How to Create a Business Exit Strategy
Whether you are just starting a business or you've been in business for a number of years, you need to create a business exit strategy. The best way to get the most money out of your business is to have an accurate report of all hard assets, inventory and office equipment. Just making money through the years is not enough to set you up for retirement. You need to set limits set so you can choose the best time to get the most out of your business.
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Instructions
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Create an exit strategy for your business well in advance of the anticipated time of retirement. At a very minimum, you should start at least 2 years ahead of the projected time to sell your business. Most business strategists recommend making your exit plans as you start your business.
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Prepare your financial statements so a potential buyer can see a realistic picture of the value of your business. Your records should reflect the actual assets and liabilities of your company. Any obscurities in the report will lead to questionable honesty or integrity, and likely end in a lost sale.
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Determine the amount of control you want over your business after the sale. For instance, you may want the exit strategy to include a provision to retain your employees as part of the sale agreement.
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Remember to include the obligations to the IRS when you create an exit strategy for your business. Using a tax attorney or accountant to provide expert advice for the transaction will benefit both you and the buyer.
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Give your business a marketable appeal. When you create an exit strategy, consider what you can do to make your business more attractive to prospective buyers. Make the physical plant clean and attractive. Create an atmosphere that is conducive to productivity. That way, when prospective buyers look over your business, they'll feel a sense of success.
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Plan your exit strategy to allow for a sale when the profit is high. Watch your financials and the market for peaks and valleys. Take advantage of the times when income is on the increase. If you wait too long, you may miss the opportunity for substantial profit.
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Tips & Warnings
Incorporate your small business to legally separate yourself from your business.
Family-owned businesses need to specifically develop an exit strategy in the event of the death of the owner, disability of the owner or partner, divorce or just the desire to leave the business.
