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Exit Strategies for Small Business Owners

There are many reasons that can provoke you to exit your business as a small business owner. One of the reasons is if you are tired of your current business. You can also exit if business is slow or you just want to change to another business. When exiting your business, you need to have an exit strategy. Here are some of the best strategies that you can be used:

  • Selling to Third Party

Selling to third party in the market is an strategy that allows you to make money while exiting. You should confidentially advertise your intention to sell your business and then find suitable buyers who are willing to buy your business at a high price. To be able to find the best buyer, it’s recommended that you start planning for the sale for 3-5 years.

  • Sell to Your Employees

This is similar to selling the business, only that now you will be transferring the business to your employees (ESOP). Although, the strategy is still a sale, the terms and nature of the transaction is usually very different. While the friendly buy-out strategy allows you to make some money, you end up selling the business at a lower price that you would as you will be dealing with people that you know very well.
To do the negotiations professionally it’s wise that you engage an experienced professional.

  • Keep your business in the family

Keeping your business in the family ensures that your legacy lives on. In this exit strategy you have opportunity to groom your successor/s for takeover and perhaps gives you some continued say in the business.

  • Go Public

Initial public offering (IPO) creates a lot of frenzy. Although, the process is usually very expensive and labour intensive, you should consider going with it if your small business is on a trajectory and there are very clear signs of it being a big company.

Although, going public is a great exit strategy, you should note that you can’t exit as soon as the company goes public – you need to stick around and ensure that the company is doing well and stable. You also need to win the confidence of the investors.

  • Liquidation

If you are choosing the option to liquidate your business to pay off your creditors, to deal with bankruptcy, to start another company, or because you cannot continue to run the business by yourself, may be an idea that seems like the easiest way out.

When a business is liquidated, all the assets are redistributed and most of the business owners are not aware of the method in which the redistribution works.

Conclusion

These are some of the best exit strategies that you can use as a small business owner. For a stress-free exit always prepare for the exit. This calls for you to ensure that the books of accounts are up to date. You should also ensure that all the core employees are comfortable in the business.

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