All businesses need an exit strategy, including online ones. These detail the way that you intend to leave the business and will dictate the way that you run it to make sure that is possible. You may want the business for the lifestyle and have no intention on passing it on or you may decide that you want to leave it to your family. Whatever the reason, here are some steps in creating an exit strategy for your online company.
Anticipate Problems in Advance
You will need to anticipate all the issues that could happen in the future. This includes the need to sell your business for equity, your retirement plans and what you will do should your business go into administration. While all the issues are difficult to anticipate, you should create a plan for the majority that happen to businesses and the ones that are more likely to affect your company.
Your exit strategy can change and should change on a regular basis. Keep assess the various problems that happen to businesses while you are operating and determine a plan for those to prevent them effective you negatively.
Why Are You Creating the Business?
Think about the reasons you have for starting your business. Was this something to do while you were unemployed? Was it something that you have always dreamed of doing so that you could leave something to your family? Do you just want the business lifestyle; the car, the house and the money? The reason for starting your business will directly affect the type of exit strategy that you create and the way that you run your business in the future.
If you want to leave your business to a family member, that family member needs to be trained in the running of your company. If you want the business for the lifestyle, it will affect how you handle the profit, who gains the money and how much of that goes back into the business. If you want the business for a retirement investment, you will need to prepare financial statements to sell the company on in the future.
How Far in Advance Do You Want the Exit Strategy to Occur?
How long do you want to keep the business running for? This will depend on the reason for creating the business and directly affect the length of time your exit strategy will be planned for. You need to think about this so you can determine when you should start writing the strategy – it should be at least two years before the plan is to take place – and the type of steps you will take for the strategy to happen.
For example, if this is something to invest for your retirement, the exit strategy will be a long term one. It will involve sales reports and making sure your business remains profitable and valuable so that it can be sold off at a later date. If you want to leave the business to a family member, you will need to make sure that family member is old enough to take control before passing it on.
Take your time to plan your exit strategy. While this is something that should happen two years before closing, many online business entrepreneurs support the idea to create your plan as soon as the business starts. It directly affects the way that your business will be run and how you handle the profit.
This guest post was written by Mitchell, an online business owner. As well as running his own business, he offers advice to other entrepreneurs to make sure they understand the business world, such as using a private equity group.