Business exit strategies are plans for what is going to happen when you wish to leave your company. In this strategy, the form of the transition will be described and outlined. In the same way, as you create your business plan as a way of guiding your company through its life, it’s important to have a similar plan to guide it to its conclusion.
Of course, having a business exit strategy shouldn’t mean failure or disaster. It doesn’t even mean that action needs to be taken imminently. Actually, most business owners begin their company with the intention of existing it after a set period of time. That doesn’t mean they’re not committed as entrepreneurs. It simply means they’ve got a clear plan in place.
However, when you’re thinking about a business exit strategy, you don’t just need to consider the way in which you’ll leave, but also the other factors involved with the process:
- Will you be making money when the time comes to exit the business, and if so, how much?
- What is going to become of the business after you’ve left? Is it going to carry on operating with a new owner?
- How long is the exit process going to take and what sort of transitional period is going to be involved?
When you’re reading Corporate Business Solutions reviews, you’ll see that many business owners have turned to us for assistance in this respect, so here are four of the options that our consultants recommend.
1.Continuing A Family Legacy
Some entrepreneurs are keen to keep the business within the family in the long-term. This means that they make plans to transition their company to a relative. While this seems to be an appealing strategy, it’s vital to ensure that family relationships are strong enough to cope with the stress and volatility of owning a business.
The benefits are that it’s possible to choose someone that you wish to carry on the business once you’ve left and prepared them fully for the challenge. You also don’t need to be completely separate from the business, being able to remain in place as an advisor in the long-term.
On the downside, though, it can be difficult to find someone in the family or is capable or who wants to take the business on. Also, business partners, investors, and employees may not be supportive of the chosen individual, while the process brings a considerable amount of financial and emotional stress to the family.
2.Merger Or Acquisition
When you adopt an acquisition or merger business exit strategy, the company will either be bought by or merge with an organization that has aligned or similar goals. Depending on who the business is sold to or merged with, this could mean greater flexibility with it comes to your own involvement in the future.
This strategy allows you to negotiate the sale price, but it can be a time-consuming process and it may not happen at all. Only a fifth of all companies listed for sale gets bought.
3.Employee Or Management Buyout
While it’s hard to plan in advance, it’s possible when you want to leave your business, the management team or employees may wish to purchase it from you. Since these individuals already know how the organization is managed, this strategy may result in a much smoother transition process, with a better chance of your legacy being preserved. On the downside though, there may be nobody willing to make the purchase.
4.Taking Your Business Public
A lot of entrepreneurs hope that one day they will be able to sell their company to the public and make a huge profit. Yet, when it comes to exit strategy planning for small businesses, this option won’t work for everybody. Even when your business is successful, your industry might not be appealing to the public, and therefore, your company may be devalued. Also, IPOs are quite rare. Yet, they’re also very lucrative and could gain you substantial profits.
No Single Strategy Is Best
When it comes down to it, there isn’t a single perfect exit strategy for every business. The right strategy for yours depends on several factors, and it could develop or change as your company’s life cycle progresses.
It’s important to be aware, though, that planning ahead is the best option. From the moment you launch your enterprise, you should be considering exit strategy possibilities. After all, if you’re proactive about the process – how it could look, how you could execute it, and what the possible consequences could be – you’re most likely to be successful when the time comes to leave your company behind.