Guest post by Jonny Hughes
One of the most overlooked aspects of business planning by business owners is having an exit plan in place. You may not be thinking about leaving the company anytime soon, but there may well come a time where you are ready to move and you will want to make sure that the company is in a good position once you walk away which is why an exit plan is so important.
So, why might a business owner walk away from the business that they have put so much effort and passion into? There are many reasons why this might be but the most common are retirement, achieving unicorn status, starting a new venture or reinvesting profits made to achieve your personal financial objectives.
Types of Exit
There are also a number of ways that a business owner can exit the company and the main options are:
- Selling or leaving it to family members
- Selling it to an outsider
- Creating a succession plan
- Closing the business
The Importance of a Plan
No matter what exit you decide on, it is always important to have a proper plan in place so that it goes successfully and to avoid complications.
Failure to have a proper exit plan in place can not only put the stability and future success of the company at peril, but it can also jeopardize your own financial health so it is clear that planning is incredibly important from both a business and personal standpoint. When you have a clear plan in place for your exit, it allows you to maximise the amount of money that you get from the business, ensure a smooth handing over and help the company to be in a good position moving forward.
Creating a Plan
Creating a high-quality exit plan is tricky and the best type will depend on the size of your company, individuals circumstances and the type of exit that you are opting for. As such a complex business plan, it is best to use an independent financial advisor who can assist with the financial planning around your departure as well as setting you up for the future whether this is constructing an investment portfolio or retirement planning.
Business owners tend not to think about what will happen when they walk away from the business but this is a time that needs to be planned for. Having a proper exit plan in place is important in terms of a smooth changeover, safeguarding the future of the business and ensuring that you are in a good financial position following your departure.
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