Create a Strategy to Exit your Business

Once you start a business, the last thing you can think of is closing or leaving it. This is usually an unplanned option of any business strategy as it is based on circumstances. But to make sure the best for your business, design your exit strategy before it is time to leave. Now in your mind, a few questions may arise:

What is a business exit strategy?

What is the purpose of such a strategy?

How will this exit strategy be beneficial for you?

How to create an exit strategy for my business?

Here is the solution to your queries. Read to know.

What is a business exit strategy?

An exit strategy of business means to stop the continuity of business ownership or can be thought of as the way to wind up a business. In simple terms, one can understand it as a strategic plan to sell his/her ownership in a company to another company or investors. The exit strategy is a simple outline of what will come about to your business when you want to quit your business.

What is the purpose of such a strategy?

The purpose of an exit strategy is to determine how the investors get a return on the large sum of money they invested in the business.

An exit strategy is implanted when an owner of a company decides to close an unprofitable business. In this case, the main purpose of the exit strategy is to minimize or limit losses.

But your business exit strategy does not always mean failure or disaster or even imminent action. It may be when a company, investment, or business venture has met its profit objective. That means if an entrepreneur or business owner is enjoying satisfied proceeds from his firm, then there may come a time when he or she wants to leave and venture into something new and different.

How will this strategy be beneficial for you?

Planning a full exit strategy prior to its execution does more than prepare for unexpected circumstances. It helps to ensure you, your business, and your investors are safe.

This strategy allows a business owner or entrepreneur a way to reduce or liquidate his or her stake in a business. If your business is going well or is successful, this exit strategy may maximise your profits, and if it is in a struggling stage or is not successful, it enables you to limit or minimise losses.

Moreover, this strategy will be beneficial to business owners in other following ways:

• It helps in making business decisions with a direction. You can more easily set a goal with strategic decisions to get good outcomes.
• Executing the exit strategy properly may protect you from unwanted consequences like bankruptcy.

How to create an exit strategy for my business?

Before going to create, you need to understand what are the different types of business exit strategies. These strategies basically depend on business type and size. Let’s take a look at the types of exit strategies.

• Merger or acquisition

This can be a strong exit plan for any company with their business because when a company makes up its mind to sell itself to another company, the new buyer often merges the services of that company into their own.

For instance, when Google bought Youtube, it continuously incorporated the video platform into its own search results. So when you search for a topic on Google, you might often notice that some videos appear on your search result page.

But before going to merge your business, you must make sure whether the new business will fit well with your current one. Otherwise, you may end up losing money.

• Sell to someone you know

Selling the business owner to someone whom you know is a good exit strategy. In this, you could sell to your family member, for example, your offspring, friends, close relatives, employees, or business colleagues, and in some cases to your customer also. However, in this strategy, there are downsides to selling your company to know one. Your relationship with the buyer may force you to compromise on value and hence sell the business for less than what is actually worth. Moreover, passing the business to the known ones may create personal tensions that reflect in the workplace.

• Liquidation

Liquidation is one of the fastest and final ways to close down your business and have all your assets sold off. It is a clear-cut and hassle-free strategy. After liquidating your business, the cash you earned may use to pay off debts or shareholders, if any. Remember that if you liquidate your business, you will lose your business concept, earned reputation, and customers.

After discussing the types, you can consider the following factors to create your business exit strategies such as your business structure, business size, economy, profitability, competitors, time, and your close relatives.