Business Exit Plan
Business exit plans or business exit strategies are ways of recovering investments. When a business is derived, the business strategy specifies or charts the way for a company to sustain itself and possibly expand, thus adding value to itself. An exit strategy is usually included and defined in the home based business plan which is part of the business plan.
This is imperative because at some point small home based business owners, entrepreneurs or investors would like to part ways with a company in order to recover their investments. Some investors could decide to exit a company to follow up on other endeavors. Some might choose to retire. And others might be forced to part with a company due to sickness or some other tragic condition. In any case a sound exit strategy will help reduce the complications which may restrict a successful exit.
3 Common Types of Exit Strategies
Succession
This option is popular with business owners who have kids and would like to hand over the business to them in time to come. However, there is no guarantee that the children would be interested in the business when the time comes. Business owners with this exit plan should attempt to get their offspring interested in the business from an early age through involvement to increase the chances of them being interested in taking over the company later on.
Liquidation
Entrepreneurs or sole proprietors usually decide to close their doors permanently when:
For some reason, a business owner has to retire and all other options are found to be not viable.
A business is too reliant on a particular skill the owner posses rendering it unfeasible to handover the reigns to a family member or buyer.
No one is interested in taking over or buying over the business venture.
Please take note that before a company is legally allowed to close it must first fulfill all the legal requirements. Such requirements would include paying off all outstanding liabilities and meeting all other obligations. Sometimes, after settling all outstanding arrears and liquidating all assets, the sole trader is not left with much.
Moreover, liquidation will erase the value of the business venture’s stature, business links and client lists which the business venture has built up over the years.
Acquisition
This may come about either through management or employee buyout or via a sale to an alternative business. Before a sale can be closed, the business must first be seen as a worthy investment. Most businesses are bought up because they possess a certain strategic edge that could yield the buyer a synergistic value when acquired.
A business would seem more attractive if:
- The business venture is seen to be continuously making a profit
- The company has strong customer base due to its ecommerce affiliate programs
- All business venture assets are in good condition
