4 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 use:

1. Selling

This strategy allows you to make money while exiting. You should 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.

2. Friendly Buy-Out

This is similar to selling the business, only that now you will be transferring the business to friends, family members or employees. 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.

3. Go Public

Initial public offering (IPO) creates a lot of frenzy. Although, the process I usually very expensive and labor 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.

4. Drain The Business

Here you need to take out cash from the business and only leave enough that allows the business to operate profitably. You should note that this strategy is only ideal if the business makes a lot of cash. The strategy is also effective if you don’t have to closely monitor your business.

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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