What are some of the best business exit planning strategies for startup founders hoping to step away from their operation someday? Before we get to that, let’s discuss how a business exit strategy works.
What is a Business Exit Planning Strategy?
A business exit strategy is a plan that a startup founder or business owner makes to sell their company, or share in a company, to other investors or other firms.
You’ve been in business for a while; are you ready to explore new options? Or maybe, your business isn’t making the profits you need anymore. Whatever your reason for leaving, just as you made a detailed business plan to start your business, you need a plan for exiting it as well.
It’s time for a clean break. Take a look at these five types of exit strategies that can help you with your business exit planning.
1. Pass It On
Even if it’s time for you to move on, it’s important to leave your business in good hands. You can pass on ownership to a trusted friend or family member. The process is extremely simple, though it may require a little negotiation.
The best part of this type of business exit is that you have a greater say in the future of your business. You can choose and train your successor, and even keep an active role in the business.
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2. Explore a Merger
You can get a clean break as well as a new nest egg by merging with another business. You may even find a new role in the business. This option provides you with flexibility and freedom.
Remember, merging is a bigger investment than other business exit methods. It takes a lot of time to negotiate the price and details, and it could fall through.
3. Sell Your Stake
If you’re asking, “How can I exit my business,” you might want to change your question to, “How can I sell my business?” With this option, you won’t have the chance to guide the future of your business, but you stand to gain the most profit.
The quickest way is to sell to a partner already in the business. But, if you’re a sole owner, you could pursue an external buyout. Sometimes, new owners will purchase your whole team because of their business experience.
Liquidizing is your best option if your business is no longer bringing in a profit. To enact this strategy, you sell all assets and real estate to pay off your debts and any shareholders.
You don’t need to make any negotiations in order to liquidize, so it can be an attractive option if you want to make your exit fast.
However, all business ceases with this method, meaning nothing lives on. Your concept, reputation, and customers vanish along with the assets.
Declaring bankruptcy should always be your last resort. It’s a method that can haunt you and your reputation.
When you declare bankruptcy, you won’t be held responsible for your business’ debts. However, creditors can seize your assets to cover the debts. You’ll be left with nothing but a fresh start.
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Start Your Business Exit Planning Today
Not every career is meant to be forever. If you want to explore new business options, then you first need to explore business exit planning. Any of these five methods can get you out of your current business and into the life you’re dreaming about.
Did you learn something from this article? There are plenty of more useful tips and tricks on the Business and Career pages of this site. Check them out now to explore more about a particular business exit strategy and beyond.