Less than 95% of SME owners have a business exit plan which is surprising, given that every one of them will exit. So surely it is better to have a plan of when you’d like to exit, how you would like to exit and hopefully put a few quid in your pocket?
Exit is a conversation I have with most of my clients early on in our relationship so that we can agree an end game and work backwards.
At that point, we can start to develop a plan so that they can be ‘sale ready’ in due course, be in control of the process and hopefully maximise their enterprise value.
Here are the top five benefits of having a business plan for exit
Clarity and direction: A well structured Business Plan serves as a roadmap for business owners looking to achieve a successful business exit. It provides clarity and direction, outlining the goals and strategies needed to reach the finish line on time. By defining the path to exit, you can make informed decisions, measure progress and stay focused on the ultimate goal.
Attracting investors and buyers: Investors and potential buyers are more likely to engage with a business that has a solid plan in place. A comprehensive Business Plan demonstrates professionalism, predictability and reliability, making your business an attractive proposition. It provides a detailed overview of your business’s financial health, growth potential, and risk mitigation strategies, giving stakeholders confidence in their investment.
Risk mitigation: Successful business exits require careful risk management. Your Business Plan (and SWOT analysis) should address potential challenges and risks and provide contingency plans. This proactive approach not only safeguards your business’s value but also reassures investors and buyers that you’ve considered various scenarios.
Financial preparedness: A well prepared financial section in your Business Plan helps you assess the value of your business accurately. It includes financial reports, cash-flow projections, and a valuation of the balance sheet. This information is crucial for negotiating a fair deal and ensuring a financially advantageous exit.
Legacy and transition planning: For many business owners, a successful exit involves passing to the next generation, the Management Team or to a third party via a trade sale. A Business Plan can aid in this transition by documenting company purpose, vision, values, key operating processes, and strategies. This ensures a seamless handover and a strong, sustainable legacy for your business.
A Business Plan is not just a document to secure funding or guide day-to-day operations. It plays a crucial role in achieving a successful business exit.
From providing direction and attracting stakeholders to mitigating risks and enabling a smooth transition, a well-thought-out and regularly used and updated Business Plan is an invaluable tool for any entrepreneur with exit goals.
Are you planning to exit your business? Do you have an exit plan?
Isn’t it about time you were in control of your business exit timeline, method and value?
Click here for access to Strategy On A Page, the unique business planning tool Tendo uses with all of our 1-2-1 clients, and get started on yours today.
Also, check out my ‘In Discussion With’ webinar on the topic of business exit.