More than one third of business owners are waiting for an opportunistic approach from a third party before selling their business, according to research. This leaves owners unprepared and at a disadvantage. Implementing a clear development strategy from the beginning, including putting in place a strong management team to lead the business following the eventual departure of the entrepreneur, means the company will be attractive to potential purchasers. This guide outlines the reasons you need an exit strategy.
Having set up and run the business, it may be you require a fresh challenge. Or the economic conditions might dictate when the time is right to sell. Or you may want to realise the value of the business. If there is consolidation in your sector, or larger firms are on the acquisitions trail, these again might be good reasons to cash in. With the economic outlook fluctuating, picking the right time to sell could make a huge difference to the price you receive.
If you don't have an exit plan, you won't be taking advantage of the tax implications of a sale. If your exit strategy is about selling the business, there are tax implications in terms of how you hold and sell the business and costs associated with that. The same goes if you are planning a succession to a family member. Think about the implications on family wealth and on taxable income. Floating the business on AIM will also dictate certain financial outcomes, all of which require advance planning and advice.
Many entrepreneurs are great at growing a business from scratch but less good at operating a going concern. The initial excitement and enthusiasm can wane, and the focus can start to go. An exit strategy from the start means these issues are dealt with. During the course of the business growing, you will keep in mind the need to hire, train and promote good people who could take over the running of the business and who are better managers.
Starting a business is hard work, long hours, stress and strain. On you and your family. Having a exit strategy in place will help you and your family realise there is an end in sight. It gives you and your family a focus so you can plan for the future. There's a whole world out there away from work, other challenges, charities, good works, artistic endeavours and family responsibilities. An exit strategy gives the owner a great life opportunity.
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