Reasons You Need an Exit Strategy

Most business owners concern themselves with growth and expansion, and sometimes, how to make ends meet.    When starting or buying a new business, the last thing on your mind is how to exit.  However, an exit strategy is a key component of a successful business plan and too few owners give this proper consideration.

An exit strategy is nothing more than your plan on how you intend to leave the business.  In the end, you will either sell, close, or die.  Each of these situations offers different opportunities and challenges, but the main point of this blog post is that a business owner needs an exit strategy and here are some reasons to have one.

An Exit Strategy Allows for Retirement

Most business owners have a significant portion of their net worth tied up in their business.  With a proper planning, you can turn this net worth into cash to provide you with a comfortable and worry free retirement.

An Exit Strategy Provides for the Future


Your family and employees depend on your business and without proper planning, your death or disability could be tragic for them.  By planning for this fairly common situation, you can make sure your business continues on in your absence and provides for their future needs.

An Exit Strategy Can Provide Cash to Pursue Other Dreams


Regardless of your age, many business owners dream of starting another business or becoming an angel investor to other businesses.  Selling your business can provide the cash to follow these dreams and a well structured strategy will help you maximize what you take from the business and provide the liquidity to pursue new opportunities.

An Exit Strategy Will Appeal to Investors


Most outside investors want to know how they are going to get repaid.  For many investors, an exit strategy is a must because they want their investment protected.  By building this into your plan, potential investors will understand how you are looking out for their interests.

An Exit Strategy Will Help You Know When to Quit


Another reason to think about your endgame is understanding when is it time to pull the plug.  Without thinking about this, it is easy to continue throwing good money after bad in a business venture that clearly isn't making it or working the way you planned.  By planning for this contingency in advance, you'll have clear mileposts to help you decide how and when to end the business, regardless of its success.

It's important that you plan for your business exit.  I guarantee you'll leave your business someday and proper planning can make the difference between a successful exit and one that's not.

Return on Sustainability

Kudos to my Bainbridge Graduate Institute (BGI)colleague Kevin Wilhelm, for the publication of his new book Return on Sustainability.  Kevin shows the clear business case for sustainability and dealing with the climate crisis proactively.

Kevin highlights the risks and opportunities climate change poses for business.  As I've stated in previous posts, there are opportunities for companies that 'truly' embrace sustainability and Kevin digs into the details including:  enhanced brand value; improved customer, employee and shareholder relations; and better climate performance all at the same time.

As Kevin points out, climate change touches on every aspect of a business: Energy; transportation; innovation; waste; supply chain; employee retention and morale; investor pressure; brand value; customer loyalty; market opportunities; cost savings; tax; regulatory; carbon trading; and leadership.  

Given all that, don't you think a comprehensive strategic business plan should address climate change is a serious manner?  What we learn at BGI, and what I teach my clients is how to address sustainability and climate change in a comprehensive way.  Kevin's new book helps bring that understanding to a wider audience.

Treating climate change as an ancillary issue creates mostly costs for business whereas addressing sustainability comprehensively allows a company to capture the opportunities.

Think of the technological revolution back in the 80s.  Companies that embraced technology in a strategic and comprehensive manner left their competition in the dust.  Those who were slow on the uptake were forever relegated to playing catch up.

Last week I had lunch with a salesman from XYZ Company seeking TriLibrium's business.  XYZ Company is probably ranked third in an industry dominated by two giants. 

As I was looking at his card while getting ready to send a thank you note, I was thinking about XYZ Company as a business and my thoughts were: 

1.       Why should I care about XYZ?

2.      It must be a tough and competitive market battling the two giants, especially when you compete on price.

3.      What are you doing to be sustainable?

I sent my thank you and included the following note:

“… I was thinking about XYZ and your business strategy and how a company like yours could benefit by embracing sustainability as a strategic business driver.

The market place is rapidly changing and I believe the future will NOT resemble the past. 

·         Your next generation of employees (Gen Y) care deeply about who they work for and the values of the company

·         Your customers care about this as well and will be increasingly, at least partially, basing their decisions on these factors

·         Sustainability is an excellent differentiation strategy.  Do it now and be a leader, do it later and you will inevitably play catch up forever.

·         Managing carbon emissions and the cost of polluting will be rising and is likely to be regulated.

·         “True” sustainably driven organizations have the highest relative market values

In many ways, sustainability and traditional business and management approaches are as different as night and day.  Appending the strategic plan with “green” practices is helpful, important and appreciated, but ultimately doesn’t go far enough.

I think every business has an opportunity to embrace sustainability as a strategy.  Sustainability has the ability to be a disruptive business innovation and in that environment, you are either a leader or you risk being left behind. …”

As readers and visitors to this blog, I would appreciate your thoughts and comments.