If you've been at all successful in your business, you've most likely put tremendous amounts of time, energy, and plain old hard work into it. It's probably one of your proudest achievements.
However, at some point you're going to have to think about a subject that may seem completely foreign to you: what's the best way to untangle yourself from the company that you've spent so much time putting together?
You may already be thinking in this direction for a number of reasons. Perhaps you're looking forward to retiring in a more agreeable climate, you've gotten a purchase offer you want to consider, or your business has done so well that you want to pass it on to your children. Perhaps you hope to "die in the saddle," but you want the business to continue beyond your lifetime, and you don't want the IRS to confiscate your hard-earned gains through estate taxes.
On the other hand, perhaps your business isn't doing as well as you hoped, or it's doing well but you're getting tired of all the time and energy it requires. Other reasons for getting out might include the death of a partner or co-owner, divorce, your realization that the competition is winning out, pressure from family members or employees who think you ought to retire, or your own health.
Don't wait until one of these events hits you over the head start thinking about your exit strategy now, even if it might be a long time before you actually need to get out. That way, you'll have plenty of time to consult with professionals and put your plan in place, and you can optimize your chances of getting the most financial and personal satisfaction from the results.
Exit routes. In most cases, when entrepreneurs picture themselves getting out of their business, the order of preference is to:
- Pass the business on to children or other family members.
- Sell the business as a going concern.
- Liquidate the business and sell the assets.
- File for bankruptcy, if all else fails and the business has substantial debts.
If the first choice won't work because your children or other family members aren't interested or qualified to run your business someday, your best bet is to sell your business as an ongoing, operating unit. If you don't find a buyer or you run out of time, you may have to liquidate and take what you can get for the remaining assets. And in some cases, a fourth choice, bankruptcy, is an option you should, or must, consider.