Planning a business is tough. But exiting a business is tougher.
Quite interestingly, both these aspects are determining aspects of your entire struggle. You work on planning the business, so you have assets on your table by the time you close all your accounts books.
And you plan an exit, so you’re able to carry those assets with you in your next phase of life. For that very reason, planning your exit is just as important as planning your business.
Mentally and financially preparing for the possible twists and turns are also equally important. We formally term these twists and turns as change management.
Here, in this post, we will look into planning a business exit strategy, as well as the benefits of the change management process.
The point of delivering this information to you is to help you lead your business in an informed manner. So, you may derive the best results and profits.
Let’s get started!
Business Exit Strategies
Formally, business exit refers to a process wherein the business owner(s) sell their business to deserving candidates. At times, selling their business may only mean a shift in the position of authority. It may not mean losing complete this hold of your business.
All the specifics of the nature of a business exit come down to the type of business exit. Here are some of the most opted strategies of all times:
- Family Succession
- Merger & Acquisition Exit Strategy
- Initial Public Offering
- Management & Employee Buyouts (MBO)
Evident from the names, some strategies simply transfer the authority from one individual to another while still keeping the original owner in the loop. For example, in family succession or MBO.
On the contrary, some exit strategies close down the business for good. For example, in liquidation companies sell their assets and halt further work.
Merger and Acquisition Strategy is purely profit-based. If you’ve got a strong business base, your competitors will be glad to purchase your business model and merge it into their company to grow bigger and better!
How to Choose the Right Business Exit Strategy?
Choosing the right business exit strategy depends on the personal goals and objectives of business owners and founders. It all comes down to what do you wish to ultimately achieve?
For a lead though, here are a few questions you can ask yourself:
- What role do you wish to have in your business when you exit?
- What are your liquidity needs?
- What’s your company’s future potential? How do you feel about it?
- What are the market conditions like? Where do you see your company standing in the next ten years?
- Considering the future outlook of your company, do you want to stick around or leave?
When you’ve got answers to these questions, you’ll be able to map out your way through your business.
Now that we’ve checked out business exit planning, let’s look into the lane that connects business planning and business exit, i.e., change & change management.
What is Change Management?
Change is somewhat inevitable for modern businesses. Companies, organizations, and markets experience and deal with change in one form or another and the change can be driven by different factors. Legal environment, technological advancements, and evolving customer preferences are prevalent issues that fuel change.
Video: What is Change Management and Change Management Process? | Educationleaves
Small businesses thus must appreciate that change is unavoidable and strive to understand the pros and cons of change to maximize the efficiency of their using a change management company to help in the following:
Change is like a double-edged sword that cuts both ways on a company’s productivity. One side will touch on the drastic improvements in workers’ productivity. For instance, installing a new POS (Point of Sale) order entry terminal can help a retail chain save the time lost when customers spend queuing and reduce costly errors the employees make.
On the other side, workflow stoppages and slowdowns might arise if hitches pop up during the implementation of such a change.
As a result, productivity might nose dive as the employees struggle to accept and adapt to the change in how they work. Fortunately, referencing the POS system example, such an investment can help the business reduce line-time.
Still, they might be longer during the first few days or weeks as the staff familiarizes themselves with the tech and how it helps them work more efficiently.
Success in implementing change depends on having the manager and front-line workers buy into it to realize its effectiveness. It is a feat that is often easier said than done. It is expected to encounter mixed reactions from your team.
Some people in the organization or company might welcome the change, but a section of central employees might show resistance. As such, the change can improve productivity and satisfaction for some workers and negatively impact others.
Change resistors might peddle fear and doubt to their fellow employers. Thus, they are the group to focus on, trying to identify their motivations, needs, and how to work with them to help them understand and appreciate the benefits of the change.
Outsourcing a department can be an example of how such a change might damage relationships between the management and subordinates. It can impact the business’ reputation in its workforce negatively.
However, bringing in fresh talent and strengthening the workforce can lead to the creation of new departments and widen relationships within the company.
Efforts to save the business by making such a change will offend some people and severe ties with others. Still, it encourages the management and employees to work closely to ensure the transition is less challenging and to help ensure everyone sees its benefits.
Success or Failure
Change is often necessary for the good of a company. However, its impact can be volatile to the business’ growth and success. Changes should be the product of considerable research and consultative decision-making; still, an organization can find itself in a worse place after implementing the change.
The change can be in leadership, target market, business model, or business structure, and each of these will affect the business somehow.
That is why it is unwise to enforce company-wide changes whimsically. Instead, consider basing it on extensive research and testing to ensure the change has a positive impact.
Summing up, proper planning for your business exit and change management process can do wonders. And that’s true both financially and mentally. With the plan laid out and a strategy in hand, you’ll be able to sit back and relax like a business owner ought to!