Business Exit Strategies
Business exit strategies is a plan of selling an investment in the firm to gain substantial profit or to reduce the risks associated with losses. It means that you can sell your business with the aim of getting a reasonable amount of capital to begin another business. It can also be related to the statistics of past operations, where your business may be at risk of failure hence you can sell it to avoid the expected loss in future. Different exit strategies can be implemented by businesses to maintain the entrepreneurial culture.
Selling to another firm
You can sell all your investments to another company that operates in the same line of products or one that gains interest in what you offer. It can be very profitable, and most companies acquire other businesses to expand their base of operations. The benefit of selling to another firm is that you are likely to gain maximum profit and a quick sale because they would want to get rid of competition. It also comes with its downsides as the existing employees may be removed from their positions. The competitor may also be interested in accessing your financial information and way of operations.
Selling to open market
Most small businesses would opt for selling their investments to an open market at a specified price. You may benefit from this kind of exit strategy since an individual or a firm can purchase your business at the actual amount you needed from the investments. An attractive business is one that is likely to make profits and thus buyers would be willing to purchase the entire firm. The downsides are that a company with a lower profit margin is likely not to sell quickly. The selling price can be lower than what was expected by the owner of the firm.
Selling to managers or employees
Your business can also be of much interest, especially to managers or employees. The benefit of this exit strategy is that you may share part of the returns on investment or act as an advisor to the company. It can also motivate the workforce to put more efforts while organizing for a long-term buyout. The only downsides are that the customers may not accept the new changes in the management and that employees may lack the necessary qualifications of managing the position.
Maintaining the chain in the family
You can also keep the business operations or management within the household. It will ensure that profitability of the firm is kept over the years and the management being taken over by your heirs. You can make it possible by involving them in the business operations from a reasonable age. You can also acquire the advisory position. The only downsides are that the family members may lack the necessary skills to operate the business and that the consumers may not accept the new executives.
Liquidation is efficient especially for small businesses or the ones managed by a single individual. It involves closing the shop and selling the entire assets of the firm. During this period, you can upgrade or make adjustments to your business to improve its ability to sell. It is simple the assets can be sold quickly depending on how valuable they are to the buyer. It also comes with its downsides, and you are likely to receive a lower return on investment.