Launching a business in itself is a herculean task and staying in the market is another major challenge. Today, a number of uncertainties surround every business and the task to stay back and make profits seems difficult. One has to have an exit plan that is profitable and able to recover the investments so made in the business. Therefore, in today’s time an exit strategy is decided upon at the time of the launch of the business. Exit strategies are a sense of relief for entrepreneurs as they have some assurance that not all that they invested will be lost.
Here are some exit strategies that will help you have a profitable exit and take money out:
Sell to a friendly buyer
It is to understand that you as owners and entrepreneurs become emotionally attached to the business and selling it off to an unknown party attaches a lot of departing pain but selling your business to a party whom you know personally is a lot easier. Selling to a friendly buyer involves less emotional torment as there is an assurance that what you so lovingly nurtured is in safe hands.
This process involves selling the business to current employees or managers. The payment regime is also a little flexible owing to the personal relations. This selling option creates a win- win scenario for the involved parties. The major advantage of this type of exit strategy is that the buyer does not discard what you feel is important for the business, rather he safeguards it.
Liquidation
Although nobody ever starts a business with a thought to liquidate it someday but this happens nearly most of the times. At times, there is just no option but to adopt liquidation. The proceeds generated from the assets are to be used to pay the creditors of the business and the rest is to be duly distributed amongst the shareholders. This type of exit strategy has its own advantages and disadvantages. The major positives are that it is an easy process and is natural its nature, living up to the saying that all good things come to an end.
It is free from all hassles, negotiations, and ownership issues. However, it is important to know that applying this exit strategy you will be able to earn no more than the market value of the company’s assets
Acquisition
This is one of the most common exit strategies. This process involves looking for a perfect buyer and selling of the business. There is a consensus on the negotiating price and once the deal is struck, it is done. The person who negotiates the price is not the owner; therefore, he does not feel the pain of acquisition while negotiating. The key to success is to make the buyer believe that you are actually worth a billion dollars.
The better you convince the more money to make. The best part of the acquisition exit strategy is that the sentiments of the employees and the customers are not generally hurt. But it has to be ensured that the fit between the acquirer and the acquiree has to be positive or else it can turn out to be a decision that is self – destructive.
The best part about this strategy is that you might end up getting even more than what you had expected, as a lot many buyers would be interested to acquire your business. However, acquisitions can be troublesome as the cultures may clash, which might as well hamper the effective working of the businesses.
Summary
Exit strategies are a must to have in today’s time where a cutthroat competition exists. These strategies often prove about to be a profitable idea in the times when the business bears constant losses.
