Exit Planning for Small Business

Planning business exit strategies for small businesses can be a long and involved process. It’s recommended you start considering the issues a good five years before you plan to sell. A comprehensive exit strategy is crucial, and planning it well in advance can optimise profits and minimise losses.

Understanding common exit strategies, such as Initial Public Offerings (IPOs) and winding down a business, is also essential, as different strategies are available depending on specific financial, personal, and business goals. There are various types of exit strategies to consider, with eight common strategies that align with different objectives.

We specialise in exit planning strategies, helping entrepreneurs and business owners to consider all their options and formulate a thorough business exit strategy. Most small businesses are private equity firms and exit by trade sale, though other options include floating it on a stock exchange such as the Alternative Investment Market.

Our exit strategy services can help you decide which method of exiting your business works best for you.

Our Business Exit Strategy Services

Every business is different, so there’s no fixed route. But a good exit plan often includes a strategic and structured approach for business owners to transition away from their companies. This often involves:

• Setting a realistic timeframe and goals

• Reviewing your company structure and tax position

• Identifying and boosting the key value drivers in your business

• Reducing reliance on you or key individuals

• Preparing documentation and financial records

• Creating a plan for life after exit

We’ll work with you to manage all of this, so nothing gets left to chance.

It’s important to consider an exit strategy during the initial business plan to ensure that targets, goals, and timelines are effectively aligned with your long-term objectives.

Exit Planning for Small Business Owners

Smaller firms are usually reliant on a few key members of staff to run the business successfully – but it is important when selling a business that potential buyers see plenty of valuable, tangible assets that stand out whether your key employees remain or not.

As a business owner, ensuring these assets are in place is crucial for a smooth transition and to maximise business value. Considering family succession as a viable exit strategy can also facilitate a smoother transition by involving a family member who already has a connection to the business. Monitoring cash flow is also essential to assess the financial health of your business during this period.

Maintaining business operations during the transition is essential to ensure continuity and preserve the company’s value, especially when considering the role of the existing management team. However, passing a business to family members can have potential disadvantages if they lack interest or competence, though it can also maintain a connection to the family legacy.

As an example, a service-sector business might rely on a few key employees charging for their time and contacts. Unless you take steps to rectify the problem now, your business might be perceived to not be worth very much without you. Discussing the process and potential advantages and challenges of an initial public offering (IPO) can also be beneficial for businesses considering public ownership.

In short, if you’re planning to sell the company in the foreseeable future, it may be beneficial to develop products, services and systems that are not heavily dependent on you as an individual or upon key members of staff. A strong management team is crucial for ensuring seamless business operations and attracting potential buyers during the sale process.

Liquidation is one of the most final exit strategies, particularly for failing businesses, as it involves closing down the business and selling off all assets to pay debts and shareholders.

Get In Touch

In addition to trade sale exit strategy, we also specialise in liquidation and franchise exit strategy. Reach out to our exit planning specialists today to develop a successful exit strategy. Meticulous planning and strategic foresight are essential for achieving a successful business exit.

Get in touch to discuss your exit strategy.

Related Videos