely held family restaurant. Suppose the owner is the head chef and his wife is the manager. The restaurant has been in business for 30 years, has a loyal clientele, and is very profitable. If the owner and his wife leave, the recipes and cooking style go with him, and the customer service and operational efficiencies go with her.

However, if the owner and his wife begin planning for a sale years before, they can make the restaurant much more valuable to a potential buyer. For instance, the chef can train one or two assistant chefs, and teach them his secret recipes and cooking techniques.

The wife, business plan exit strategy sample, who manages the restaurant, can hire one or two assistants and train them. She can develop procedure manuals or at least define what the procedures should be. After a few years, a buyer could easily take over the business and keep it going as long as he is able to keep the now well-trained staff on board. By following the above steps, the owner and his wife have significantly increased the value of their business and will be able to sell the restaurant for a much higher price.

Larger businesses have much more at stake. The best approach is to postpone the sale for a few years, and gradually put some key elements in place to maximize the value of the company. Basically anything that increases transparency, efficiency, revenue or profitability, or decreases risk or costs, should be considered. Define roles business plan exit strategy sample responsibilities for each position, and hire top-notch people. A solid management team adds value in several ways:.

This includes an employee manual, an automated accounting system, a CRM system, a marketing and sales process, etc. Such systems reinforce and support the management team. They also provide transparency, and give further evidence that the whole business is not just smoke and mirrors. Examples include better documentation of expenses, invoices, back-orders, payroll deductions, benefits, cash management, business plan exit strategy sample, etc. Update this inventory at least once a quarter.

This typically includes furniture, books, hardware, specialized equipment, manufacturing or office supplies, and software. There are numerous good software programs available to track and manage physical inventory at larger businesses; for a small business you can simply use an Excel spreadsheet. Many companies over-estimate or under-estimate the value of their physical assets. This is different from a Board of Directors, since the advisory board members have no formal fiduciary responsibilities and therefore assume no legal liabilities.

They are advisersnot directors. Bring in smart people that you trust, who understand your business, and who will ask tough questions and help you find the answers.

There are many variations, but all effective advisory boards have the following in common: independent advisers who think for themselves, understand the business, work well with each other, and who are willing and able to spend at least a few hours a month on the business.

Avoid the temptation to form a showboat board where the advisers are famous but have no time or interest in helping your business. Also limit the number of golf buddies, relatives, and friends on the board. Note that I am not talking about a financial audit.

Business plan exit strategy sample business audit business plan exit strategy sample marketing, sales, customers, partners, internal operations, management structure, compensation, and more. The audit is usually quick just a few weeks and business plan exit strategy sample and prioritizes outstanding issues in every area of your business.

Ideally, if you plan to sell the company in 5 years, you should do an operations audit now, with follow-up audits every months thereafter.

The follow-up audits can be focused on the areas that need most attention for instance, marketing, sales, or Information Technology. Make sure each team understands that they are responsible for solving these problems, and set up a reasonable reporting framework they will update you once a quarter, for instance. Hold the leader and her teams accountable for results. Even if you hire an outside firm to guide you through the process, you will still need an internal resource to coordinate activities within your company.

Repeat this every few years as you approach your target sales date. A valuation serves several purposes:. The easiest way to do this is to bring in one or two insurance agents from competing companies. Most insurance agents will develop a comprehensive proposal at no charge.

Once you decide on an insurance package, business plan exit strategy sample, be sure to have your corporate attorney review the policy to make sure you are actually covered for the risks you deem most important.

This is especially important for businesses with major computer infrastructures dozens or hundreds of servers and time-sensitive, mission critical applications. Many firms specialize in disaster recovery planning. A good plan usually requires months of preparation and testing before it is considered complete. Review all employee, partner, and vendor contracts and policies to make sure the company is in compliance with all applicable city, state and federal laws, and minimize chances of frivolous lawsuits or other legal actions.

Many small business owners have their real estate attorney handle all of their legal issues — this is a huge mistake. You need a competent business attorney who understands and works with businesses like yours. There is a chance that key employees will leave the company if they hear rumors of an impending sale. It can impose penalties for leaving before a certain date or event, such as loss of stock options, business plan exit strategy sample, etc.

Talk to your attorney and HR Director and have appropriate stay agreements drawn up and signed by key employees. Start networking with business buyers, other business owners, business brokers, and others.

A good place to start is a local entrepreneurship group, Chamber of Commerce, or a local chapter of a business broker association. MBBI the Midwest Business Brokers and Intermediariesfor instance, has monthly meetings where business plan exit strategy sample buyers and sellers can get together to learn more about buying and selling a business — typically for the cost of a lunch.

Finally, although it usually takes years of preparation to sell a business, sometimes the right opportunity comes along much sooner. Be sure to watch market trends and keep your ego in check.

Many entrepreneurs have missed opportunities because they were convinced they could do better later, only to watch their window of opportunity close over time. If a great offer comes along before you have everything in place, take it — or at least give it serious consideration. The owner of a residential construction firm with over contractors had a heart attack at least business plan exit strategy sample because business plan exit strategy sample was so stressed by the daily hassles of running his business.

Given the fact that his business was well established and generally profitable, by giving the business to his friend, the owner probably missed an opportunity to sell the company for several million dollars. He also alienated large numbers of dedicated employees who had worked very hard to grow the company and were constantly frustrated by the apparent lack of planning.

About 7 years before he sold the company he began preparing the company for a sale.


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business plan exit strategy sample


SAMPLE STRATEGIC BUSINESS PLAN wilrdmanssa.gq An Internet Sports Entertainment Portal This document was written by: Funding and Exit Strategy Opportunity Page 33 Funding and Use of Proceeds Page 33 Exit Strategy Page 33 Financial Summary Financial Details. 4 Executive Summary Business Overview. This article is intended for small business owners who may be considering an exit within the next years. Although there are many variations, there are really only a few realistic exit strategies for most business wilrdmanssa.gq strategies only make sense for certain classes of business, so for any given business, even fewer options are viable. Jun 18,  · All good business planning documents have a clear business exit plan that outlines your most likely exit strategy from day one. It may seem odd to develop a business exit plan this soon, to anticipate the day you'll leave your business, but potential .