In entrepreneurship and strategic management an exit strategy, exit plan, or strategic withdrawal,

is a way to transition one's ownership of a company or the operation of some part of the company.
Entrepreneurs and investors devise ways of recouping the capital they have invested in a
company.

Planning an exit strategy is the most commonly overlooked consideration of a business strategy,
yet the exit strategy plays a key role in determining the strategic direction for the company. By
not planning an exit strategy beforehand, business owners, their heirs, or their successors may
find that the options in the future are limited.

Some entrepreneurs think of their exit strategy as the means by which the business transitions to
the next major stage. From this perspective, the entrepreneurs do not necessarily leave the
business, but their role changes significantly

Benefits of an Exit Strategy

Besides having peace of mind that you can exit the business profitably, other benefits of having
an exit strategy in place include:

• Protecting the value of the business you have built.

• Creating a smooth transition to your management team or family members.
• Generating a potential income for retirement or disability.
• Enhancing the future worth of your business.
• Reducing or deferring the potential tax impact on your estate, spouse, or family.
• Creating a strategic direction for your business’s growth.

Planning how you exit your business is just as important as how you start it. The goal is to
maximize the value of your company before converting it to cash, and to minimize the amount of
time consumed.

Getting out of business is a process. The length of time required to complete the process is
directly related to the complexity of the business, and the circumstances underlying this decision
to get out of business. It can range from one week for a home-based sole proprietorship to several
years for a corporation forced into involuntary bankruptcy. Disputes and litigation add another
dimension to the timeframe.

The process for exiting a business usually includes the following steps:

1. Reach Agreement & Obtain Authorization from Owners to Dissolve Your Business
Entity.
Agreement and authorization to dissolve a business must be established under some
acceptable, governing set of rules, such as the bylaws or partnership agreement. It is best
to settle disputes quickly, and document any terms and conditions that apply.
2. Designate a Leader & Organize a Team.
Authority and roles should be clarified. The owner may be the only team member for a
home-based business. For a large entity, however, the team may consist of the executive
management team and important functional managers whose expertise is not represented:
 finance, human resources, legal. This group should be as small as possible for efficiency,
and large enough to include the expertise required to cover the basic planning issues.
3. Engage Professionals & Consultants as Team Members.
For most small businesses, this group consists of the firm's legal counsel, CPA, and a
business broker or valuation expert. Professional expertise and advice in these areas will
contribute to a smooth process and improve the outcome.
4. Perform a Thorough Review of Business & Identify Problem Areas.
Establish and maintain a problem list to focus on. Determine the condition of the firm's
records. Review transactions. Problems extend the timeframe and cost money.
5. Prepare a List of Assets & Perform a Physical Inventory.
The inventory is very important input to several activities. It is used to establish the value
of the business, make decisions and manage disposition of assets, and it becomes the
basis for tax calculations and tax returns.
6. Perform a Valuation of the Business.
It is difficult to make prudent decisions without knowing the market value of the business
and its assets.
7. Prepare a Detailed Plan & Assign Responsibilities.
8. Develop a Schedule for Implementation.
A schedule provides the ability to measure progress, estimate completion of critical steps,
and project the end of the process. The schedule is also extremely useful for managing
cash flow during this uncertain time.
9. Release Announcements & Notices.
This step is about timing and legal notice. At some point, interested parties must know
what is happening: market, competitors, customers, vendors and suppliers, professional
service providers, consultants, trade groups, employees, media, creditors, contractors.
The notice should designate an official point of contact for questions or inquiries.
10. Implement the Plan.
This is where momentum and activity builds. Things happen very quickly. Without the
planning steps, an important degree of control is lost. When that happens, net value is
usually decreased in some substantial way.
11. Conclude or Transfer Contract Obligations.
This process may require approval from contracting parties, and involve negotiation of
final terms. Office, car, and equipment leases need to be reviewed, addressed, and
terminated. The timing of termination dates for insurance contracts and benefit plans are
very important to all involved.
12. Close Operations.
The timing of this step is important. There is a time when manufacturing or production
must cease, retail sales must end, and human resources are pared down. Each affect cash
flow and net value dramatically. Security and maintenance services may be an important
consideration from this point on.
13. Dispose of & Transfer Assets.
This is an important tax event. Insurance coverage can be reduced or eliminated.
14. Settle Accounts Payable & Debt Obligations.
15. Prepare Final Financial Statements & Tax Returns
Final financial statements for the business are important to establish the tax implications
for assets, gains, and losses conveyed to the owners, or other involved parties.
16. File Articles of Dissolution.
State licensing departments require a formal filing to terminate the legal and tax status of
the business. Examples are articles of dissolution, certificates of withdrawal, and
cancellation certificates. This process also results in a review of tax liabilities, and
issuance of a tax clearance notice or certificate.
 17. Prepare & Issue Special Filings, Notices, Informational Returns, & Taxes.
To develop a checklist, retrace your steps taken during startup. Generally, some action is
required with all federal and stage registration, taxing, and licensing agencies contacted
to start the business. Final submittals of payroll, unemployment, industrial insurance, and
other business tax returns must indicate that the business status is closed, or changed.
18. Receive Tax Clearance Notice.
File in financial records.
19. Close Bank Account.
20. Store Business Records
These records should be kept for at least seven years.

