At some point, every business owner will decide to exit their business. There are various reasons why this happens. These include declining profits, growing competition, shift in life goals or health, retirement, or handing over the business to family members. Some may even exit their business because they can’t keep up with its growth. Exiting a business is sometimes done voluntarily, while others are forced to do it.
Preparing for exit is important as the process can involve fulfilling a host of monetary, legal and operational requirements. Your goal is to make sure your business is in good shape before you exit.
Preferably, you should include an exit strategy in your primary business plan. You can find out about the different exit strategies available for your business by talking to your solicitor or financial adviser.
Here are the most common methods to exit a business:
If it took you years and a lot of effort to develop and expand your business, the thought of just selling your business to another party may not be to your liking as you may prefer to pass it on to a family member. This method of exit strategy is called succession planning.
Succession involves making sure the existing success of the business continues with a hassle-free transfer of ownership. This needs a huge amount of planning. In a formal succession plan, who will take over the business, when they would take over and how they will take over must be clearly defined.
Shutting down the business
It may be hard to sell a business that is declining. If this is the case, it may be better to close it down. There are a lot of things involved in closing a business, including divesting business assets, paying debts and retaining whatever money is left.
When closing a business, there are many legal obligations involved, as well as monetary and emotional costs. You, your employees and other stakeholders in your business will be affected by these factors.
Selling your business
This is typically a major decision for a business owner. When planning to sell your business, you have to make specific decision regarding the why, when and what you are divesting and the person you are selling your business to.
In money terms, the best time to sell is when a business’ sales and profits are up. Your business will get a higher value and will attract more prospective buyers.
Contact PJS Accountants to help you plan your strategy for a successful exit from your business. We provide a full range of services including accounting, taxation, business improvement, superannuation, business valuations, asset protection, succession planning and bookkeeping. We have been dealing with local businesses in Capalaba, Cleveland and the Redlands for over 30 years. Our team is always available to take your call and help with your business needs.