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Exit strategies for small businesses

If you are a small business owner, you may think that you will own and run your business, for a long time. However, the reality is that at some time most small business owners look to leave their business. Just like any investor, who invests in a small business, if you own a small business, you need to put an exit strategy in place. Whether the time comes of your own choosing, or some event occurs that forces you to leave your small business, having an exit strategy will help you to make the move as efficiently and profitably as you can. Here is what you need to know about exit strategies, for small businesses-

There are different exit strategies for small businesses that each business owners can choose from. Choosing the right exit strategy will be determined in part by the type of business you have and what you hope to gain when you exit. Common exit strategies are-

  • Liquidating the small business-This happens when the small business owner closes up the store and sells all of the assets. However, it is important to understand that in order for this to be successful, your business will need assets that can be sold. This can include but is not limited to: land, buildings, equipment or even considerable accounts receivables. In addition, you should keep in mind that any profits that you make will have to be used first, to pay off any creditors.

  • Keep the business in the family-This is often the dream of many small business owners. Many people want their small business that they have worked and devoted themselves for to stay with the people closest to them. In addition, this can often give you the chance to have a say in how the business is run, even after you leave. However, it is important to keep in mind that this can be a difficult and emotion filled issue.

  • Sell your small business to your employees-Every small business owner should keep in mind that their employees may be interested in buying the business. This can be a highly effective exit strategy since the employee will know a great deal about the existing business. In addition, they will also have a vested interest in continuing to have a successful business. There are different options, for how this can be done. You should consult with an attorney to determine which method would work best if you choose this type of exit strategy.

  • Sell your small business on the open market-This is the most widely used exit strategy, for most small business owners. This is a fairly simple strategy that involves the small business being put up for sale, when the owner is ready to leave. This is typically done at the point when the small business owner feels that he or she can get the most money out of the business. Keep in mind that if this is the exit strategy that you will choose, then you will need to be grooming your business to be as enticing as possible, for potential business buyers.

  • Sell your small business to another business-This can also be a very profitable exit strategy. There are many different businesses that look to expand from buying other businesses. Keep in mind that this happens for many different reasons including but not limited to: using the new business to expand, getting rid of the competition, or stripping the new business to fund the original one. Small businesses that want to use as an exit strategy, should make sure that they are positioning their business, to be attractive to a potential business buyer. You want to be able to convince your potential acquirer that your small business is worth the money you are asking for it.

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