The exit strategy within a business plan

The impart system within a business proposeThe Last portion of the business plan is the endure strategy. It may await strange to develop a strategy this soon to leave the business, simply potential investors will want to greet the long-term plans. The clog plans request to be clear in your own mind because they will rank how you operate the comp whatsoever. For example, if it is your ultimate aim to go about identifyed on the stock market, past you give up to follow certain accounting regulations from day wizard.Recent inquiry study has shown that 40% of all small business owners would like to exit their business immediately but that sole(prenominal) 25% gift either sort of plan for doing so. A mere 7% of the people have a formal written exit plan in status so although the desire is at the forefront of many owners minds, there is no strategy to crop it happen.The sequence of steps involved in the exit strategy atomic number 18Timing and the marketEstimation of business chargeImproving business valueSelling the businessConcluding the bargainTiming the marketDuring last decade, capital markets around the world became considerable with funds. These funds primarily got accumulated through a decade of sparing growth and attainity. Low interest rates and low yielding conventional investment fundss have driven the fund managers to seek alternative investment strategies that would exploit their returns.Whether through expansion strategies of large corporals, consolidation strategies of private equity managers or purely direct investment, this money is finding a home in middle market privately owned businesses. No much(prenominal) fortune had existed for business owners to accelerate their succession planning and considerthe in store(predicate) of their equity. But now, such a thing has become common.Estimation of business worth mayhap the single biggest factor that deter exploits of the value of a business is its current and lat e profit history. It represents the return to the business owner, and of course, the future business owner. The second major(ip) determinant of the value of a business is the future insecurity. It is an assessment of the probability that the profit of the business will be maintained or increase. Factors to be considered in assessing this hazard include the dependency of the business on the promoters sustaining the competitiveadvantage intelligent property of the fraternity growth and profit trends projections business practices culture and professionalism of the conjunction the market in which the business functionsWhile there is something called profit and risk trade-off, the Ultimate factor that determines the value is the strategic position of a buyer.Beauty is in the eye of the beholder. Factors such as economies of scale, Innovation of products and markets, market domination or even fast tracking of growth, poop see particular buyers payment more for acquisitions than an accountants valuation.Improving business valueBusiness owners should consider like steps when preparing to sell their business. Many businesses view their businesses as their Golden opportunity . It represents a one-off opportunity to convert a lifetime of efforts into wealth. So often, the bulk of the familys wealth is tied up in the business, invariably all at risk and highly dependent on a successful exit outcome that is of course, after tax, after debt repayment if any. Clearly a strategy must(prenominal) be set to maximise value. The Main aim is to get the business investment open.Enough Attention must be focused on those attributes of the future risk described before. We rouse take an example, what must be done to reduce the perception that the business will no longer prosper without the promoter of the business ? so, what be the implications for the management structure, policies and procedures, reporting, ongoing innovation and creativity and ultimately, the drive behind the business? By taking factors such as these, the business becomes more mature and will ordinarily be in a better position to grow and prosper without the business promoters influence.Selling the BusinessThe whole selling process is a procedural methodology structured to attract the right buyer who is prep bed to pay a good price for a business which agniseably demonstrates strategic advantage through acquisition. It must be capable of withstanding a due diligence process without any material concerns. Armed with an Information, an investment ready business owner can commence the next grade of selling identification of a buyer. Not surprisingly, in around 60% of cases, business owners already know their future buyer. It may be a competitor, a supplier or even a client. A list of known suitors is easily assembled. Attracting the other 40% requires a sales plan using mass marketing .The various options that be available areIPOAcquisitionMergerLiquidationConcluding the saleFor just about of their lives, business promoters have risked most of their wealth to be in this once-in-a-lifetime position. They know how to run a business, but how can they make the transition from a risk taker to that of custodian? Sadly, too many business owners get this number wrong What does this pot of gold represent? It represents the future security, income and lifestyles for the business owner and their dependents for the term of their lives. It represents the opportunity to pass wealth to the next generation and beyond.How can investments be structured to provide good returns but mindful of the risk profile of the family? How can taxation be legally minimised? How can the acres planning be properly structured to incorporate uperannuation, insurance, wills and trusts? How can the owner remain mentally challenged? A comprehensive wealth management strategy should bring together all of these components. Importantly, like planning for the sale itself, it should non be left to the last minute.Impact on friendshipCompanies. impacts on the host communities where they operate do non abruptly end when they stringent down operations and go home. Rather, the way in which companies depart has a significant impact that can linger long after the mine or plant has closed. Three of the most common impacts on communities are decline in economic status. Often a company is one of few sources of income for a community, if non the only one. A company.s closure can represent a return to economic hardship for its host community.Decrease in company-provided work. Companies often bring services that were not previously present, such as hospitals or road maintenance.Decrease in social status. The red of a company can lead to a decrease in a social status that corporate resources had elevated.Most companies do not give enough attention to the impact that their departure may have on surrounding communities, or how to manage that impact. Some companies do not cons ider an exit plan until operations draw to a close. opposite companies plan an exit plan early on, but do not revise the strategy based on ongoing analysis.COMMON PITFALLS adjoin DEPARTURE1. Companies do not sufficiently prepare communities for what to expect when they depart.2. Companies only strategy for ensuring sustainability of social programs is that the government will take over.3. Companies decrease community relations budgets as time for closure approaches, butthe need for services does not decrease.4. Companies leave behind infrastructure that is unsuited to community needs.The make up strategyInclude an exit strategy in the design of any new project. the manner in which a company wishes to leave its corporate site behind after its departure determines the manner in which it develops a project, even if the departure date lies several decades ahead.Engage communities in discussing impacts and planning closure. prate with affectedcommunities about the present and the fut ure. By planning together, the community will understand the process, and can have buy-in on decisions made.Solicit a range of perspectives and views in instal to assist groups in appropriate ways. Companies can identify surrounding communities. views of the future by engaging community members in planning closure. subroutine fear when choosing language and framing exit strategies. The ways in which a company.s get a line events are presented and discussed will influence how those events are perceived.Closure is no exception. Use tangible and visible short-term objectives that build toward goals for departure. While long-term hallucination is necessary, companies risk overlooking concrete, short-term actions that will be necessary to circulate future goals.Impact on CustomersWhen a company is planning to make an exit, the society at large will get affected. The extent to which customers are affected cant be quantified. The kind of problems that the customers likely to face are Unavailability of the product or serviceNo other alternatives availableLack of customer support (for product or service)There are various ways by which these issues can be tackled. Some of the realizable ways are,The company making a tie-up with other company which offers similar product. So,that similar products are being manufactured for the old customers.Having a tie-up with companies to offer customer support services (even after companies exit.Creating a forum to address the needs of the past customers.