All good things must come to an end. No matter how much you love your business or how hard you’ve worked to build it into something that’ll endure long after you’re gone, there comes a point when you’re no longer willing or able to carry it on.
Don’t reach that point without a plan — or “exit strategy,” as it’s called in the business world. Every exit strategy looks different: some involve transfers to heirs, others require outright sales, and still others are simply glorified liquidations.
As you start thinking about your exit strategy, keep these five tips from entrepreneur George Otte in mind. They’ll guide you to the right conclusion for your needs — and your employees’, customers and heirs.
- Make Sure You Have a Fallback Plan in Place
You’ll hopefully have many healthy, prosperous years left after your exit. Make sure you have the resources to stay in it for the long haul by setting up and contributing to a tax-free retirement plan well in advance (at least 15 years) of your exit. Ideally, you’d do this as early as possible — starting in your 20s, for instance, can make a huge difference over a lifetime.
- Consider a Succession Arrangement
If you have kids or a trusted group of employees, consider handing over the keys after an appropriately long transition period. Before you do, though, be sure to talk to a succession planner who can help you deal with potentially thorny legal issues, such as how to transfer ownership shares.
- Analyze Your Competitive Landscape
Normally, your goal as a business owner is to stay ahead of the competition. But, in this case, it might be better to work with the competition. If your company has something to offer competing businesses, consider putting it up for sale.
- Take Care of Your Employees
No matter how you choose to exit your company, remember to take care of the folks who made it what it is (or was). Give your employees plenty of warning about any impending ownership change or closing, and be sure to provide fair compensation to anyone who’s been let go.
- Maximize the Value of Your Inventory and Assets
If you’re shuttering your business for good, take pains to maximize the value of its inventory and assets: unsold merchandise, equipment, real estate, vehicles, you name it. Consult with a finance professional to determine the best way to dispose of your assets quickly and fairly.
Heading for the Exit?
When starting a business, it’s absolutely critical to follow tried-and-true tips for building a business, even if you think you have everything figured out.
But it’s arguably even more important to honor conventional wisdom when you’re on the way out. So, when in doubt, consult the experts. Start by giving the Small Business Administration a ring. They have a host of resources for business owners thinking about closing up shop (or actively in the process of doing so), and they’re happy to provide advice and guidance. You’ll be glad you took the time to speak with the experts about your options.