Planning ahead is an integral part of running a business. Developing an exit strategy might seem like too many steps ahead, but it’s actually essential to plan your exit from the start.
What is an exit strategy?
An exit strategy is a roadmap for how you will transition out of the company when you feel it’s time to move on. Here are a few things to consider as you develop your strategy.
- Will you keep the business in the family? Maybe pass it down to your children?
- Would you sell to investors?
- Could you let another company acquire your business?
Do I need an exit strategy?
Many new business owners will include information about their exit strategy in the original business plan. After all, the exit plan you choose should significantly impact the choices you make while growing your business. Don’t leave these decisions until you are ready to exit. You don’t want stress and emotions to cloud your judgment.
What are the most common exit strategies?
- Liquidate. Close the business and sell your assets as soon as you can. Liquidation is the least favorable option since you’ll only make money off the assets you can sell.
- Keep it in the family. Selling the business to someone you know, whether it’s a family member, longtime partner, or trusted employee, allows you to phase yourself out at your own pace.
- Sell it to an investor. For many investors, the idea of buying an established business is a better alternative than starting one from scratch, especially when the company is profitable.
- Sell it to another company. A company looking to broaden its reach or eliminate the competition often searches for acquisition opportunities.
- Go public. When a company “goes public,” it offers the general public the ability to buy shares in their company through an initial public offering (IPO).
The best type of exit strategy for your business depends on you and the specifics of your business. If you’re ready to create your plan, the financial advisors at Boris Benic and Associates are ready to help you reach your goals.