Why Small Business Owners Need to Think About their Exit Strategies Even if They Don’t Plan on Selling Soon
When you are building a business, the case may be that the only think you think about is growth, and where the business can be if your planning and hard work pays off. Rarely does the idea of an exit strategy cross the mind of business owners who are in the midst of building a business that they feel passionate about, but that may be a mistake that they wind up paying for in the event that they build their business around themselves and find that they are in an irreplaceable role in the future when they begin to think about retirement and turning the reins over to someone else.
Do you know what kind of buyer would look at your business? If you aren’t sure what type of person would buy your business from you, you should do research to find out. Odds are that a competitor, a skilled person looking to purchase a business of their own, or a company looking to acquire new capabilities, such as in house manufacturing, would be suitable buyers depending on your business type and industry. It may be the case that you are growing your business with the goal of one day turning it over to your children or relatives, but even if this is the case, you need to identify potential buyers for your business in the event that you need to sell it, or sell a part of the ownership in order to finance retirement or other essential needs. Selling a business that you wish to remain involved in might not always be what you want to do, but identifying market conditions that could force you to either sell or take a loss, such as the entry of a well financed competitor into your industry and locale, means that having a strategy in place can make a lot of difference in a pinch
Do you know when is the right time to sell your business? While many business owners would ideally like to work at their business up until the point that they retire, in reality it may be more advantageous to sell when market conditions make it the most advantageous to do so, which may or may not coincide exactly with a planned date of retirement. Being flexible with your timing as well as attuned to the market for businesses in your industry will help you even if you don’t plan on selling soon, as it is important to become familiar with trends in the market beforehand to know when you are being offered a rare opportunity as opposed to selling your business from a hurried or otherwise disadvantaged position.
Photo Credit to dan paluska on Flickr