Planning and awareness are crucial. The process, timing of events, and tasks must be tailored to
the type and complexity of the business. Each case is unique because reasons for dissolution
differ, and problems that exist or develop are unique to the circumstance. Take a look at this
checklist of items to consider as early in the process as possible. Most of these issues have some
impact on the process of getting out of business.

The process for getting out of business successfully requires the same amount of planning as
going into business. While the process should be easier, it is likely to be less enjoyable and more
stressful. The best advice for business owners is to think about the future during the early stages
of getting into business. Exert managerial influence to ensure that complications and problems
which could affect dissolution, and net value, do not develop into roadblocks. When the time for
getting out of business comes, engage the invaluable expertise you will need, and prepare a plan.

Whether you are just starting a business or you've been in business for a number of years, you
need to create a business exit strategy. The best way to get the most money out of your business
is to have an accurate report of all hard assets, inventory and office equipment. Just making
money through the years is not enough to set you up for retirement. You need to set limits set so
you can choose the best time to get the most out of your business.

1. Step 1

Create an exit strategy for your business well in advance of the anticipated time of retirement.
At a very minimum, you should start at least 2 years ahead of the projected time to sell your
business. Most business strategists recommend making your exit plans as you start your
business.

2. Step 2

Prepare your financial statements so a potential buyer can see a realistic picture of the value of
your business. Your records should reflect the actual assets and liabilities of your company.
Any obscurities in the report will lead to questionable honesty or integrity, and likely end in a
lost sale.

3. Step 3
 Determine the amount of control you want over your business after the sale. For instance, you
may want the exit strategy to include a provision to retain your employees as part of the sale
agreement.

4. Step 4

Remember to include the obligations to the IRS when you create an exit strategy for your
business. Using a tax attorney or accountant to provide expert advice for the transaction will
benefit both you and the buyer.

5. Step 5

Give your business a marketable appeal. When you create an exit strategy, consider what you
can do to make your business more attractive to prospective buyers. Make the physical plant
clean and attractive. Create an atmosphere that is conducive to productivity. That way, when
prospective buyers look over your business, they'll feel a sense of success.

