Establishing and running a business requires a great deal of patience, dedication, and prudence. Owners not only invest a massive capital but also a colossal part of their mental and physical wealth. Their whole net worth is tied to the business, which makes exiting burdensome and a matter of great contemplation. Moreover, starting a business does not arouse questions and misconceptions as much as exiting one does. Exiting a business is not a foreign concept, yet it is greeted with a lot of questions and doubts. Exit planning requires a lot of strategising and analysing, to gain a perfect outcome. Exit planning has to be done with precision, ensuring that your business is ready to sell and the current buyer’s universe is fit for your business. Along with planning the deal and its terms, the owner has to prepare themselves for life after. Though common, exit planning and the phenomenon itself is often avoided by business owners because of the following three widespread myths and misconceptions about exiting a business:
Exit planning is for owners who want to exit business soon
The first misconception is that those business owners who are thinking of retiring or exiting soon, carry out exit planning. In reality, exit planning provides short, medium, and long term financial security options for all the business owners who want to gain utmost profit from their business. Exit planning is not merely an indication of selling a business but also increases the value of the business. It helps the business become more about growth and constant operation and less about the current owners. It does not entirely depend upon your decision to exit your business. It has other benefits too, which you can acquire even if you do not immediately exit.Â
It’s easier to sell the business than implementing an exit plan
Indeed exit planning or succession planning requires a lot of time and energy but there are certain factors to be considered when compared to selling the business. Some businesses in competitive industries can easily sell their business to a peer or competitor. Businesses with a niche do not have this advantage and they would be giving up a lot of business value. Even if you are transitioning internally or waiting to sell your business to a peer, exit planning can help you acquire better business value.Â
Renouncing ownership equals giving up income and control
One of the greatest misconceptions is that exiting a business means letting go of complete control over the business and the generated income. Exit planning can be done gradually, with shifting complete control over the next generation only after they have proven their competence. This gradual shift helps in safeguarding the interests of your stakeholders and you. Though one day you will have to give up absolute control, exit planning gives you time to enjoy while it lasts and gains adequate benefits. Exiting a business can become profitable and seamless if accurate exit planning is done. If you overcome the hesitation created by these myths, exiting a business will make you feel stronger instead of otherwise.
