Starting a writing business: why you need to have an exit strategy
If you are starting a writing business, you will likely have short and long-term goals that you want to achieve through your business. Whether you’re aiming to sell in 5 years, be acquired in 10 or will try to grow the business for as long as possible, it’s imperative that you begin developing an exit strategy from the beginning. It might seem like the day that you will leave the business is a long way away, however circumstances can change quickly. On top of this, having a plan will help you direct the business towards your end goal. Whether you’re just starting out, thinking about leaving the business soon, or have been offered to sell unexpectedly, it’s important to have an exit strategy.
What’s an exit strategy?
While you’re developing a business plan, or even focusing on growing your business, it can be difficult to think about the end and your eventual exit. It might feel like you’re setting yourself up for failure, however planning an exit strategy early gives you the advantage of time to create the most profitable exit possible, when that day comes.
An exit strategy is effectively a plan that details how you want to leave the business. Understanding what you want to happen, and what this entails, means when the time comes it’s much easier to gather the required documents and create a quality pitch to potential buyers. Different exit strategies might mean you need to make different decisions throughout the businesses lifespan in order for your exit to be as successful as possible.
Some of the popular exit options include:
- Sell and be acquired by a larger business or a competitor.
- Sell to an investor, entrepreneur or equity firm.
- Organise a successor, usually a family member or business partner, where you will sell your stake.
- Arrange for a current manager or employee to buy your business.
Why you need an exit strategy:
You might be thinking that you will just be happy to sell your business for whatever its worth in 5 years, and so you will deal with it when the time is closer. However, circumstances can change quickly and having an exit strategy means you are prepared to deal with an unforeseen exit. Furthermore, having a plan early ensures you don’t miss any profitable opportunities. A plan removes uncertainties and gives you and your business a clearer direction.
Some of the most common reasons for exiting a business include:
- Health issues
- A new venture
- An unexpected offer
- Change of interests and values
Developing a plan:
So, you have decided how you want to exit your business in the future, but this isn’t everything that an exit strategy entails. You should consider what you want to gain out of an exit. Do you hope to gain as much profit as possible, or would you prefer to see the business continue in good hands? Perhaps you want to remain involved with the business? Your strategy will depend on these things, so it’s important to have a clear idea of what you want. Discussing your options with a high-end broker, like those at Digital Exits can help ensure you make the correct choices for your end game. A good broker will also be able to accurately value your business, as well as tell you what needs to be improved on for a successful sale. These are all important aspects in developing an effective exit strategy.
You should re-assess your business and exit plan every six months in order to ensure your business is on the track to your long-term goals. An important thing to consider before selling is how easy the business will be to run for a new owner without you? If a lot depends on you as the owner, this can make it increasingly difficult to sell your business. Potential buyers will want to see that your business isn’t reliant on you specifically, along with healthy growth and growth opportunities as well as minimal risk and a good year on year profit. Knowing what things a buyer will be looking for
well before you choose to sell, will make the eventual sale much simpler.
Selling a business will be difficult whether it goes to plan or is due to unexpected circumstances. You will be involved less, or not at all, in a project which you invested a lot of time, money and effort into, and parting ways will never be easy. However, having an exit strategy from the early stages of your business means you can plan how you want to transition from the business and will be prepared when the day comes to move on.
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- Starting a writing business: why you need to have an exit strategy - August 17, 2017