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Business Owner Exit Strategies

Smart Business Owners Start with the Exit in Mind

Image of a road site with an arrow and the word exit pointing to the way out

Great entrepreneurs who have multiple successes under their belt do something most business owners don’t do.  They plan an exit strategy up front. New business owners often enter a business with a high degree of passion, excitement and commitment. In the beginning, the furthest thing from the new business owner's mind is how and when to leave the business. Fast forward a few years, five years, ten years or even more and the owner is entrenched in the business, possibly getting tired or having the time of their lives, and yet they still hasn't planned an exit.

Why would the person who is operating a thriving business that is running successfully and making money look for an exit? The answer is because this is what they planned all along. If they didn't plan it, they would see the good times as an opportunity to milk the cash cow, not as an opportunity to sell.

Here are some reasons a seller would sell a profitable business.

  1. Selling an unprofitable business is difficult
  2. The seller reached their financial goal
  3. The seller is in a position to pursue other interests or life goals
  4. The seller found another business to pursue
  5. The seller recognizes fading interest, passion, or energy despite building a solid business
  6. The seller seeks an even more financially rewarding endeavor
  7. The seller seeks a more emotionally fulfilling opportunity or challenge

Smart entrepreneurs who are busy building their business are always considering their exit strategy. This is the best way to prevent getting stuck selling under sub-optimal conditions, As a business owner, do you know your exit strategy and will you be prepared? The first step is to hop into the buyer's shoes. Buyers look for businesses that can provide two major components: sustainable income and growth potential. If these two ingredients are in the business that a buyer is investigating, the chances of receiving an offer are significantly higher.

If you are considering selling your business in the future, make certain that a buyer can verify your income. Most buyers will walk away from a transaction if the income cannot be verified.  Your First Choice Business Broker can advise you in more detail as to what a buyer will need from you when you are ready to sell.