Presenting Your Exit Plan as an Agency Owner
(Editor’s note: the following article is by industry trainer and speaker Barb Bruno, CPC/CTS of Good as Gold Training. Barb has served as a keynote speaker at recruiter networking events like the Top Echelon National Convention and Fall Conference multiple times. She has also presented webinars for the Top Echelon Recruiter Coaching Series. Barb is a trusted voice in the recruiting and staffing industry, as well as a valuable contributor to the resources that Top Echelon provides.)
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Whether you plan to sell, close, or pass the business on to your children—it’s never too early to think about an exit strategy. If you have an exit plan, it’s time to review it and make sure that you agree with the end results. If you do not have an exit plan, then there is no better time than right now to create one.
Why develop an exit plan?
Why should you design your exit strategy when you still enjoy your business? Think of it this way: you have invested money and time in your business, which makes it one of your greatest assets. Your business has revenue streams that provide you with your current lifestyle and generates annual profits. Your business increases each year in value so that when the appropriate time comes, you’ll be able to sell your business to enhance your wealth.
Planning an exit strategy is the most commonly overlooked consideration of a business plan.
The exit strategy plays a key role in determining the direction for your company. If you don’t know where you’re going, then how are you going to get there?
If you do not plan your exit strategy in advance, you, your heirs, and your successors may find that the options in the future are limited.
You could plan an exit strategy as the means to transition your company to a different stage. From this perspective, you do not necessarily leave your business, but your role changes significantly.
Your exit strategy should help you to achieve your long-term goals and create the lifestyle you deserve after years of hard work.
Three primary exit strategies
In the staffing and recruiting profession, there are three main exit strategies:
- Sell your company to the highest bidder.
- Sell your company to your employees or family members.
- Take as much money out of your business as you can and eventually just close the doors.
You could also merge your business with another or sell shares in the business to the public at large. Unfortunately, those entrepreneurs who do not create an exit strategy will one day exit from their business unprepared. The reality is that unless you define that end or change, your business may change in a way that wasn’t in your plan. Choose an exit strategy that aligns with your business and personal goals. You should be thinking about your exit strategy from the day you start your business.
To prevent your business from taking a path other than the one you intended, you can integrate an exit strategy into your business’s vision, recruiting goals, strategies, and tactics. Just because you have defined your exit strategy now doesn’t mean you have to execute it anytime soon.
Benefits of an exit strategy
The first and most obvious benefit is your peace of mind. You can exit your business profitably because you have designed your strategy to provide you with a predicted outcome.
Other benefits include the following:
- Protecting the value of the business you have built
- Creating a smooth transition to your management team, new owners, or family members
- Generating potential income for retirement or disability
- Enhancing the future worth of your business
- Reducing or deferring the potential tax impact on your estate, spouse, or family
- Creating a strategic direction for your business’s growth
Think carefully about your choices before you decide on your exit strategies. If you have created your exit plan, take time to read and assess your plan:
- Do you agree with your initial plan?
- Do you need to make changes?
- Is the future of your business secure with your plan?
- Have you positioned yourself properly?
- Do you have your assets in an irrevocable trust?
- Are you on track to attain your targeted net worth?
If you do not have an exit plan, please create one this week. Your exit plan will help guide all decisions you make in your business going forward.