How would you respond if someone asked when you plan to retire? As a business owner, retiring means exiting your business. Once you have chosen the best exit strategy for your business, it’s time to build a plan to follow through on that strategy.

A surprising number of business owners fail to plan for the transition out of their business. Starting a company with an established business plan is a best practice, as is engaging in regular planning on an annual, quarterly, or even monthly basis. It makes sense that there would be a planned departure, as well.

Successful business owners spend years building their business, adapting to necessary changes, while still maintaining their initial mission. Continued success includes an exit strategy and it’s important to consider that next phase sooner rather than later.

How a Business Exit Strategy Helps

Instead of thinking of an exit strategy as permanently closing a door, think of it as forging a new path of opportunities. For business owners close to burnout, an exit strategy or succession plan can help redirect and reinvigorate enthusiasm for a possible new business venture or retirement on their terms. An exit strategy can be designed to transform the business into a new phase or ownership structure while making it more attractive to potential buyers. A well thought-out business exit strategy opens the door and creates freedom to pursue business goals and personal aspirations.

Steps to Developing Your Exit Plan

Creating an exit plan, or business succession plan, is a significant undertaking. The first step is defining your exit strategy objectives. Relevant questions that deserve careful consideration when developing your exit strategy include:

When do you want to exit?

Timing a business transition is deeply personal with many factors to explore. How soon and under what circumstances, ideally, would be optimal?

What does "exit" mean to you?

Will you stay on for a while as a consultant, or are you looking for a clean break?

What is next for you?

Often, business owners want to continue to keep busy. Sometimes this means travel, spending more time with family, pursuing a hobby, or creating a charitable foundation. Having a plan to stay active is critical.

What do you want to do with the business?

Few owners simply close their doors. Some opt to sell the company to a third party or merge with an enterprise similar to their own. Others create legacy ownership by turning the business over to a trusted partner or family member or creating an employee-owned partnership structure.

What will you do with the proceeds?

The monetary side of the equation is rarely as simple as "cash out." A clear definition of what amount is needed to continue to create financial sustainability and determine how to allocate funds to fulfill long-term goals warrants careful review.

Answers to these questions are not set in stone. Deciding the best approach is the one that supports your goals and fulfills your needs. Click here to download our Succession Planning template. For more information about how to successfully take the next step, please reach out to a Cambridge Savings Bank business banker today.