The Importance of Business Strategy

Exit Strategy, in most cases means the way you will go about selling your business. There are many Reasons why having an exit strategy is important — even if you have no immediate intention of selling your company. Some reasons may be as follows:

·         Sudden illnesses or family issues take time away from your focus on your business.

·         A recession may negatively impact your business.

·         At some point, you may want to retire and you will want to capture the value of your company.

·         Many small eCommerce businesses are highly dependent on a single product or product line. A shift in trends may lower your revenues.

 

Why Plan Your Exit?

It can be a lengthy process. Think about selling your house. The most common advice is to make major repairs, paint the house, spruce up the yard, and get rid of clutter. Likely, selling your business will have the same sort of procedure that you will need to follow.

Determining a Value

Determining a Value of your business is also a key factor, there are many factors that affect the valuation and overall marketability of your company. A successful sale of your business will depend on how you are executing these key factors.

There are many moving parts that will impact your company’s valuation. Planning a strategy to sell your company starts with evaluating potential buyers and what will be important to them. Next, evaluate your strengths and weaknesses with each of the key factors discussed above. Collect all the facts and data for each factor and include it in a prospectus, likely with the help of a broker. At that point, you can estimate a valuation. If it’s too low, invest some effort into improving the key factors or in increasing your net cash flow.

The most successful exit strategies are the ones that were planned years in advance. Frequently, they leverage one or two key factors such as profits, customer experience, supply chain, or organization. Think about an exit strategy for your business and plan ahead. You can then decide when to act.

Author: M Khanna director of Businesses2sell