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5 Business Exit Strategies For Startup Founders
Startup founders are always looking for the next business tycoon to be. Check out these business exit strategies for entrepreneurs and founders.
Business Exit Strategies
For Startup Founders
Startup founders are always looking for the next business tycoon to be. Check out these business exit strategies for entrepreneurs and founders.
Exit strategies for a business
So you've created a successful business. Do you know what to do next?
After your startup flourishes, you're going to move on to other innovative ideas. But that means you need to have an exit plan for business.
With these 5 exit strategies for a business, you'll be moving on to the next challenge in no time!
1. Merger and Acquisition
The first exit strategy in business is arguably the most popular one among famous entrepreneurs: merger and acquisition.
In this scenario, you either merge with a similar-sized company to create a larger entity or get bought outright by a larger company. This is a popular move among business owners or entrepreneurs because everyone walks away a winner.
For best results, you should pursue this route at the height of your business valuation calculation.
2. Individual Sale
Despite its popularity, the merger and acquisition route isn't perfect for everyone. You might instead prefer to sell your business to an individual.
More famous entrepreneurs than you think prefer to buy existing businesses instead of creating something from scratch. If they buy your business, you can pay off debts and investors and start making plans for your newest business.
As a bonus, this approach is arguably the best way to retain the branding and feel of your original business instead of watching it change into something else entirely.
3. What is an IPO
Another method is to sell shares of your startup via a new IPO. This method has some real benefits but also some definite drawbacks.
For a successful business startup, this is the first step towards real financial security. You can raise funds for a business that results in additional growth and watch the value of your own shares continue to rise.
At the same time, the number of IPOs by year has declined significantly in the last 20 years. You may not want to take this really big gamble, especially when it means putting up with a gaggle of annoying shareholders.
4. Income Stream
One of the simplest exit strategies for a business is to not exit the business at all. In fact, all you have to do is exit the building!
If the business is really booming, you may not want to sell at this exact moment. Instead, you can leave day-to-day management to someone else and count your money as it comes in.
With that cash, you can pay off debts and start investing in your next business venture. If you can make it work, this is a great way to have your cake and eat it too: easy money now and new challenges later!
5. Total Liquidation
The final exit strategy in business is typically the last option among business owners or entrepreneurs: total liquidation.
Liquidation is relatively straightforward. You simply close the business down and begin selling everything that you can.
No young entrepreneur likes to liquidate, but it may be your only option if the market value dramatically shifts. Just make sure you explore all other possibilities before you choose to liquidate.
Exit Strategies in Business: Make the Call
Now you have options for exit strategies in business. But do you know who can make selling your business easier than ever?
We specialize in helping successful entrepreneurs "go out on top" and move on to the next challenge. Unleash the possibilities by selling your business today!
BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
What You Need to Know About Selling a Small Business
Start with this entrepreneur's guide to selling a small business as quickly and efficiently as possible.
Read to exit your business?
Here are great tips you need to know
You're ready to move on to the next venture. Start with this entrepreneur's guide to selling a small business as quickly and efficiently as possible.
Selling a small business
In 2018, there was a 4% increase in businesses sold from the previous year. The 2019 numbers are just coming in and it's clear this has been a banner year for business exits/sales.
The economy has been on a tear and business owners are cashing in on a market with active buyers and high price multiples. But don't believe that just because you have a business, and because you work really hard in that business, that you'll be able to sell your business quickly.
There are steps you need to take when selling a small business, and we want to share with you what they are. Keep reading our guide to learn how to sell your own business.
Figure Out Why You're Selling a Small Business
The first step to selling a small business is being able to clearly articulate why you want to sell. Most potential buyers will ask this question right off the bat.
Most business owners decide to sell for the following reasons:
Bored
Overworked
Retiring
Illness or death
Partner problems
Others decide to sell because their business isn't profitable and their soul has been accordingly crushed after years of slugging it out with nothing to show for it. Selling a struggling business is like trying to sell a rundown house with a crappy foundation and a frat house next door. It's harder to get a favorable transaction done and there are fewer buyers out there interested in dealing with the problems they'd be inheriting in a market with so many attractive deals for sale.
You're better off trying to fix any addressable problems before putting your business on the market if you can take the time to do it.
You Must Know The Real Value When Selling a Company
It's vital you know how much your company is actually worth in the eyes of a potential buyer. This will ensure you don't price it too low or too high.
Find a business broker to get a valuation. The broker will provide you with a detailed explanation of your business's worth based on real market comparable and professional experience.
A formal valuation can also help you back up your asking price. Most buyers will ask for the business to have a valuation done at some point in the process, so better to arm yourself with one before you start engaging prospects.
Prepare Documents
There are certain documents buyer's will need to take a look at regarding your business such as:
Financial statements
Tax returns (dating back three to four years)
List of equipment being sold with the business
A list of contacts of salespeople and suppliers
You should also include any relevant paperwork like your current lease. A buyer must understand exactly what he or she is getting if they choose to buy your business.
Find a Broker
Yes, you can sell a business without a broker but it's like selling a home without a broker. It's often more difficult, riskier, and leaves you vulnerable to making costly mistakes.
Selling your business tends to be a lengthy process. Being patient, taking your time, and being thorough will help you make smarter decisions.
Before choosing a broker, interview several before you choose which one to work with. A good broker will have a realistic approach. A bad broker will try to sell you a fantasy of what you can expect and it'll take longer for your business to sell it at all.
Put Your Business on the Market
Selling a small business doesn't have to be hard. You just need to surround yourself with the right team to help you find the right buyer. Use websites like BizNexus to match you with the right business intermediaries to help you sell your business on optimal terms at the right price.
Best of all, it's a free service. Click here to try it now.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.