Did you know that more than 45% of business owners looking to sell have no exit strategy?
Having an exit plan is a key tool for many businesses. Preparing for what will happen if your business fails, or if you want to leave your business is a wise decision to make.
It doesn’t have to mean immediate action; many business owners start their company with the idea of leaving after a certain amount of time. But what makes a good exit strategy? What plan works best for you? Well, let’s dive in and find out.
Continuing Your Business In The Family
Lots of business owners would like to keep the business in the family, meaning proposals are made to transition the company to a relative or child. This is often a popular option as your family will know the in and outs of the business, however, family relationships can sometimes cause stress and volatility.
| Advantages | Disadvantages |
| Can stay on board with a smaller, advisory role. | Can create tension, with financial and emotional stress usually involved in family businesses. |
| You can select, as well as prepare the person who you’d like to take over from the business. | You may not be able to find a capable family member or someone who wants to run your business. |
| Family will usually know the ins and outs of the business. | Some people, such as investors and employees may not support the new member in charge. |
| Can be passed on from generation to generation. |
Selling Your Position To A Partner
You can sell a stake of your business to another party, such as a business party or investor. This is a common idea for business owners and is pretty straightforward. Just make sure you are confident in the person you are selling to.
| Advantages | Disadvantages |
| The person you sell to is typically someone you already work with or know, making it an easy switch. | It may be hard to find someone who will purchase your stake in the business. |
| Sometimes, a profit can be made when exiting your business. | Staying involved in your business may be a lot harder, seeing as though you are not officially involved. |
| Your business should continue as it was prior to you leaving, keeping a legacy in place. |
Liquidating Your Business
Liquidating your business is the most final option you can choose. Closing down your business and selling off all assets doesn’t always mean failure, but just the end to another part of your life. Remember, any debts must be paid off, as well as keeping in mind how your employees could be affected.
| Advantages | Disadvantages |
| It can be a very simple process in comparison to other plans. This can remove stress and allow you to focus on areas that are more important to you. | In terms of making a return, unfortunately, it wouldn’t create the best monetary solution. |
| Your business is closed, so you don’t have to worry about it anymore. You will be free of all the stresses of your company. | Relationships with your staff, customers and other members of the business could be severed, which can be a shame. |
We recommend always weighing up the different options available, checking which option benefits you the most. It is never easy leaving your business, but having that reassurance there is a method in place for when it happens can be a way to relieve stress.
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