6. Step 6

Plan your exit strategy to allow for a sale when the profit is high. Watch your financials and
the market for peaks and valleys. Take advantage of the times when income is on the increase.
If you wait too long, you may miss the opportunity for substantial profit.

corporate social responsibility - introduction

Definitions of social responsibility

Corporate social responsibility (CSR) is:

• An obligation, beyond that required by the law and economics, for a firm to pursue long
term goals that are good for society
• The continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families as
well as that of the local community and society at large
• About how a company manages its business process to produce an overall positive
impact on society

Corporate social responsibility means:

• Conducting business in an ethical way and in the interests of the wider community
• Responding positively to emerging societal priorities and expectations
• A willingness to act ahead of regulatory confrontation
• Balancing shareholder interests against the interests of the wider community
• Being a good citizen in the community
Is CSR the same as business ethics?

• There is clearly an overlap between CSR and business ethics

• Both concepts concern values, objectives and decision based on something than the
pursuit of profits
• And socially responsible firms must act ethically

The difference is that ethics concern individual actions which can be assessed as right or wrong
by reference to moral principles.

CSR is about the organisation’s obligations to all stakeholders – and not just shareholders.

There are four dimensions of corporate responsibility

• Economic - responsibility to earn profit for owners

• Legal - responsibility to comply with the law (society’s codification of right and wrong)
• Ethical - not acting just for profit but doing what is right, just and fair
• Voluntary and philanthropic - promoting human welfare and goodwill
• Being a good corporate citizen contributing to the community and the quality of life

The debate on social responsibility

Not all business organisations behave in a socially responsible manner

And there are people who would argue that it is not the job of business organisations to be
concerned about social issues and problems

There are two schools of thought on this issue:

• In the free market view, the job of business is to create wealth with the interests of the
shareholders as the guiding principle
• The corporate social responsibility view is that business organisation should be
concerned with social issues

Free market view - a summary

• The role of business is to create wealth by providing goods and services

• “There is one and only one social responsibility of business- to use its resources and
engage in activities designed to increase its profit so long as it stays will the rules of the
game, which is to say, engages in open and free competition, without deception or
fraud.” [Milton Friedman, American economist]
• Giving money away is like a self imposed tax
• Managers who have been put in charge of a business have no right to give away the
money of the owners
• Managers are employed to generate wealth for the shareholders - not give it away
• Free markets and capitalism have been at the centre of economic and social development
 • Improvements in health and longevity have been made possible by economies driven by
the free market
• To attract quality workers it is necessary to offer better pay and conditions and this leads
to a rise in standards of living and wealth creation
• Free markets contribute to the effective management of scarce resources
• It is true that at times the market fails and therefore some regulation is necessary to
redress the balance
• But the correcting of market failures is a matter for government - not business
• Regulation should be kept to a minimum since regulation stifles initiative and creates
barrier to market entry

The free market case against corporate social responsibility

• The only social responsibility of business is to create shareholder wealth

• The efficient use of resources will be reduced if businesses are restricted in how they can
produce
• The pursuit of social goals dilutes businesses’ primary purpose
• Corporate management cannot decide what is in the social interest
• Costs will be passed on to consumers
• It reduces economic efficiency and profit
• Directors have a legal obligation to manage the company in the interest of shareholders –
and not for other stakeholders
• CSR behaviour imposes additional costs which reduce competitiveness
• CSR places unwelcome responsibilities on businesses rather than on government or
individuals

The corporate responsibility view

• Businesses do not have an unquestioned right to operate in society

• Those managing business should recognise that they depend on society
• Business relies on inputs from society and on socially created institutions
• There is a social contract between business and society involving mutual obligations that
society and business recognise that they have to each other

Stakeholder theory

The basic premise is that business organisations have responsibility to various groups in society
(the internal and external stakeholders) and not just the owners/ shareholders

The responsibility includes a responsibility for the natural environment

Decisions should be taken in the wider interest and not just the narrow shareholder interest

Arguments for socially-responsible behaviour

• It is the ethical thing to do

• It improves the firm’ public image
 • It is necessary in order to avoid excessive regulation
• Socially responsible actions can be profitable
• Improved social environment will be beneficial to the firm
• It will be attractive to some investors
• It can increase employee motivation
• It helps to corrects social problems caused by business

Enlightened self interest

This is the practice of acting in a way that is costly and/or inconvenient at present but which is
believed to be in one’s best long term interests

There is a long history of philanthropy based on enlightened self interests e.g. Robert Owen’s
New Lanark Mills, Titus Salt’s Saltaire as well the work of the Quaker chocolate makers such as
Cadbury at Bournville and Rowntree in York.

