Top 7 exit strategies for your business
While the number of bankruptcies across Australian businesses has dropped since mid 2014, there are still around 500 companies a month going under, according to the Australian Securities and Investments Commission.
Don't become one of these statistics!
So why do businesses fail? Lack of a strategic plan for growth, poor management or lack of capital are some of the top reasons. A loss of interest and failure to have a viable exit plan, is another reason.
EVERY business needs an business exit strategy - yes, even if you are struggling right now, you need to know how to shape your business so it becomes attractive to someone else later on. Selling a struggling business is never a good option. A good exit plan is worth its weight in gold and can help you grow, define and structure your business for long-term business success.
So let's look at 7 possible business exit strategies
Sell: The most obvious choice. Build it so that is has value to someone other than you and you can make a handsome return on selling your business.
Acquisition or merger: a common exit strategy. Identify another business that might want yours because it adds value to theirs, be it due to your customer base, IP, staff, technology or processes. Or, maybe you are a threat and they want to bring your successful enterprise into their empire. Find this business and sell, sell, sell!
Succession: Pass it down to the family, through direct sale, apportionment of shares or by appointing family members as directors and managers.
Management buyout - is there someone (or a team of some ones) within the business who can be groomed to purchase it in years to come? Often this exit strategy has an option that can see the current owner help finance the new team in. This sees you exiting with cash in hand, but provides a seamless transition for the company, clients and employees and other stakeholders.
Walk away (Close-up). Sometimes enough is enough and closing the doors is the only option. If you don't plan a good exit strategy, your business may not be attractive to anyone else. If you don't have debt - you can sell up all the assets and pocket the cash.
Liquidation: while not a popular choice, unfortunately it is sometimes the best way to exit a business. Let's say there was a natural catastrophe, or the market you counted on falls apart. Put some thought into it now to ensure you don’t go down with the ship.
Do nothing! The worst option of all: by doing something will eventually happen and you could be forced into a scenario where you have little control. Do you want your business contributing to those bankruptcy figures?
Whatever your reason for selling you will want to get a sale, and sell for the best price. The following tips on selling a business will help you get the best price and a sale.
By Richard O'Brien - aubizbuysell
Recommend this article:
- How to sell a business
- Profit vs value when selling a business
- Why have a business exit strategy
- The process of selling a business
- Who will buy my business
- Great business systems make great businesses
- Your options when selling a business
- What do business buyers want?
- Write a better business for sale ad
- Marketing your business for sale
- 7 business exit strategies
- Selling a business to get your best price
- Keeping your business relevant
- 5 Questions before you sell a business
- 10 questions to ask your business broker