Planning a Profitable Exit Strategy
Too many businesses during the recession had no real exit strategy other than bankruptcy court. Cash flow was so erratic that when any business loan option dried up it put them on the brink of disaster, until eventually they failed. They had no idea how to keep their inventories stocked or how to pare down their expenses when needed, other than laying off numerous employees, causing havoc on employee morale. Even if they had survived, they would not have been able to do it at the same level of proficiency as they would have to re-hire (a costly endeavor) and re-tool to get back up to speed afterwards. They literally strangled their own potential future prospects because they didn’t have a plan.
Know Your Strengths
Every business should have a good idea of where the value lies in it. It may be a specific product that you alone manufacture. It may be a client list so long, that when the economy recovers sufficiently, it will be instant pay dirt for someone. It can be trademarks. Assets aren’t just about real estate and stock prices. It has to do with how you created the business and how you can dismantle it later, without losing everything.
If You Plan to Sell
Business owners who sell a business are much more likely to walk away unscathed and with some money in their pockets. For that, you have to prove to potential buyers that your business has the capacity to create future income, even if the income is currently depressed. You have to show that your team of employees is unlike any other and that they can literally run the business without you. If the business requires your name and your association, you may want to offer your services, too, but the best way to sell is when the business can stand alone without you. If you can’t get one buyer, get multiple buyers. Sell your intellectual property to some, your equipment to others, and your lists to still a third until you can safely close your doors without declaring bankruptcy in court. Then, take that cash and start a whole new company with the proceeds.
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If you business is losing money, likely your only hope for a sale is a strategic buyer — a well capitalized competitor, or someone with a similar business, who will basically purchase your assets, but gut the rest of the company so as not to acquire your overhead.