By Mark Russell
Thursday, June 19th, 2014
As a business owner, your mind is consumed with enhancing your products or services while increasing profits. These are worthy ambitions. But from a larger perspective, something is missing. We’ve worked with enough entrepreneurs to know that establishing an exit plan is important for recouping your money at the end of your ownership experience. Some important issues for your consideration:
The time to draft your initial exit strategy and commit it to paper (or computer) is as early during ownership as possible. The U.S. Small Business Administration suggests doing so at least 15 years before you intend to retire. And don’t wait until an illness (or injury) unexpectedly alters your life.
Work with an independent valuation expert to determine which exit strategy is best for you and your business: running it as a “lifestyle company,” liquidation, selling to a friendly internal or external buyer, acquisition by (or merger with) another business, or going public with an IPO.
Before pursuing potential outside buyers, address any internal “messes” that need to be rectified. These might include your financial records and tax returns; any personal expenses you run through the business; customer, employee, or supplier contracts; employee misclassifications; current lease obligations; inventory issues; and facility/office upkeep.
The type of business you own – Sole Proprietorship, Partnership, Limited Liability Corporation, S-Corporation, etc.- determines the legal action required for ownership transfer (as well as any tax implications).
It’s important that you assess and choose carefully regarding the optimal exit strategy for your business. Have questions regarding an exit strategy? Contact the Corporate Advisory Solutions team to guide you toward this important milestone in your ownership life cycle. Email either Michael Lamm or Mark Russell to request your initial consultation. Exiting without a plan is not an option!