Although entrepreneurs come to grips with the reality of business failures, bankruptcies, and overpowering competition, that’s not to say that success stories and profitable startups are no longer part of the picture. It’s the very reason why so many aspiring individuals pursue the business-minded goal of creating a successful company because all it takes is for that one innovative idea to supersede every problem they’ve faced until that point.
However, when entrepreneurs establish their business operations, reach a loyal target audience, and expect sustainable profit margins, most don’t often think of what comes afterward or what their next step in the business cycle looks like. And while sticking to what you’ve succeeded in and working toward expansion are equally good choices, we firmly believe that every forward-thinking entrepreneur must also consider a proper exit strategy.
Exit Strategies Add More Value To Your Company
You see, while it may sound counterproductive on paper to leave behind leadership and ownership of a business entity that you’ve dedicated countless years to create, sometimes our vision and mission for the company could be holding it back. Furthermore, others also want to cash out and enjoy the fruits of their labor, a compelling reason to reward all your efforts. Case and point, exit strategies add value by preparing for the future.
- A Clear Plan Serves As A Guide: Whether it be assigning key management roles, bringing up seasoned teams to speed, or reallocating project features to match a change in the business roadmap, exit strategies serve as a guide for the business. As a result, resource allocation and completing financial reports will flow more efficiently, knowing there’s a set deadline for selling the business entity. Plus, it encourages key stakeholders to invest smarter as well.
- Highlights Your Next Business Venture: In addition to the benefit of planning and futureproofing, exit strategies specifically help the entrepreneur with their next move. For example, you could be like Nvidia’s CEO, Jensen Huang, who is interested in the future applications of the metaverse and is considering the possibility of planning your next business venture in the digital space. Therefore, exit strategies help transition your responsibilities and put you back in your comfortable thinking chair once more.
However, Don’t Fall For These Common Shortfalls
Now, while selling off your business or holding a meeting with potential investors may sound like a clear-cut process at face value, many entrepreneurs suffer from poor exit strategies that force them to lose out on a company that was already successful. As a result, delays and lousy management often lead to bankruptcies or shaky business dissolutions that end on bad terms. So, we recommend that you steer clear of these common shortfalls when planning your exit:
- Discuss All Possible Exit Options: Firstly, before you double-down on selling off your company to a trustworthy candidate, we recommend that you discuss all possible exit options with senior management and business advisors. You see, there are countless ways to exit from the business entity that can still offer a channel to benefit from its operations, such as launching an IPO while holding company shares, merger acquisitions with business partners, or liquidating over time. And you want to weigh the advantages of each one to secure the best future for you and your tenured employees.
- Your Say On Future Leadership: Besides discussing the different approaches you can take for an exit strategy, a common mistake that many entrepreneurs commit is overlooking their say on future leadership. Sure, you could leave the decision up to the management and owners that will succeed you, but you must understand that your experience makes you the most capable of highlighting what the next CEO should uphold. Plus, it leaves a bad aftertaste when someone you deem incompetent or unprepared assumes your position.
- Transparency And Integrity: While completing the papers and due process on your time is possible, it’s a lot more ethical and appropriate for you to be transparent with the steps you will take moving forward with the company. Your employees and the teams you’ve worked with side by side deserve to know the future of their workplace, and they’ll feel much more valued knowing that you’ve shared your intentions and plans. Furthermore, you also maintain integrity and solidarity until the final moments of you acting as the firm’s head.
- Failure To Prepare The Finances: Last but not least, while preparing your financial statements and clearing up any present obligations of the entity appear as the obvious solution, many entrepreneurs fail to execute this critical step. As a result, their exit strategies shouldering unnecessary expenditures that eat into the potential profits the entrepreneur and owner intended to make from the sale. Therefore, it is in your best interests to maintain faithful financial representation and explore professional company valuation to avoid gaps in your exit strategy.
Don’t Let Your Achievements Conclude On A Sour Note
Overall, we firmly believe that every successful startup that transforms into a profitable business venture deserves an exit strategy to match the effort invested. Plus, you wouldn’t want something you worked so hard on just to come off short at the end.