And how much money are you going to get?
One often-overlooked exit strategy is simply to call it quits, close the business doors, and call it a day. (not a great one). If you liquidate, however, any proceeds from the assets must be used to repay creditors. The remainder gets divided among the shareholders-if there are other shareholders. For small businesses, especially those that are dependent on the performance of a single individual, liquidation is sometimes the only option, as there’s really nothing else to sell.
Keep your business in the family
The dream of many small business owners, keeping your business in the family ensures that your legacy lives on. As an exit strategy, it can also give you the opportunity to groom your own successor and even perhaps give you some continued say in the business. If you’re looking for proceeds to retire this may not be the way out.
Sell your business to employees
Selling your business to your partners or management can be an attractive option to consider. Current employees know the business and have a vested interest in seeing it prosper. As well, customers, suppliers and investors may be reassured by the stability this option offers. Arranging an employee buyout can be a win-win situation as they get an established business they know a great deal about already and you get enthusiastic buyers that want to see your business continue to thrive.
Sell to another business
Targeting another business to purchase your company can be highly advantageous. Businesses buy other businesses for all kinds of reasons, from using a new acquisition as a quick path to expansion through buying out (and getting rid of) the competition. The trick to success with this exit strategy is to target your potential acquirer(s) in advance and position your company accordingly. And of course, convincing your acquirer that your small business is worth what you want for it.
Sell in the open market
Selling a business on the open market is probably the most common way to exit. At a certain point in time, often when he or she is ready to retire, the small business owner puts the business up for sale for a certain price – and hopefully walks away with the amount of money she wanted to get for it. If this is your exit strategy, you should spend some time PREPARING your business for sale, making it as attractive as possible to potential buyers.
The best exit strategy
Decide first what you want to walk away with and if that is reasonable. If it’s just money, an exit strategy such as selling on the open market or to another business may be the best pick. If your legacy and seeing the small business you built continue are important to you, then family succession or selling to employees might be best for you. Most people who own a business are focused on making it a great success. Few of us spend as much time thinking about winding down the business or transitioning it to someone else.