2018-03-20 14:54:45 Operations English Learn about the options available to you for planning your exit strategy from your business. Choose the option that benefits you and your... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2018/03/20132932/entrepreneurs-discuss-potential-exit-strategy.jpg What Is an Exit Strategy?

What Is an Exit Strategy?

1 min read

As an entrepreneur, your main focus is on growing your business and becoming a known player in your industry. But have you thought about the day when you transfer your business to another owner? Pouring your money, time, and passion into your business isn’t enough. You need a strategy for taking that money back out of your business when the time is right. You need an exit strategy.

Begin planning your exit strategy as early as possible, even before you open your business. Start by examining the options available to you. You have five basic choices when choosing an exit strategy:

  1. Draw out cash as needed into your personal accounts so that you’re financially prepared to walk away from your company whenever you want. This method may have adverse tax implications, however, so don’t approach it without some serious consultations with your financial advisors.
  2. Liquidate your business when you’re ready to move on, selling off the company’s assets, paying any creditors, and keeping the remainder. This exit strategy is very simple, though you may not gain the maximum amount you could from the sale.
  3. Sell your business to a friendly buyer, possibly a family member. If you can do this without causing strain to your relationship, this exit strategy can be very satisfying, since it allows continuity for your business while letting you move on.
  4. Sell your company in an acquisition. For many entrepreneurs, this is the exit strategy of choice. If your company has strategic value to the acquirer, you can walk away from this kind of deal very rich, especially if a bidding war is involved. Be prepared to sign non-compete agreements if you opt for this strategy.
  5. Take your company public. While issuing an IPO can be exciting, it’s not the exit strategy for everyone. IPOs require a great deal of financial and structural preparation, and not all of them are successful.

While starting a business can be exciting, reaping the rewards with a smart exit strategy is also satisfying. Plan ahead to make sure your exit strategy provides you with the benefits you’re looking for.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Long-Term Planning: Implementing Strategy Map

Sometimes your profits give a narrow view of how well your business…

Read more

What Are My Options for Leaving My Business?

Know the different ways to leave your business to maximize your advantages.…

Read more

Why You Need a Contingency Plan or Exit Strategy

It’s important to have a plan of action, or contingency plan, to…

Read more