As a small business owner, you probably didn’t come into your business thinking about the way out. You had an idea, saw a need and had the desire to fill a gap in the market. Whether that was as a consultant, a baker, a lawyer, or whatever, you were focused initially on getting it off the ground and then on keeping it up and running.
The one thing you might not have thought about is how you exit your business. There are a number of exit options, some of them selectable by the business owner, some of them not. Planning an exit is a much better option than having one forced on you.
Of course economics, unexpected illness and other factors play a role in deciding when to leave a business. Those unexpected situations aside, planning your exit can provide not only a continuity and succession framework for current employees and customers, but can actually help you identify who might take over the reins when you do exit.
Ending the Business
One option when you decide you are ready to leave the business is closing your doors. Perhaps you feel the business has run its course and the best way to exit is by ending the business. Depending on the type of business you have, there are certain steps you need to follow to dissolve your business.
Keeping It In the Family
Another option when you are ready to exit your business is handing over the reins to a partner, family member or even an employee. There are a number of advantages of going this route — having someone take over who already knows and understands the business means there is less disruption when ownership changes hands.
Selling Your Business
You might decide that instead of handing over the business to someone internally that you want to sell the business to an outsider. This is a much longer term plan and requires a lot of planning.
You have to ensure that you have at least three years of good performance from the business before you start to shop it to potential buyers. And don’t forget that any serious buyer will want to perform exacting due diligence, which means going through your books with a fine-tooth comb. So preparing early is definitely the best method when it comes to selling your business.
How do you decide which exit to take? You have to be realistic about your business and how sellable it really is. Service businesses are the hardest to sell. They consist mostly of intellectual property and relationships. While a product-based company has the product itself to sell and the processes around that product, along with a customer list.
So what is your exit strategy, and how will you put it into action?
Image credit: btafly