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Planning Ahead: How an Exit Strategy Can Improve Your Future
21
Mar 2019

Planning Ahead: How an Exit Strategy Can Improve Your Future

By The CBA Group

As a business owner, you should always be thinking about long and short term goals for your business. When it comes to the future of yourself and your business, an exit strategy can significantly improve your turnaround when it comes time to leave your business.


What is an Exit Strategy?:

For a business owner, an Exit Strategy is a way to plan for the future. It allows for the selling of the owners share to another business, person, or investors. Ideally, when executing an exit strategy, if the business is highly successful a large profit is made but if the business is not as successful as it could be, an exit strategy can limit the owners losses.


Building an Exit Strategy:

When initially setting up an exit strategy it should be put into place to create a safety net. The two biggest aspects to be determined while configuring the exit strategy are the maintained ownership and the business value. The business owner must determine if they want to maintain any ownership or control of the business once they execute the exit plan. With regard to the business valuation, the owner should seek a professional that can help determine a market value or an estimated range for the business based on financial information provided.


Is there a “One Fits All” Exit Strategy?:

The short answer is NO. The best exit strategy is built on a per-company basis. A company that is smaller, such as a sole proprietorship is better off attempting to make the largest profit it can, where as a partnership may be better off selling ones shares to another partner.


Exit Strategy Conclusion:

Having an Exit Strategy can help protect a business owner from harm's way, or help them make a large profit when it comes time to leave. Creating this plan early allows for an easy transition, or a way to cut losses if the business were to fail.


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