What’s the value of exit planning for business owners?

Exit planning is an integral part of running a business as it plots a roadmap for the business following your exit. An exit plan that’s fit for purpose gives the business the power to operate independently and maintain operations after your departure, regardless of the circumstances.

With an exit plan in place, the success of the business is no longer contingent on you, so the business can continue following your exit and therefore, maintain value. Whether you plan to exit from the business soon or in future years, an exit plan provides the business with a lifeline that covers most contingencies.

Exit planning and protecting against all contingencies

An exit plan is a priceless tool for a business as it equips the next management team with the necessary information, connections, and direction to drive the business forward following your exit. It provides peace of mind, protects stakeholder interests, and maintains business value.

We run through the benefits of exit planning and why it’s essential for every business owner with a profitable business.

Business value

– As an exit plan strategically paves the road to your exit, this places the business in an optimum position to continue operations under new leadership. This protects the value of the business as it can continue to prosper under a new owner.

Stakeholder interests

– An exit plan protects stakeholder interests and secures the future of the business. From shareholders with a stake in the business, employees whose livelihoods depend on the business, and suppliers with strong commercial relationships with the business, an exit plan provides clarity and a clear sense of direction to all parties.

Contingency plan

– A comprehensive exit plan typically defines management structure in the event of a planned or unplanned exit to minimise operational disruption. This dissipates uncertainty about the future of the business likely to be experienced by employees, customers and suppliers.

As an exit plan prepares for most contingencies, it can protect its legacy and guide the business through unexpected storms.

Peace of mind

– An exit plan provides peace of mind and relieves pressure on your mental health, as should an unexpected turn of events befall you, your business will not be left without direction or a leader.

Future plan

– An exit plan can help organise your affairs and prepare for the next chapter of your life. Your business exit can take many forms, such as a business sale, employee/management buyout, merger, acquisition, or a solvent liquidation.

The best port of call is your accountant, financial adviser, or insolvency practitioner to understand what route is best suited to your business.

How to craft an exit plan for your business

The health of your business will largely determine the options available to you and subsequently, your financial returns. It’s best to seek professional advice to understand how to secure a future for your business and cash out on your investment.  The circumstances behind your exit will also play a major role in the decision-making process.