Planning an “Exit Strategy”

The Business Life Cycle – Stages 6 & 7: Decline & Exit Stages

Just like a human life cycle, the business life cycle comes to an end in the Decline and Exit stages.

In the Decline stage, competition, the changing economy, and a shift in customer needs may reduce your profits.  Not only will cash flow be an issue, but you may also find yourself wondering whether or not you want to continue with the business at all.  It is at this time that you have to ask yourself a critical question – Am I ready to adapt to the changing market or is it time to let the business die?  If you want to continue, becoming more efficient and searching for new business ventures will become more important than ever and should be your number one focus.

If you choose not to continue, you will enter the final Exit stage.  In the Exit stage, your main focus will be finding the best way to cash-in on all of your years of hard work by formulating an exit strategy.  Rather than focusing on innovation, growth, or market needs, you must concentrate on how to establish the market value for your business and complete a successful sale.  This step will most likely require assistance from your accountant, lawyers, and financial advisors.

Although the business life cycle is a challenge, the satisfaction of taking an informal idea and turning it into a thriving business is a feeling that money cannot buy. This satisfaction and sense of pride in your accomplishments will make the Exit stage that much more difficult.  It is important to try and mentally prepare yourself for the end of the cycle, so that you can fully enjoy retirement and the life you deserve after many years of hard work.