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Exit Strategy

Guest post by: Gerry Simpson

Article Overview: When is the right time to go?

Exit Strategy

One of the more interesting and challenging questions I run into when providing consulting support is “when should I be thinking about exiting this business? There are many factors to be considered but here are a few thoughts.

What kind of shape is the business in today? Is the business operated from strong principles of strategy with a clear vision? Can that vision be expressed and understood by those who manage the business or potential buyers? If you the owner cannot clearly state the purpose or reasons that you exist don’t expect new owners to invent it for you.

How will you get the maximum return if you plan to sell? In cases where management/ownership is dominated by a single individual it is important to maintain a high degree of confidentiality so that employees do not become insecure and unsure of the stability of the company or their jobs. This instability can easily be communicated to a potential new buyer and create a poor impression.

Factors that may support your decision to leave can grow out of many conditions. The most common is an age derivative. A long career leading to a desire for more personal time; reap the rewards of your career. Age may not be the prime driver but longevity at the job could be creating burn out. Time to move on.

Another good time chosen is driven by a need for change. You may feel you have achieved all that can be achieved and you wish to quit while on top of the game. This may also provide a high rate of return if the business is at a high level of performance. Selling now may produce the equity needed to finance a new opportunity.

Look for opportunities to exit from positions of strength. A well trained and competent management group may provide the opportunity to offer your staff a management buyout. Managers may be able to pool resources to fund the buyout, you as owner may offer to finance all or part of the buyout or there may be an option to use company assets to finance the loans needed for the buyout. This is often referred to as a LMBO – Leveraged Management Buy Out. It also provides good opportunities for maintaining stability in the organization.

Finally, the marketplace may facilitate determining the right time to exit. Poor economic conditions or competitive activity can have a huge impact on if or when you should exit. Positive conditions too might bring a competitor to the door with a buyout offer.

So the options are many but not always easy to sort through. Timing is critical, business life changes, choose wisely.

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Article Tags: exiting business, key factors
Referred by: http://www.businessguide.net/



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Re: Question: What has been your biggest business challenge? - [quote="gcr1976a":1niq7gnj]Regardless of the industry they may be in, it seems all small business owners and entrepreneurs face similar key challenges in growing their business and becoming as profitable as they would like. These can be grouped into the categories of "Time", "Team", "Money", and "Exit Strategy". What has been your most significant challenge, the one that seems to be your biggest hurdle to moving forward and achieving the level of business success (however you define that) that you would like to? If you could have one issue solved in your business, what would that be? Your insights are invaluable and I appreciate your honesty. Regards, Gavin[/quote:1niq7gnj] The biggest hurdle for moving forward and achieving the level of business success for me is getting enough traffic to my website a day. There are many ways to do this, and there are many "perfect plans" out there, but doing so is a lot harder than it seems. That's why I must keep trying.
Re: What can you do if your franchise is hit by a scandal? - GT - Brilliant Strategy... What can I add? I'm at a loss for words...so I'll shut up now...
Re: Run when you can, walk when you have to, crawl if you must; - Hmmm nice, never beg while crawling But also look up "Exit Strategies" We cannot always be right, nor can we control all matters of business.. Sometimes we have to get off the horse before it dies under us I can recall offering data service to banks, mortgage companies, and others before the data became available on the internet. Even though I had a better mousetrap, I was not ready for the glamor of the internet and let my system die a natural death


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