No one likes to think of a scenario in which they may have to shut down their business, or leave it in other hands. However, planning for such exigencies is an important aspect of business. Charting out an exit strategy will prepare you for the worst, and enable you to deal with a lot of difficult questions – How do you recover your investment if you are making a personal exit? How do you decide if a valuation is fair in case you need to sell out? Or, when does filing for bankruptcy become the best option?

As far as possible, an exit strategy must cover all scenarios, expected and unexpected, whether it involves transferring the reins of your business to the younger generation or jumping off a sinking boat. Plan your company's exit strategy ahead of time to avoid last minute clashes with employees, angel investors and others who might have an interest in your enterprise. These are some of the things you need to think about:

A succession plan: Roping in your children to run the business after you are gone, cannot be done overnight. A succession plan makes all the difference to how your children become a part of your business: by default or after careful initiation! If the latter is on your mind, devise a well laid out plan - decide on a minimum stint that they must complete in order to learn the way your business is run, and more importantly decide if it is something they would like to get involved with at all!

A great offer: Over the years, other options might open up for you and selling your existing business might seem like a good idea. But selling can be done only once and it is imperative that you get the right price. You will also have to deal with objections from people who are part of your business. To get a great price, sell when things are looking up. You could sell to an interested company, make a public offering or offer your stake to your employees. You will need to hire legal and financial professionals to conduct the valuation of your company so you get a fair deal on a sale.

Dying out: In the unhappy event of inevitable closure, be generous to yourself. Take home a bigger pay check or bonus. This will reduce the amount of reinvestment your business sees and will help it die a slow death. Of course, you will have to bear the burden of increased personal taxes.

Selling assets: Another possibility is to sell all your company's fixed assets. Ideally, liquidation should be your last option, and should be resorted to only when you feel that the business does not have too many prospects. If your company's exit strategy has made provisions for such an eventuality, there are chances that you will also invest in fixed assets more judiciously.

Going bust: If you see the writing on the wall, there's nothing to do but file for bankruptcy. The legalities differ depending on the nature of the company's ownership. A company that is bankrupt is faced with two options – liquidation or reorganization.

Venture Plan Consulting offers assistance with all aspects of entrepreneurship including how to formulate an exit strategy. Visit them at ventureplan.com for more information. “Exit Strategy Planning: Grooming Your Business for Sale or Succession”, by John Hawkey, available at amazon.com could help you go about the planning process yourself.

It is necessary to have an exit strategy ready for the short and the long term. Being prepared for any situation, adverse and otherwise, will help you retain control over your investment. A ready- to-use exit strategy is indispensable from this point of view.