Enlightened self interest is summed up in this quotation from Anita Roddick (founder of the Body
Shop):“Being good is good for business”

CSR behaviour can benefit the firm in several ways

• It aids the attraction and retention of staff

• It attracts green and ethical investment
• It attracts ethically conscious customers
• It can lead to a reduction in costs through re-cycling
• It differentiates the firm from its competitor and can be a source of competitive advantage
• It can lead to increased profitability in the long run

Formal report writing in professional, technical and business contexts has evolved certain
conventions regarding format, style, referencing and other characteristics. These will vary in
detail between organisations, so the information given below should be treated as general
guidelines which hold good in the absence of any more specific `house styles'.

5.1 Format

The format will depend upon the type and purpose of the report, its intended readers, and the
conventions of presentation and layout prescribed by the organisation in which you are operating.
In general, there are two broad types of format which are differentiated by whether the summary
and/or recommendations are placed after the main body of the report, or are placed earlier, before
the main body. The eventual format chosen might be a combination or a condensed version of
these two formats.

5.1.1 A format where the findings/recommendations follow the main body

• Cover sheet
 • Title page
• Abstract
• Table of contents
• Introduction
• The body of the report
• Conclusion (and recommendations if applicable)
• References / Bibliography
• Glossary (if needed)
• Appendices

5.1.2 A format where the findings/recommendations precede the main body

• Letter of transmittal
• Title page
• Table of contents
• Summary and/or recommendations
• Body of report
• Conclusions
• Appendices
• Bibliography

5.2 Report checklist

Here are some aspects which may be found in each section of a report and which may be of use in
organising and checking the details in your own reports. Section 5.3 Report Sections provides
more information on the content and setting out of some of these.

5.2.1 Title page

• title
• writer
• organisation
• date
• person/group who commissioned the report

5.2.2 Table of contents

• accurate, clear layout

• section numbering system and indentation
• complete
• page numbers
• list of illustrations if applicable

5.2.3 Abstract

• appropriate length
• complete summary of key information
• informative, not descriptive, in form
• impersonal tone
 • connected prose

5.2.4 Introduction

• relating topic to wider field

• necessary background information
• purpose of report
• scope of report
• explanation of arrangement of report
• sections

5.2.5 Body format

• main headings indicating equal level of importance

• all subheadings relating to section heading
• choice of levels indicating hierarchy of importance
• hierarchy of importance shown by careful and consistent use of features such as capitals,
different fonts, underlining, bold, italics
• indenting
• numbering/letter system
• space between sections to enhance readability and layout
• when using charts, statistics and illustrations check for suitability, captions, reference in
text and positioning
• acknowledgement of all sources, including material referred to indirectly, direct
quotations, copied diagrams, tables, statistics
• ensure a systematic link between references in the text and the reference list and
bibliography

5.2.6 Expression

• correct
• own words
• concise
• clear to intended reader
• formal and factual

5.2.7 Content

• logical development of ideas from one section to another, and within each section
• citing evidence
• relevant
• objective
• specific

5.2.8 Conclusion(s)

• arising out of the facts

• convincing
• a substantial basis for the recommendations
5.2.9 Recommendations (if applicable)

• based on the conclusions

• practical
• specific
• well organised, with the most important first

5.2.10 List of references

• sources in the text listed by the Harvard system

5.2.11 Bibliography

• texts consulted but not referred to directly in the report

5.2.12 Glossary (if included)

• arranged alphabetically

5.2.13 Appendix (appendices)

• placed at end of a report if included

• arranged in the order referred to in the report