10/24/2005
Planning an Exit Strategy
by Phil Harris, Business Consultant, UALR Lead Center
The two greatest times for entrepreneurs are when they start or buy the business and when they sell it! When you start the business, you have so much excitement in terms of how you are going to operate and how you are going to improve the business. When you sell the business, however, most entrepreneurs are even happier! This exit is inevitable (like life and death) but with a business, you do need to have a specific time in mind for this to occur. The day you start the business, is the day you need to start having an exit strategy.
There are four critical things that you need to consider when going through this exit planning. The first step in planning an exit strategy is to estimate when you plan on getting out (of course, this can change). Second, the business must, and I do mean must, be able to operate without you at the helm. If the business is the least bit dependent on you, then its value is much less than if the business is not solely dependent on you. The third step in developing an exit strategy is to clean up the balance sheet and the income statement to show as much profit and growth as possible. The better these things are, the higher the value. The final step is to ascertain who might purchase your business. Will it be a relative, will your business be acquired by another business or will you just sell your business?
To learn more about how to plan your exit strategy, visit the following web site www.business.gov/phases/getting_out/.
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