When you first became a business owner, the thought that was probably farthest from your mind was “How am I going to get out of this business?” While no one tries to have a pessimistic outlook on their livelihood, it is a reality that someday your position as the business owner is going to end.
How it ends and what you get out of the deal are entirely up to you.
There are typically four ways that business owners relinquish their position within the company. The first, and worst, is to simply lock the doors and walk away. This is never a good decision, as with proper planning all of your hard work and personal investment will not end up going to waste.
The second way to change ownership is to give the business to a member of the family. This can be successful, but only if that family member is ready to take over the business.
The third type of business transfer occurs when an owner gives or sells the business to an employee. This has benefits as an employee already knows the business, but rarely do employees have the cash to buy the business outright.
The fourth and most common way to transfer ownership is to sell the business on the open market. With this method a business owner typically gets a much better return than with any of the other methods.
There is a caveat, however. If you are suddenly faced with the need to sell your business, it needs to be in good shape.
The biggest secret in small business ownership is to plan your exit strategy from day one.
If you don’t currently have a pre-exit strategy, now is a great time to start. By preparing your business for sale today, you can be ready if the occasion should suddenly arise where you need to sell. Some pointers to keeping your business sell-ready? Think like a buyer.
- Buyers like businesses with cash flow that will give them the ability to make a living starting day one. Consult with a business broker to find out how to make cash flow a major selling point.
- Buyers like businesses that are aesthetically pleasing. Keep the business in good shape by repairing and restoring what is needed on a regular basis.
- Buyers hate surprises. Take care of any legal issues, government issues, and financial issues as quickly as possible.
When the time comes to sell your business, you will be glad you planned and prepared ahead of time. It will mean a less stressful transition in the end. Use the services of your business broker to get your business pre-exit ready, even if you are not ready to sell today.
Are you a business owner who doesn’t have an exit strategy of any kind? Would you like to know how to get your business in pre-sale shape? Leave any questions or comments here and we would be happy to help.
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