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Business Exit Strategy

After a few years, you might find yourself with a successful

home business. After a few more, you might find yourself sick of

it and ready to retire, only to realise that you have no idea

what to do with the business and all the customers who rely on

you if you take that course of action. Here's what you need to

do to get out of your business without destroying it, and come

away with a good nest egg.

Exit Strategy refers to how you will leave your business. Some

business people plan to take their companies public and sell

their shares when they retire. Others plan to sell their

businesses to individuals or other companies without going

public. Some expect their children to assume control of the

company. Other business people don't think about an exit

strategy at all, and, someday, just die. So, if you don't plan

an exit strategy, don't worry, a default strategy will be

provided for you!

Selling Your Business

A business has more value than you might expect. As a rule,

businesses are bought and sold for somewhere between one and two

years' worth of their profits. If you wonder why, consider that

the person buying a business gets not only a proven business

model, but also all the marketing materials and other

intellectual property (trademarks, copyrights, patents), an

existing customer base, and years of built-up goodwill.

Home businesses, however, can be more problematic to sell than

other businesses, for the simple reason that they do not come

with business premises. You might have the best luck allowing

one of your larger competitors to do a 'takeover' of your

business, in which they are mostly paying for your name,

branding and customers. This can be lucrative for them, as they

get to both eliminate a competitor and expand their own business

at the same time.

You will need to put some effort in to make your business

attractive to potential buyers -- do some analysis on what each

element of the business is worth. Show that you have made lots

of sales in the past and will make many more in the future.

Above all else, buyers are looking at your balance sheet, and

the business' potential for growth. They're in this because they

want their future earnings to be more than the amount they pay,

and if you can demonstrate that they could make that happen

quickly then they'll have no reason not to buy.

Getting the Right Price

Don't sell your business to the first person who offers, however

good their offer might sound -- you need to get offers on the

table from everyone you can think of who might be interested.

You may even find that they're quite willing to have a meeting

with you as a group, and get into a little bidding war.

Alternatively, if you already have staff, you may wish to offer

them the option to bid too, providing them with a finance

agreement. Before you do anything like this, though, it's good

to get your lawyer and your accountant to advise you on the best

course of action.

You will do better on the price of your business if you've

planned your sale in advance, instead of waiting to the last

minute. The people who get the best prices are the ones who take

years to sell their business, and are always prepared to walk

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away from the negotiating table.

Time to Skim

One thing you need to remember when you sell your business is

that if there are any shareholders other than yourself, they

need to receive their percentage of the business' final sale

price. Depending on the terms of the agreement, you may have to

buy their part of the business before you can sell it, or give

them the option to buy your part before you offer it on the open

market.

On top of that, you will also have to pay tax on the sale of

your business. Always consider how much an offer is going to be

worth to you after tax, not before.

Starting from a Powerful Position

Once you've sold your business, there's one thing left that you

can do. With the lump sum you just got from the sale, you're in

a great position to start a new business! If the sale didn't

include your equipment, then it shouldn't be too hard to get

started again -- and this time, you'll have a lot of money to

invest. Not only that, but you've proven yourself to be good to

lend to, so any finance you need should be far easier to obtain.

Keep building businesses and selling them every few years, and

you can quickly get hold of the resources to build something

truly great. Good luck!

About the author:

Original Source: Articles-Galore.com

Information supplied and written by Lee Asher of CyberTech SoftShop

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