A significant number of entrepreneurs fail to recognize the importance of formulating a proper exit plan for their commercial ventures. Experts recommend developing the plan in the startup phase. This enables business ventures to remain viable by constantly aligning the overall strategy with long-term goals. Business exit planning also provides contingency measures.
On other hand, it is important to note that exit plans change over time in tandem with the business operations. For this reason, you should make an effort to update your plan regularly based on the operational status of the venture.
Business exit planning is a fairly new discipline aimed at addressing specific requirements. Professionals in various fields have different definitions and applications of the practice. The professionals include accountants, estate attorneys, wealth managers, consultants and sell business brokers. They help clients make key financial decisions.
Some of the decisions involve inheritance, selling the business, dissolution or acquisition by a larger organization. In all cases, you need to handle a variety of matters, such as risk management, legal obligations and tax. These issues require specific skills and expertise.
Preparing for an exit
To formulate an effective exit plan, you need to outline a number of options. These include:
– Liquidation
– Liquidation over time
– Keep your business in the family
– Sell to employees
– Sell on the open market
– And more
As an entrepreneur, you will consider the best option that provides maximum profit or benefit. A good business exit plan gives you an opportunity to reach your goals. Some of the key considerations include the desired level of income and the preferred successor.
Expert support
You should take an inventory of your personal assets and conduct a business valuation. Enlist the help of at least advisers, including a financial adviser, a public accountant and an estate attorney. This makes it easier to achieve the desired objectives. The attorney performs due diligence and can assist you compose the required legal agreements.
Meanwhile, a certified public accountant handles due diligence relating to tax and accounting matters. A financial adviser provides expert advice on matters concerning retirement goals, insurance contracts and investment.
Liquidation
Opting for liquidation as an exit strategy is one of the viable options, which boosts simplicity. This option is often the only practical choice for small businesses that dependent on the performance of one employee. To sell such a business requires retooling with the aim to allow the new owners to run the venture successfully.
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