Recognizing and identifying favorable exit opportunities is crucial when considering where your business goes next.
For online retailers and e-commerce businesses that achieve considerable success, they can often be left wondering what to do next. It is entirely natural for owners to assume that continuing to run the business is the most beneficial way of prolonging their personal success however it is only beneficial so long as the business remains profitable. The continued growth and popularity of the online retail space means that owners are now able to exit at lucrative margins when compared to projected earnings. Understanding this concept is key for owners and businesses that find themselves out of depth and struggling to compete.
Being able to recognize, and understand when and how to execute an exit is pivotal for the future of a business as well as its owners. Now more than ever, online retailers and e-commerce businesses must reassess their view of exit opportunities and create a way for them to exist within their existing strategies. Businesses that fail to do this are more likely to miss out on more lucrative opportunities as their business faces unforeseen changes in the landscape that destabilize sales.
Preparing for success, not failure
Viewing exit opportunities as a form of failure is common and understandable for most businesses. Brands are sometimes the result of personal expression and thus hold immense personal value to the owners and founders. It is nevertheless critical for owners to remember that an exit does not simply equate to abandoning their creation. In the online retail and e-commerce space, the exit opportunities can be diverse. Additionally, negotiation is core to the exit process and it should be shied away from.
When done right, a good exit strategy can boast numerous positive outcomes for the business and owner. The business could be given access to the resources and personnel needed in order for it to advance to the next level and this does not have to exclude the owners or founders. Outcomes such as these are tried and tested methods of ensuring that the name of the brand continues to thrive after it has encountered barriers in resources and mobility. Instead of allowing the business to continually struggle, owners must consider real possibilities that will give them access to the materials necessary for a turnaround.
Keeping these prospects in mind and taking them seriously is a way of ensuring the legacy of a brand can survive and remain intact. Success and advancement are the main goals of any exit strategy. They should therefore be viewed as such by those who have attained a significant level of success and wish to continue.
Knowing when to consider an exit
Expert timing is essential when it comes to planning or considering an exit. Several factors must be taken into consideration ranging from earnings and debts to sponsors and partnerships. Each element of the business has the power to potentially limit or increase the number of opportunities available to the business so the first step in the entire process is making sure that the company is performing the best that it materially can. It is important to emphasize “materially” when undertaking. Buyers, investors, and other interested parties look at the immediate state and health of the operation before analyzing anything else.
Studies conducted by Meji have concluded that the following characteristics were key indicators that an online retail or e-commerce site could seriously consider an exit strategy.
These indicators also illustrate a future where a business may experience a period where it continues to move further away from its peak performance while struggling to establish consistency. Recognizing these flags will ensure that an exit strategy can be employed at an optimal time when exit opportunities are more varied.
Maximizing the possibilities
It is already evident that performance is the principal factor when presenting a business to interested parties. If the value is greater then more can be drawn from it. There is nonetheless a neglected aspect of positive value that is oftentimes unrecognized in an exit strategy. We’re referring to the immaterial value of the business which is not always reflected on the financial statements.
When businesses fail to magnify these elements within their exit strategy, they are inadvertently limiting the options that could be available to them. It is common for stores whose sole strong point is sales to be restrained from selling the store outright. While this is still a positive outcome, any store in this scenario eventually learns that its negotiating power is severely limited.
Putting the pieces together
As the online retail and e-commerce space continues to be hyper-competitive, owners and directors need to realign their views of exit strategies now more than ever. When undertaken optimally in all aspects internal and external, businesses can expect to see their exit opportunities diversify from the simple sale of the business. Meji understands and recognizes the importance of online businesses unconstraining themselves and seeing all possibilities.