Entrepreneurs yearn for the struggle to manage their own companies. The battle often leads to many benefits but can sometimes lead to a corridor of endless darkness. Thus, while launching your well-thought-out startup, you must plan a sparkling exit strategy for the tough times.
Most startups often start their new organization without a proper exit strategy. Everybody likes the period of high, with the money flowing in and the finances meeting all expenditures. However, business plans can only succeed by outlining a proper exit strategy for all.
An exit strategy only comes in handy when things go south. Your exit strategy can be helpful in several places. For instance, you can use your exit strategy to find the best ways to jump from one startup to another. We might have the resource for all entrepreneurs looking for an exit strategy.
For all those who plan for the future and those who don’t but should because planning is the best way out, the following four exit strategies are deemed to give a feasible return on the effort and capital that you invest:
Liquidation
Liquidation is the process of finishing business. It means selling the company’s assets and realizing all the tangible and intangible gains. The money made from selling the assets and realizing the profit would be used to repay all the business loans. The remaining leftovers will be distributed amongst the owners and the shareholders.
The process is straightforward and free of any hassles. There is no transfer of power, so everything phases out simply for you.
Just Bleed the Company Dry
One exit strategy gaining popularity amongst entrepreneurs is to bleed the company dry. That would mean that you shower yourself with a luxurious salary and bonuses of all sorts. It cannot turn out perfectly in a public company, but it is all okay in a private company.
Rather than having to bear the hassle of reinvesting the money into the business, a decent exit strategy can be to take out a satisfying chunk and enjoy the spoils of your brainchild.
Plan an Acquisition
An acquisition is when another company buys yours at a mutual selling price. The acquisition price is set after a detailed dialogue and includes calculating the working capital and the goodwill the acquisition would bring. Considering that the person from the other party doing the discussions for the purchase is not necessarily the owner, you can bargain a deal with them, making the acquiring company flex their bank accounts.
Put a Friendly Person in Charge
Handing the business to a friendly friend can be a decent exit strategy. One such example can be giving the company to your children, who will, in the worst-case scenario, eventually fight for it amongst each other and lead the company to its downfall. This option ensures you keep making money even after implementing the exit strategy.
Suppose you have become emotionally attached to a business. In that case, the best way to plan an exit strategy is to put a friendly person who shares your passion in charge of the business rather than selling it to someone else. It will broaden your attachment without burdening you in any way.