Four ways to exit from your business
There are numerous ways to start a business and millions of ways to run your business, but there are only four ways to exit.
#4. Sell it
You can sell it for a handsome profit – yes, this sounds to good to be true. [see our other article Seven reasons why Business Owners commonly Over-estimate the value of their business].
Finally a just reward for all your hard work, all your investment. Validation for following your dreams, proof you were right all along and compensation for all your hours of sacrifice. Perhaps you can treat your family if they can remember who you are!
Finally, you will get time to play golf.
It may not surprise you to learn that of the 700,000+ businesses started in this country each year, only around 10,000 are actually sold, leaving 690,000+ that never reach this pinnacle of business success.
Download our free planning templates – click here
You can decide to keep the business, and hire someone to run it for you.
You can put in a management team to replace you and to undertake both your day to day and strategic duties. Recruit the right managing director and you can sit back and take all the profit for none of the hard work, give yourself a fancy title like ‘Founder’, ‘Chairman of the Board’, ‘Chief Visionary Officer’ or such and watch the money roll in.
Sounds good, they may even wheel you out for special occasions and make a fuss of you.
This also sounds good to be true, and while it’s not impossible, this route is full of pitfalls. [also see Seven things to consider deferring to a management team] Chances are the better your business runs, the easier this will be to achieve …and the better your business runs, then the more your business is worth, and so, the more likely you are to sell it, rather than employ someone to run it for you, but hey-ho.
#2. Give it (all) away
The third way is that you can give it away, to your family for example, or possibly you may have excellent staff already in place, that are like a family to you, where you can orchestrate a management buy out.
The advantage of this is you get something in return. Either way, whether you get value personally, or as a family, this strategy takes lots of planning and comes with many possible pitfalls. It is best to start with the end in mind, and to set up a suitable commercial framework from day one, and to form a clear succession plan, in which personal and professional development will be key, especially if blood relatives are involved.
#1. Do Nothing
Finally, you can do nothing, let the business close. All your hard work, sacrifice, dreams and ambitions come to naught.
The business can either taper off or, more commonly, your business will come to an abrupt halt, like a cardiac arrest.
It is a sad statistic that a recent study by the insurer RSA suggests that 55% of businesses will fail to make their fifth birthday.
Draining the swamp
It has been said that many business owners are too busy working in their business to work effectively on their business, and that they value having a clear strategy set out for them.
If you look at these four ways you can exit your Business in this article as a ladder, how high up can you climb? Even if your long term plan is to give away your business to your family, having an efficient, well-run business that could be sold at a moments notice will still be a huge benefit, and will give maximum flexibility to give you the peace of mind you so richly deserve.
Planning to exit your business is a new process for many business owners – seek professional help and guidance from experts and professionals who can share their experience and knowledge with you along the journey.
Blunt advice from Yorkshire Powerhouse
Now you’ve read our article about the four ways to exit a business – have you any questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
Businesses are facing a time of great uncertainty and the road ahead is unclear. Is 'now' the best time to be looking at options to transform your business Read >
7 things to consider when deferring to a management team as part of your business exit strategy and understanding the risks involved Read >