How is exit becoming part of business strategy

As a nation we’re very good at starting businesses. 

In the UK, SME’s account for over 99% of the total business population and employ over 60% of the total workforce. There’s no doubt that the SME sector is an important part of the UK economy, but when founders set up their business, do they think about their exit? 

We don’t normally start a business thinking about how we’re going to leave it, but the reality is that none of us will live forever, so planning the future of our business, and how we want to leave it, should be an integral part of our retirement plan but it rarely is.  

We assume that if we just work hard, build our business, grow our customers and our revenue, then someone will want to take over the business in the future.  

The problem with that approach is that it’s a hope rather than a strategy. When the time comes there may be no identifiable successor and no one interested in buying the business. 

When you create your long-term business strategy you should be including your desired exit as the main aim or end goal for you and your business.

For example, if you want to leave the business to a family member or other successor, you’ll need a strategy for training, developing, and preparing that person for that role. 

If, however, your intention is to sell the business to a larger corporation then you need to structure, develop, and finance your business with that in mind.

In both cases it takes time to create the right foundations for a successful exit.

You need to incorporate your exit strategy as soon as possible, making sure that everything you do gets you closer to that goal. 

The rewards of a successful exit can be significant. 

On average, UK SMEs were sold for 5.5 times their gross profit in 2021.

The number of SMEs with revenue between £1m and £200m sold in the UK also increased by 59% in the first six months of 2021 compared to the same period in 2020.  

SMEs are an attractive acquisition target for large corporations looking to increase market share or buy R&D and innovation capabilities rather than spending time and money creating it themselves. 

Sound attractive?

If you want to join the list of SMEs that successfully sell their business every year, then you should start by rewriting your business strategy with exit as its core.  

If you don’t know where to start, then get advice and support from people who know how this is done.

Most importantly, don’t leave it too late to think about exit.

When the time comes, you want to be able to enjoy the fruits of your labour.  

Want to discuss exit and business strategy in more detail?

Want to know how our team here at Yellowyoyo can help you to write your strategy with exit at its core?

We’d love to help.

You can contact us at hello@yellowyoyo.co.uk or leave us a message here.

Al