How To Set Up an Exit Strategy For Your Business
When building a business, many people forget about the importance of the decisions they make. The decision you make today can have large consequences down the road, whether for the good or bad. Even if you build a successful business, you need an exit strategy to get the money out.
One exit strategy for companies who like to think ahead is to milk the company for what it&39;s worth daily. By doing this, I&39;m not referring to sending the company into deficit spending. The expression "milk the company" means that you should pay yourself handsomely and give yourself nice bonuses.
You should do this despite the growth or earnings of the company. You should issue yourself shares which have a much higher value than those owned by most investors. While this may be questionable in a public company, in a private company it is an excellent strategy. By doing this you protect yourself and move assets outside the company.
The second strategy is called "liquidation." With this strategy, you simply shut down the company and put yourself out of business. It may sound strange, but it happens often. If you do this, you should take some of the assets you own and pay off any creditors you owe. This way you are completely debt free. It is also important to pay your shareholders as well. The only problem with this strategy is that while it is simple, your reputation could become damaged.
Another common exit strategy is to sell the company to someone interested in buying it. You can sell your business to outsiders, or employees who have shown they have the skill, desire, and finances to run the company. Sometimes entrepreneurs tire of one business, and wish to start another. Selling your existing business and using the proceeds to start another business is a smart strategy.
The last exit strategy many people use is called the "acquisition method." If you have children or heirs you want to live money to, but want to sell the business to someone else, this is an excellent strategy to use. You negotiate the price for the business, and once both sides agree to the deal, you close and sell the property.
There are pros and cons with all these strategies, and you must do your research to find out which exit strategy is best for you and your family.
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