If you’re looking for good exit strategies for your business, here is a list of some of the most common approaches. Even though the term “exit strategy” sounds negative, there are some very positive outcomes from planning ahead. It’s always better to have some good options before the situation becomes an emergency.
When you start a trading floor with Day Trade The World™, you will not need any detailed exit strategy. The best part of this business is you can close down your trading floor whenever you wish too. you will also get your deposit back as soon as you return the P8 Cube™. But you will need a exit plan for majority of other businesses.
1. Merger & Acquisition (M & A)
If your business merges with a similar company or is bought by a larger company, this can be a win-win for both of you. A merger is ideal for two companies that have related skills and resources. An acquisition usually happens when bigger corporations seek to grow their revenue. The additional products and services available from the merger or acquisition are usually beneficial to the customers.
2. Initial Public Offering (IPO)
While IPOs used to be the preferred method for exit strategies, this approach isn’t very profitable for startup companies anymore. The IPO rate has declined every year from 2000 until 2010 and is currently around 15%. In addition, shareholders can be demanding and the liability risks are high.
3. Sell to a friendly individual.
Selling to one buyer isn’t the same as an M&A where two companies are involved. The ideal prospective buyer is someone who can advance your business to a higher level. Moreover, this potential buyer will have additional skills that can help the operational side of the business. Once the sale has gone through, you can pay your investors and yourself, take some well-deserved time off and learn to have some fun again.
4. Make it your cash cow.
If your company has a steady revenue stream and it’s in a stable market, then consider hiring someone you trust to run your business. In this way, you can pay off your investors and use the remaining cash to help you develop your next business idea. You’ll also retain ownership of the business and receive an annuity. The downside of this plan is that many “cash cows” still need to be constantly fed to remain healthy.
5. Liquidation and Close
Shutting down your business and liquidating is another possible strategy. Sometimes this is the hardest choice to make, but it’s still an option. If you’re ready to close your business, be smart and make rules up front. It’s important to pay everyone you owe so you can walk away with your head held high.
Whatever exit strategy you choose, it’s best to have a plan. Think of this stage of your business as a succession plan. It’s always good to be one step ahead when you’re making a transition to the next part of your life!
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