An exit strategy is a plan for eventually leaving your business, either by selling it, passing it to family members, merging with another company, or in a worst case, closing it responsibly.
Having an exit strategy from the start shapes how you build the business. If your goal is to sell, you need to build systems and processes that don't depend entirely on you personally — a business where you're the key man is harder to sell. Buyers want documented processes, recurring revenue, and a business that can run without the founder.
Most small businesses are valued at 2-4x EBITDA (earnings before interest, taxes, depreciation, and amortisation). SaaS and recurring revenue businesses often command higher multiples. Growth trajectory, customer concentration risk, and quality of earnings all affect valuation.
If you're not planning to sell, think about what happens if you become unable to work. Life insurance and key man insurance protect your family and business partners. A documented operations manual ensures the business can continue.
by rabiakhan50668