When you started up your business, chances are you were thinking of it as more than just an investment. You probably understood that the ultimate goal was to make money, but it was more of a labour of love and a lifestyle choice, so the cash came second to the passion. Well, you are certainly not alone.
Only 12 per cent of Australian business-owners want to make money above all else.
MYOB surveyed more than 1,000 Australian small-business owners, uncovering that the top reasons why Australians start their own businesses is control over their destiny (39 per cent), a desire for greater flexibility (32 per cent), sheer passion (29 per cent) and a total lifestyle change (27 per cent).
While these are all idyllic and romantic reasons to enter into a business venture, they are not overly strategic or conducive to business success. In fact, only 12 per cent of Australian business owners suggested that the ultimate goal of their business was to make money and even less (11 per cent) saw it as a long-term investment.
Australians are not in business to get rich, but they do still want to lead a comfortable life. So why is it still important to have an exit strategy?
An exit strategy is essentially a way of cashing out your business. When the time to move on comes, it is a strategic plan that ensures your end goal is to come out better off. This can involve selling your business, liquidating it, or even passing it on to an employee or family member.
"Planning for an exit is essential, even if you intend to hold the business long term," said Mr Scollay.
"[It] helps you make quality decisions about your business, identifying areas you could improve to get stronger results and setting up systems that make it more efficient."
It's like owning a house. You may have had a leaky shower for a whole decade, but if you are looking at putting it on the market, then you will surely get it fixed. In the same sense, an exit strategy is just formalising these decisions for your business to force you to keep everything under control.
Just remember when you are putting together your exit strategy to consider listing your business on BSale.