What is an exit plan?

If you are reading this, you are likely interested in finding out more about what an exit plan is and the value of exit planning, correct? You possibly have a small business and are familiar with the importance of a business plan?  Now, what if I told you, your exit plan is just as important as your business plan.  “How could this be possible?” you ask. Well you are not alone in your surprise. Exit planning is often a sorely neglected part of a business.

Business owners are often disillusioned by the fact that the hardest part of the business process is the start up and don’t give much thought to an exit plan. Surely though your exit plan should be given as much consideration as you do in setting your business’s goals?  After all, why are you putting in all this work into building your business if you are not planning at some stage to sell your business or at least maximise the value of the business when you do make your exit. Even if you are stoic and plan to die at your desk, you still need to have an exit plan to prevent your family from being left with a large problem.

Therefore in summary, an exit plan is a strategy you develop to ensure that when you leave your business, you do so under the most favourable terms and whilst maximising the value of your business.

The value of exit planning.

At first glance, it may seem like a dismal lack of confidence in your business when you have to review how you would leave your business at any point, but really, it is the opposite. The value of an exit plan allows you to correctly grow your business.  By constantly being aware of how you can exit your business, you can ensure that you are staying on track and maintaining your business’ s value.

To give you an example, imagine your exit plan is to sell to a competitor. Having this as part of your business plan can ensure that you do your best to gain and maintain sufficient market share or push product development to constantly stay attractive to your competitors. Then if you need to make an unexpected exit, your business’s value won’t suffer as a result.

An exit plan also adds value in that when the time comes to exit, a plan is already in place to minimise the tax payment to the Receiver and also reduce the stress of exiting.

Exit planning is also about your goals.

An exit plan should also include your personal goals. When would you like to exit the business? Would you like to retire or make a gradual exit from your company? Are there specific goals like travelling where you may need to leave the business for extended periods?  As personal goals change over time, keep the plan flexible to accommodate these changes.


All these personal and business decisions should be included in your exit plan to allow you to be able to exit when you are ready or as circumstances dictate, ensuring you receive maximum value for all the hard work you have put into your business.

For help with a professional exit plan, contact Brett on 021 421 4444.

2011-10-11T12:13:17+00:00October 11, 2011|Advice, General, Uncategorized|0 Comments