Exit Strategies for Small Business Owners - 5 Examples of Getting Out

 

what is an exit strategy in a business plan

Jan 02,  · While it is important to have an exit strategy, I’ve always shied away from including it in the business plan, mainly because most of the business plans that I have developed for clients have been for start ups and business turn arounds. My reason. Jul 19,  · All businesses have a life cycle, they start, grow, and mature, at which point a decision needs to be made about the direction the business will take. The exit strategy is an important part of the business plan, and to avoid costly mistakes and limited options in the future, the plan should be geared towards the exit-strategy from the beginning. In most cases, your written business plan should mention your personal exit strategy. Sketching out how you plan to leave your business, harvest its value, and ensure its ongoing vitality under new ownership is an important first step in guiding the final chapter of .


Exit Strategy in a Business Plan | Plan Projections


But even if you are running a one-person sole proprietorshipyou need an exit strategy. For you, what is an exit strategy in a business plan, as for any investor in a businessthe questions are the same when it's time to move on:. Having an exit strategy worked out in advance helps ensure that you like the answers to those questions and gives you some control over your small business's future.

Here are seven exit strategies for small businesses to choose from:. This is the close up shop and sell all the assets exit strategy, what is an exit strategy in a business plan. If you're in this position, you may want to spend some time retooling your business so that it could be operated by someone else — making it a business someone might want to buy. In this exit strategy scenario, the owner s extracts most or all of the profits out of the business over time before eventually selling or closing the businessrather than reinvesting them in the what is an exit strategy in a business plan for expansion.

The dream of many small business owners, keeping your business in the family what is an exit strategy in a business plan that your legacy lives on and provides a living for your heirs.

One way of setting up this exit strategy is through an Employee Share Ownership Plan ESOPa stock equity plan for employees that lets them acquire ownership in a company. However, an employee buyout doesn't have to involve a stock equity plan. It might be as simple as having one of your current employees take over the business with a straight purchase.

This is the most popular exit strategy option for small businesses. At a certain point what is an exit strategy in a business plan time, often when he or she is ready to retire, the small business owner puts the business up for sale for a certain price — and hopefully walks away with the amount of money she wanted to get for it. If this is your exit strategy, you should spend some time grooming your business for sale, making it as attractive as possible to potential buyers.

Positioning your small business to be a desirable acquisition can be very profitable. The trick to success with this exit strategy is to target your potential acquirer s in advance and position your company accordingly. And of course, convincing your acquirer that your small business is worth what you want for it.

While not suitable for all small businesses, the IPO can be a viable exit strategy. The best exit strategy is the one that best fits your small business and your personal goals. Decide first what you want to walk away with. If it's just money, an exit strategy such as selling on the open market or to another business may be the best pick.

If your legacy and seeing the small business you built continue are important to you, then family succession or selling to employees might be best for you. Whichever exit strategy you choose, you need to start working on it. Planning in advance gives you the time to do it right — and maximize your returns. Management Business Planning. By Susan Ward. How are you going to get your money out of the business?

And how much money are you going to get? Liquidation has the lowest return on investment to the owner s. Second-hand business asset values for items such as machinery and equipment can be very low, even in a non-depressed market. Creditors if any have the first claim on funds from asset sales. Extracting the profits reduces the growth potential and eventual sale value of the business.

Other shareholders if any are likely to object unless they are similarly compensated. Salary is taxed as personal income, whereas profits remaining in the company increase the value of the business and will be taxed as capital gains when the business is sold. Can make for a smooth transition by grooming a family successor. May allow for you to keep a hand in the business in an advisory or other capacity. Family members may not have the skills or interest to take over the business.

Clients may not approve of new management or changes in company direction. The business can thrive as employees will get an established business that they are familiar with and are enthusiastic about. Arranging a long-term buyout by employees can increase loyalty and greatly motivate staff to work hard to make the business succeed. May allow for you to keep a share of the business and stay on in an advisory or other capacity. Employees may not be suitably qualified to take over the business.

A profitable business should be attractive to buyers and sell quickly. Assets and goodwill can be incorporated when valuing the business for sale, maximizing the return to the owner s. Finding a buyer on the open market can be a long process. Businesses can be difficult to value and the selling price may be much lower than expected.

For the above reasons, a competing business may be highly motivated to purchase your business, making for a quick sale and maximum profit. If the purchaser's only motivation is to reduce the competition, they may fold your business after purchase.

Any existing employees may lose their jobs. A competitor may only pretend to be interested in purchasing your business in order to get access to your customer list and financial information.

Taking your company public can be extremely profitable. Becoming a public company is a long, costly process. Depending on how the IPO is structured, you may or may not be able to withdraw any of your capital at the time as new shareholders may want to see all the money raised by the IPO be used to expand the business.

Public companies have much higher compliance and reporting standards. As an owner, you may be personally liable or subject to prosecution for any prior accounting "irregularities" or failures in disclosure. Continue Reading.

 

business - Exit Strategies for Your Business

 

what is an exit strategy in a business plan

 

Jan 02,  · While it is important to have an exit strategy, I’ve always shied away from including it in the business plan, mainly because most of the business plans that I have developed for clients have been for start ups and business turn arounds. My reason. Acquisition is one of the most common exit strategies: You find another business that wants to buy yours and sell, sell, sell. In an acquisition, you negotiate price. This is rechztsguts.gq: Stever Robbins. In most cases, your written business plan should mention your personal exit strategy. Sketching out how you plan to leave your business, harvest its value, and ensure its ongoing vitality under new ownership is an important first step in guiding the final chapter of .