Whether you’re dreaming of retirement or itching to embark on your next big entrepreneurial adventure, the importance of a good exit strategy cannot be understated.
However, according to research conducted by the Commonwealth Bank, only 47% of small business owners actually have one. Since the best exit strategies are planned well in advance, here are a few options to consider.
It’s not a pleasant thought, but death and disability happen and it’s best to be prepared. That’s why it’s a great idea to draw up a succession plan, including looking at your contracts and insurance, protecting your assets and shoring up your super. The advice of a lawyer wouldn’t go astray here.
Get a partner to buy you out
Do you have business partners? Would they be interested in buying you out? You’ll need to agree on a valuation so you get a fair price for your share of the business.
Sell your business
If you’d prefer to sell your business, you can hire a broker or do it yourself. Even if you go through a broker, you’re still going to have to sort out your due diligence, get a credible and fair valuation, put together a good marketing pitch and, of course, find a buyer. This last is easier said than done. Just a few options include advertising online and in industry magazines, or offering to sell to a competitor.
Don’t be irreplaceable
A lot of small-to-medium business owners are the lifeblood of their company. When they leave, the company loses a huge part, if not all, of its value. Set up your business so that you are replaceable. This includes putting management measures and processes in place so your business will make money without you, and therefore ensure you get a decent price.
If all of the above aren’t for you, you could go down the liquidation route, i.e. close your doors, sell your assets. The trouble with this option is that you’ll only make a profit is your assets are valuable. You’ll also need to deduct employee entitlements, pay your final bills, etc, so do your sums first.