• Serdar Kabul

Why Every Entrepreneur Should Have an Exit Strategy

Updated: Sep 17, 2021

All serial entrepreneurs will have launched more than five businesses during the course of their careers. Since they can’t micromanage every aspect of their businesses, business owners often end up-selling some of them to prospective buyers – hopefully at a premium.

However, selling your business at a premium often hinges upon an exit strategy that aligns with your goals and profits. Your exit strategy is a set of plans that includes details about what happens to the business after you have left.

This may not seem like such an obvious step to take at the earliest years of starting the business, but drafting an exit strategy is an important aspect of building the business and setting yourself up for a big payday.

Why Your Business Needs an Exit Strategy

Every entrepreneur, even the most successful one, needs an exit strategy at some point. Take a cursory look at some of the biggest businesses – such as Microsoft, Uber, and Amazon - and you’ll notice many instances of when the founder decides to retire or take a back seat. Leaving a business that you built from the ground up can be a stressful time and emotions can easily convolute your judgment. This is where an exit strategy comes in.

Here are a few things that should be considered when formulating an exit strategy:

Factor in the amount of time you plan on being a part of the business

Your financial circumstances and expectations

Any investors who need to be compensated for their contributions to the business

A successful exit strategy is one that allows the subsequent owners to continue on a positive trajectory.

In general, there are three primary ways of selling your business:

Merger & Acquisition (M&A)

This means that your business is being bought by a larger company. This is ideal when both companies have the same subset of skills and clients, which can allow them to save resources by joining forces.

Selling to an Individual

This is not a merger and acquisition because you’re not combining two entities into one. However, it is a great way to sell your business at a premium in exchange for a big payday or to just take some time off. Many entrepreneurs love the thrill of getting to start all over again. It is worth noting that you should sell your business while maintaining confidentiality without spooking your clients and employees.

Have Someone Else Run it for You

If your business is doing well and is giving you a steady revenue stream, find someone capable to run it for you. You can enjoy ownership of the business as well as the revenue stream while an executive you trust takes over.

However, you should have an exit strategy for the day when you finally decide to hang the gloves. The best exit strategy is one that is aligned with your company goals and profits. Don’t wait until the last possible moment to think about an exit – start thinking of one right now.

Ready to sell your business? Find a prospective buyer that shares the same goals and values as you. You can also get in touch with me to learn about the ideal exit strategy for your business.