A lot of people never like to plan for the worst. It’s understandable. Why would anyone want to sit around thinking about their own death and writing out their will? Who wants to talk about what happens in the event of a divorce, before you’ve even walked down the aisle?
But it’s something that needs to be done because if or when that day comes, you’ll be glad you had a strategy already set up. The same thing applies for an exit strategy in your small business. It’s something that investors and partners will look for. And if you don’t have one, it can raise eyebrows. Read on for our tips on some options for an exit strategy.
This is the most obvious strategy. Sell all your assets, get the money, and pay off your loans first. This strategy really only works if you have something valuable enough to sell: expensive equipment, a lot of land, etc. If this is an option that seems to work for your business, try and make your company such that it could be run by someone else. That way, if the company fails, perhaps someone else might like to take the reins and buy it from you.
Another option is to have the employees of your business buy the company from you. It works for them because they likely already know a whole lot about the company, having worked here as an employee. Your employees have also dedicated a lot of time and effort to seeing the business grow, and they definitely want it to succeed. It doesn’t have to be a complicated process – it can be as simple as one of your employees purchasing your business from you and taking control of where it goes from here.
Sell to Another Business
If your company is a strong acquisition, this can bring quite a bit of profit. Businesses acquire each other all the time, oftentimes to expand or to get rid of a competitor. To pursue this option, you’ll have to speak with potential acquirers ahead of time, and really position your company as an attractive purchase. You’ll need to convince the acquirers that your business is worth it, and that it will benefit them.
File for Bankruptcy
The decision to file for bankruptcy protection is of course a difficult one. Certain assets can be protected when you file for bankruptcy so it’s not a total loss for you. It’s important to do research on this ahead of time to figure out if this is the right path for your business to take if worse comes to worst.
Figuring out an exit strategy for your small business can be painful, but it’s a conversation that needs to be had. It’s just like writing a will or signing a pre-nup – it’s designed to protect you if things go wrong. For more information, visit www.biz2credit.com.