If there was a classic business mistake I have seen time and time again, it is that business owners wait until they are ready to exit to put in place an exit strategy.
The answer to the question of when is it a good time to plan your exit, is “now”.
It’s always a good time to be planning your exit, and here’s why.
No-one lives forever, so at some point it is guaranteed you will leave your business.
Admittedly, this may be some way off, but think of it like this, if you were to try and sell your business tomorrow, what would you be doing today?
You would be making it the best, most valuable, version of that business possible.
As soon as you start to think and plan your exit, you would be scrambling around to do everything to make it attractive, from all points of view, to the buyer, who could be anyone from your partner, to your employee, through to a third-party.
It doesn’t matter, you want to hand on something good – and valuable.
When an exit strategy is put together last minute, it misses a trick, and can often be messy or even desperate.
If, on the other hand, you always have an exit strategy (even when you are not planning to exit) then you will always be (a) ready and (b) thinking about how to make the business optimise its value.
So, the exit strategy is no different than saying I want to maximise the value of my business at any given time, even whilst I am the owner. Especially when you are the owner.
This means you are thinking about how to maximise sustainable growing profits. That is commonly the thing that puts the value up the most.
Recuring income, long-term reliable clients or customers, exceptional management of the accounts and staff, are all things that will help make a business more sellable, more attractive and easier to takeover.
You see the point? The exit strategy commonly has within it, the very things that make the business the best it can be, at any given moment.
This is not the only reason to work on an exit strategy well ahead of time, there are others. But this one reason alone makes it worthwhile.