exit strategy
Exit Strategy: the plan for how you will eventually leave a business you built, whether by selling it, merging it, or closing it down on your own terms.
In plain English
Here is the part that surprises most first time founders. The best time to plan how you will leave a business is the week you start it, not the year you get tired of it.
That sounds backwards. You have not even opened your shop or launched your app, and someone wants you to plan your exit already. But investors, and smart founders, know that a business without a planned ending often ends badly instead of well, sold in a panic, or shut calmly with debts unpaid.
Think about a Lagos woman who built a skincare brand from her kitchen. Five years in, a bigger company offers to buy her out for ₦80,000,000. If she had never thought about an exit, she might undervalue her brand, or worse, sign away rights she needed to keep, like her name or her formula.
An exit strategy is simply the answer to the question, how do I eventually get my time, money, or ownership out of this business, and on what terms. It could mean selling to a bigger company, merging with a competitor, passing it to your children, or even a planned shutdown that pays everyone fairly and lets you walk away with your reputation whole.
In the United Kingdom, many small business owners build their whole retirement plan around selling their company one day, so the business itself becomes their pension. For a Nigerian in the diaspora who set up a business back home with siblings managing it, an exit strategy also answers a quieter question, what happens to this business, and to the family running it, if I am no longer sending money or making decisions from abroad.
A founder who started a logistics startup with ₦5,000,000 agrees from year one that if a bigger firm offers to buy at least ten times that value, she will sell. Three years later, an offer of ₦60,000,000 comes in, and because the plan was set early, the decision takes days, not months of arguing with co founders.
Questions people ask
Do small businesses really need an exit strategy?
Yes, even a small shop benefits from one. It could be as simple as deciding who takes over if you retire, or at what price you would sell if someone offered to buy the business from you.
Is an exit strategy the same as giving up on a business?
Not at all. It is closer to writing a will while you are healthy. Having a plan for leaving does not mean you want to leave now, it just means you are prepared and in control when the time comes.
What are the common types of exit strategy?
The main ones are selling to another company, merging with a competitor, passing the business to family, selling shares to the public, or closing down in an organised way that settles debts and pays out owners fairly.
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