It’s hard for business owners to guarantee their perpetual existence. With competition expanding every minute in every sector of the world, there’s so much pressure for entrepreneurs to innovate, formulate new ideas and solutions and satisfy their customers. This only means the stakes are higher for any type of entrepreneur now, and that’s why it often helps to get a back-up or exit strategy in case things go south.
This is one of the reasons why it’s so important for companies to have an exit strategy, a sort of safety net that helps them deal with sudden changes in their business environment. Besides, according to research, it’s not inaccurate to claim that businesses prepared with a good exit strategy endure the hardest market blows. If you’re looking for a set of guidelines on how to create this exit strategy, then this article is for you.
Preparing for The Worst
In a bestselling book by phenomenal trader/philosopher Nassim Taleb – the man who wagered against the real estate market in that last Tragic Housing Bubble – he emphasized the power and impact of Black Swans, which are highly improbable events but with dramatic tragic damage, threaten one’s survival and could not have occurred in the minds of those who want to avoid them. These Black Swans often get underestimated, shorted and even ignored. It’s when business owners understand the nature of these black swans and the environment they operate that they can mitigate their exposure to complete ruin.
Companies that make sure that they’re protected from the worst tend to have the most robust exit strategies. Doing this means diversifying the assets and not putting all investments in one basket. Preparing for the worst entails anticipation of the gravity of any type of risk that the business owners engage in and the creation of a response system that benefits from such chaos. Taleb calls this system Anti-fragility, which is likened to a Hydra that multiplies when beheaded or hit with a stressor, thereby increasing its value; in contrast to a Glass, which breaks and loses value when dropped.
Procrastination Is A High-Risk
Expert opinion also suggests that one barrier to bolstering a business’ exit strategy is procrastination. It’s so easy to postpone everything. Every day there’s a new event to be part of, an opportunity to invest in and many other distractions that try to steal us all off of our trajectory. This spare time would have been better spent creating a blueprint of how to deal with new monetary policies or in creating insurance for inflation. There’s a lot of balancing act and quality check of ill-planned business models going in operating a business, and the last thing an entrepreneur can do is waste time on burning it altogether on procrastination.
Assembling A No-Nonsense Team
When a business moves to new leadership or is currently in the process of succession, there are transitions and adjustments that have to run smoothly. Otherwise, it could get messy, costly and even ruinous to the business. When dealing with a good exit or transition strategy, it’s a wise decision to go with the experts. But be careful. There’s a thin line dividing between charlatans out to get your money, and real people who offer quality, real value and measurable results to your business. If you want transparency, fiscal credibility and hedge protection for your business, find a consultant or accountant you trust and tap into their empirical knowledge and experience in exit strategies.
Make It Efficient
When you think about it, things that are smaller in scale are easily manageable. There’s ancient wisdom even advocating that making things small is safer and will make them impervious to ruinous harms. On that note, it’s important for business owners to make sure that the exit strategy will remain as stable as it has ever been, and making the costs of the transition lower, smaller and more affordable is the next best step.
There might be a need to divide the assets of the company and its costs as well as to isolate the additional overhead from spreading to the other areas. Another tip here is to make sure that the assets to be divided, such as retirement income assets, are planned out as early as possible, as it takes time to make substantial structural changes during a transition.
Training New People
Fiscal rules, business modules, and your insider operations are complicated, and making the new staff of the business after an exit strategy must attend to them comprehensively. There’s a lot of training involved, but when the successor gets a good laid out exit strategy, all will be good. When a good exit strategy is well thought off and given keen attention, no need to second guess the next business decisions. Transition goes smoothly, especially if delegation, impartial leaders and level-headed trainers who can deal with constant changes and conflict are set forth.
A good business exit strategy must always also gear itself towards growing the business after succession. Growth means changes, big changes, and sometimes this requires a transfer of business ownership to another family member, management team or even a third party buyer.
There are nuances, tricky fiscal paths, and budget choices that have to be considered when new management is in charge, but with a good accountant or consultant, the transition will definitely go smoothly. A good accountant or adviser in your exit strategy can add value by telling you how to make the right business system changes and updates to make the to-be-sold business more attractive to the next buyer. And don’t forget: these transition changes take time, even with the most trustworthy accountants assisting you. So it pays to start this exit strategy ASAP.