The startup spirit, the entrepreneurship enthusiasm always posts a negative monosyllable (No) to a prerequisite for a successful legacy. Yes, the exit planning. A white paper published by Plan for Transition on The Psychology of Exits – Moving Owners to Action, states that the essential attitudes for entrepreneurial success such as
- Risk taking propensity
- High innovativeness
- Need for achievement
- Tolerance for ambiguity
- Need for control
Makes the “No” for exit planning
Veteran entrepreneur Celeste Hilling, CEO and Founder of “Skin Authority” views the exit planning as a primary atom for the company’s growth. Her words of wisdom are, exit planning acts as a reassess for the business, it clarifies the end goal of the business whether to sell it(or going public) or to create a legacy for your children’s future. She insists that the way we exit tells us whether the goal is still relevant for our company, i.e. whether all the indicators are driven towards the end goal or not. The facts and the factors in your exit plan will make a mark about your brand appeal to the public.
The major product of an exit plan is, the way down to the lane of reality. This lane of reality portrays the feasibilities of the company’s actions. Take for an instant, you plan to exit in 50’s and you are at 40’s, now it’s never profitable to work on products which revolutionize the world after that 10 years because, at the end of the day we all need wealth, fame and should be contempt of achieving greatness.
Nowadays startups are all attracted towards the early exit for the exchange of lucrative offer some of the standing examples are Flickr was sold for 30 million in its 1.5th year, Club penguin was sold for 350 million in its 2nd year and the great Youtube sold at 1.6 Billion in its 2nd year.
In “Why Every Company Should Have An Exit Strategy” from strategic exits, preaches the 2 stronghold points for the need of exit plan
1. It’s a business process:
It’s a process like yet another product development, financing plans or market strategy. The biggest difference is that this makes more money to shareholders than other processes in the company’s lifetime. Designing and executing the exit plan can increase the value of the organization by 50%.
2. It is a financial strategy:
It gives the capitalist and investors a clean and high res picture of the company even after the CEO of the company is shown exit. This builds the investor-company relationship strongly with a space for a further move for the company. Some investors are not compatible with certain exit strategies. So having a pre-drafted exit plan will avoid the turmoil at the time of unexpected circumstances.
The important steps for exit planning
Having a correct exit plan is more important than having one. There are the basic steps for a good exit plan
1. Time of sale
Plan the right time to sell the business or to transit the authority. The time of sale largely depends on the type of business, for example, E-commerce sites has a period of high sales and a period of low sales. Get familiarized with the trend and sell it at its peak.
2. The precise and errorless entities
If there is a plan for exit then there should be the right documentation, starting from the financials to the website you own. Accurate and detailed financials is required at the time of sales. The recurring and the predictable revenues are always attractive to the investors. Now coming to the website, check for any technical glitch or possibility privacy breaches. The websites should have valid links and the all the images should show up correctly, this task is time consuming but the likeliness of selling is greatly increased.
3. Restructuring to standards
The new investors may or may not be experienced in this field. So, restructure the organization with a standard for operations. Everything should have a standard operating procedure. This operating procedure should be easy for the new investor to embrace it easily.
4. Remove yourself from the business
Choose a wise successor, empower him with key roles. Train him to face the race solely and get yourself out. This is the toughest job for entrepreneurs, Getting out. It doesn’t necessarily mean a full walk out but for a full independence for the successor with a measurable advice from your side.
Mistakes are common in exit plans, time is the only factor for refining it. Make sure that, your business (Synonym for your creativity, hard work, passion) should continue the rich legacy with all its glory equivalent or more than that of your leadership.