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As the effects of coronavirus continue to unfold, you may have decided that it is time to sell your business and move on. As a business owner, it is vital to have a plan for a possible exit as soon as you start your business. How can you start planning for your business’s future? Here are a few tips:
Let’s begin with why you actually need an exit plan.
Having an active exit strategy in place protects your business. An updated exit strategy will protect the values you have established within your company and it will help create an easy transition for both your employees and your investors.
These exit plans give you — the owner — a plan for the future and a direction in which your company can grow. Not only will it create a supplemental income for you later on in life, but it could also reduce tax impacts on your estate and family.
So how do you begin this process?
Start with your valuation. Every business, big or small, must know its valuation. This starts with taking inventory of your current value and where you stand amongst competitors. The right valuation can set your company up for success, but if you value your company incorrectly it can lead to more problems down the line.
Regardless of your future plan for your business, whether that may be selling or passing it down, you need a valuation to achieve your exit goals. To start analyzing your business’ worth, look at your total revenue, pretax income, accounts receivable and payable, loans, and rent or mortgage payments.
Once you have figured out your valuation, it’s time to start planning your exit.
There are a few ways to figure out your perfect exit plan and a few different options. Here are the types of exit to consider, and what they may mean for your company:
If you prepare your business for an exit at the beginning of creating your company will set you up for success as you move forward. There are various options and routes you can take, and it may seem overwhelming at first. At TGG, we want to help make exit planning easy, contact us to schedule your 15-minute evaluation today!
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
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