There comes a time in most business owners’ lives when it is the right time to exit your business. Whether the plan is to retire, or free up time for another business endeavor, you don’t have to stick with every business you start from the beginning until the end. There are many ways to exit a business, but whatever strategy you choose it is important to have a good strategy laid out before you do it. Here are three keys to creating an exit strategy that is right for your business.
Consider Your Options
There are two options at your disposal for exiting a business: closing and selling. There is nothing wrong with either option, but Patriot Software recommends you choose the option that best aligns with your goals. If you want to see your business continue after you are gone, selling to an employee, family member, or other interested party is the best plan. This will allow you to pass on the business in its entirety to someone else and receive a payment for the value of the business. If you would rather get the largest sum of money possible for your business, you can close and liquidate your business. Selling off your assets, like equipment, real estate, patents, etc. can generate a huge sum, but remember that you will have to pay back investors or creditors first.
Get it Appraised
Whatever you decide to do, you should have your business appraised first. You need to have an accurate idea of the worth of your business before you can sell it or close and liquidate. According to Freeman Lovell, a valuation expert can help you properly assess your business. With a professional assessment, you will be able to see if you are getting fair offers for your business on the market or know how much you should sell for to an employee or family member to ensure a fair price and exchange. Make sure that an appraisal is one of the first things you do when you consider exiting your business.
Tell Your Employees
Your business is very important to your employees, as it is their source of income and a place that they have dedicated a lot of time and energy into. According to NFIB, letting them know that you are selling or closing shop is news that should come from you, rather than someone else. Letting your employees know early in the process will help them plan for what they want to do in the aftermath. Some employees may decide to retire or find work somewhere else if you are no longer at the helm. Other employees may stick around, but either way it is important they know what is happening at the business and that they hear it from you first.
Exiting a business is never easy. A business that you have worked hard to grow and nurture can be a sentimental item. But there usually comes a time where an exit makes sense. And when it comes time, you need an exit strategy. Make sure to consider these three things in any exit strategy you craft.
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