As an owner of a business, you should always consider your next move. In some instances, it could be an exit strategy for your business. Even if that technically becomes you last move, always keep an exit strategy in mind. Think about how your business will be if you are no more involved, and how you will come out of that situation on top.
A business exit strategy
This is simply a plan for what will happen if you decide to leave your business.
It shows an outline of events that will happen for that transition to happen. Just as you have a business plan to guide you on running your business, you also need a plan that guides you to its end. A business exit strategy doesn’t necessarily mean a plan for failure or disaster; but many business owners begin their businesses with an aim of exiting after a period of time.
Reasons for exiting a business
There are several reasons for wanting to exit a business – they include health challenges, retirement, a planned exit, unexpected offer, a potential for a better business venture, wanting to raise money, spend time with loved ones or a change of interest.
Exiting at the right time can turn out to be the best decision for your business in the long run.
Every investor in a small business looks forward to the right time to acquire an existing venture. Even if you own a one-person company, you need an exit plan in advance to ensure that you get enough money out of the business.
Exit strategies for small businesses
Below are some exit strategies for small businesses:
This is the process of selling all the assets of that business. For a small legal entity, liquidation is most times the only option there is because there are not many assets to sell. If will be wiser to make the business in such a way that another person can easily operate it, thus selling the entire business.
2. Keep your business within family members
Most small business owners dream of keeping their businesses within their family to ensure that their legacy lives on and serves as a source of income to loved ones. More often than not, parents have their children help them with the daily operations, and then when it is time for the parents to retire, their children take over the management of the company.
3. Sell to managers or employees
One or more of your staff might be interested in buying that business. This will make the business thrive because employees already have an idea on what the business is all about. Also, it can keep you as a shareholder of the business.
4. Sell in the open market
This exit strategy is the most popular used by small business owners. When an owner is ready to retire, he or she can then put the business for sale at a particular price – and hopefully gets a satisfactory deal. If you plan to go with this exit plan, spend some time developing your business for sale, making it attractive to potential buyers. It is important to maximize the value of your company before you sell it.
5. Selling to another business
Making your business desirable to other companies can offer you a profitable deal. Businesses purchase other ventures for several reasons, such as a desire to expand, channeling synergies for similar businesses or just to get rid of a competition. The trick to this strategy will be to position your company in advance to your potential buyer.
The best exit strategy will be the one that fits your small business and your goals. First determine what you want to gain from selling – whether it’s just some cash, or want your legacy to go on; whichever strategy you go with, plan ahead.