Are you looking at exit strategies so that you can step away from your business? Plans and circumstances can change which may mean you are thinking about leaving your business behind. But how do you walk away and protect your finances at the same time?
In 2020, almost 100,000 businesses closed down according to a report by Yelp.com. There are a range of reasons why small businesses close down, and if you are one of them you may need to think about formulating a business exit strategy.
Do you want to learn more about how to create a company exit strategy? Here is everything you need to know about how to close your business.
What is an Exit Strategy?
A company exit strategy is a plan that outlines how you can sell or close down your business. When you started your business, you might have included an exit strategy in your initial business plan. If you are developing an exit strategy or adjusting an existing one, you should ask yourself how you will limit losses and protect your investment.
Types of Exit Strategies
There are several options you can look at when developing an exit strategy. It is important to build an exit strategy into your business plans so that you are prepared if you need to close your business. Here are some of the options for building a company exit strategy.
Liquidation
Liquidation is the process of closing down your business completely and selling off all of your assets. The value from your assets goes to creditors and investors once your assets are sold. It is a good idea to find a company that can provide an equipment appraisal so that you get the best value for your assets.
Sell the Business
Another option for your business exit strategy is selling the business to someone you know. You may have an employee, partner, or friend that has shown interest in buying the business. One of the advantages of this is that you will be familiar with the buyer and that they could buy the business straight away.
Selling your business to someone you know can be complex so it is a good idea to involve accountants and solicitors from the beginning to avoid any confusion.
Pass On to Family or Friends
You may decide to give up your business to a family member or friend if you are unable to sell the business in its entirety. Passing on your business can mean you will avoid the expenses and disruption of selling to someone you don’t know. Family members and friends might already understand how the business works and the ethos behind it.
Start Planning Your Exit Strategy
Whether you are planning for the distant future or looking to close your business immediately, having an exit strategy in place is a good choice for any business. If you manage to start your own business, then you also will be able to change your entire life. It will free you from your dull job. In addition, you will also get the flexibility to work from your home. There are various exit strategies to choose from so it is important to think through each option carefully before making a decision.
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