As busy professionals striving to grow our ventures while working on perfecting our business plans, it can be easy to neglect the fact that every business owner should also have an exit strategy so that when the time comes, we can make a smooth transition into the next chapter.
By carefully considering long-term goals for your life aspirations and goals for your business even after you’re not as involved, you can begin to formulate an exit plan that delivers a beneficial result.
Time flies from choosing your first office to selling off your company, so plan ahead! Depending on whether you plan to sell your business entirely, or you want to ensure it stays in the family, there are different steps you can take to lay out a sensible and detailed game plan.
Keeping it in the Family
A common scenario for business owners that are looking at transitioning out of the company they’ve built is to explore ways that they’d be able to keep ownership of the business in the family. Obviously, a key part of this exit strategy involves having a qualified candidate that is ready and willing to take over the company.
For this reason, detailing the steps involved in passing over ownership to a family member ahead of time can make a huge impact on the ease and success of the transition. The earlier you plan ahead, the more time you can spend introducing the next owner to the most critical aspects of your operations and you’ll have more time to drill-down the challenges of the role.
Pursuing an exit strategy that keeps your business in the family can have some significant benefits. You might be in a better position to control the outcome of the transition and if you’re interested in staying involved in the company, you may have a better chance to do so.
Closing the Sale
The process of finding a buyer for your company and making the sale can be an arduous one, but it doesn’t have to be a pain-staking process. By exploring your options now and keeping your finger on potential selling opportunities down the road, you can devise a fruitful exit strategy that leaves you with peace of mind and some money in your pocket.
Some important things to keep in mind when considering your options to sell include the state of your business’s financial reporting, how you can reasonably determine the value of your company and whether you want the help of a broker to handle the deal.
Ensuring that your business’s financial reporting is clean and accurate can greatly speed up the time it takes to close the final sales of your business. Enlisting some type of automated data collection and tax reporting software can help make this process easier and prevent mistakes. and The more investigating and organizing it takes to figure out your books, the longer it will take to assess how much your business is worth.
Enlisting the help of a business broker can provide you with a wider reach and new leadership opportunities to help you sell your business. Brokers usually bring a wealth of knowledge that can help you vet qualified opportunities from time-wasters.
Depending on the structure of your business and the financial positions of your employees, you may want to consider how your team might be able to complete the final purchase of your company. This is another exit strategy that benefits from the time you take to plan ahead because deciding on this plan of action early can pay huge dividends in terms of your company’s growth before you leave it.
With the opportunity to own part of a successful company, employees are incentivized to improve their work habits and be more productive and efficient in their roles. The potential for an employee buyout can also help improve employee retention rates as employees work to gain some return on the time and effort they’ve put in growing the company.
Liquidate Your Assets
Another common business exit strategy that is usually pretty straightforward but doesn’t always produce the most lucrative results is business liquidation. By selling off all of the assets associated with your business such as property and equipment, you are able to transition out of the business pretty quickly and depending on your business this might be your one and only option.
It’s important to keep in mind that in the event that you liquidate your assets and sell them off, any money you owe to creditors will be deducted from the money you get back. It’s also important to take inventory of your equipment and save yourself enough time to find the right selling price for it because the value of second-hand equipment significantly depreciates over time.