Owning a business comes with difficult decisions. Eventually, all business owners will have to ask themselves if they are ready to exit their business. When that time comes, you will need to start looking into the exit strategy that best suits you and your business’s needs.
What is a Business Exit Strategy?
Similar to the business plans you have written to guide your business throughout its lifespan, a business exit strategy is a plan that describes and outlines what form your transition will take.
There are a few important questions that business owners should ask themselves when planning their business exit:
- Will you make money in this transition? If so, how much?
- What will happen to your business once you leave?
- How long will your transition period last?
There is no right or wrong way to exit your business, there is simply a way that works best for you.
Here are some of business strategies that you could consider:
1. Continuing the family legacy
Many business owners want to keep the business in the family for as long as possible. This can be a good plan for those who want to preserve their name in the business, but it is extremely important to be practical about who is the best person for the job of running your business.
- You can choose and prepare the person who will be continuing your business over time.
- You don’t need to entirely detach yourself from the business and may be able to still be a part of some decisions.
- This process may bring a lot of emotional and financial stress to your family.
- Employees, investors, or business partners may not support the person you have chosen to own your business.
2. Selling the business to someone you know
It is possible that you already know someone who would be interested in buying your business, whether that is a former employee, a customer, a manager, or a friend.
Usually, when buying a business from someone else, the buyer can pay off the business gradually. This allows the seller to act as a mentor to the buyer while also maintaining an income during the transition process.
- If sold to someone already familiar with the way your business works, this could result in little disruption to the business.
- A long-term buyout could make employees feel more committed to the business’ success.
- You may feel pressured or tempted to sell at a discounted price.
- This could potentially cause stress to family relations and cause disagreements.
3. Merge or become acquired by another business
This process can take a long time, but it could also give you the flexibility in terms of your involvement or the freedom to walk away entirely from the business.
- You can negotiate the terms and price of your merger or acquisition.
- This can be extremely time-consuming.
- Your business may change entirely after this action.
There are many other business exit strategies that you could consider, and at BTA, we are ready to assist you with your specific needs. Contact us at firstname.lastname@example.org for more information.
We are business owners and advisors that offer consulting services to entrepreneurs. Working hands-on, we help develop and implement effective strategies that increase business value, growth and profitability, to prepare for the future.