Prepare Your Exit Strategy
When we take a look at businesses all around the Kuwait Market, over the past years, we have observed that numerous businesses move closer to the end of their business life within a short period of time. The main challenge several businesses stumble upon is overlooking & exiting without a well-defined strategy. All successful entrepreneurs & business owners plan & develop their exit strategies at a very early stage of the business in order to make profits & acquire investors. A business exit strategy is a crucial step that entrepreneur's take to think ahead & present a strategic plan to sell their ownership in a company to investors or another company. Developing an exit strategy should not be considered as a drawback, rather it could play a role in increasing your chances of a successful business by identifying the business’s failures and preventing the closure of the business too early. Create a balance & know when to close down a business and how to take into consideration the legal responsibilities.
Recognize the journey
The first step in developing a business exit strategy is to determine the success of the business & when you as a business owner might be willing to close & seal the business. The key is to identify several financial situations which are likely to take place in the future, thus influencing you in taking up realistic decisions while forming the strategy. The primary reason to forecast your business finances is to secure your personal investments & finances by preventing your business liabilities from leading you into a long-term personal debt. A crucial step is weighing out the pros & cons of how much would it cost you to keep the business running rather than hoping that the sales pick up.
An Early Exit
An unplanned-hasty decision can lead to a business closing its doors too early. In some situations, it is advisable to conduct a study before putting your business for sale on the market. Some business owners have experienced that announcing the closure of the business too soon, may lead to further debts and may get entangled in ongoing monthly rents, taxes or previous contracts, until the business is transferred to a new business buyer. In such circumstances, business owners prefer running the business to pay off monthly expenses rather than getting buried in debt. Have an understanding of which would cost you more money – a fully functional business or shutting down the business.
Create a list containing all the assets of your business – both tangible & intangible assets. Your list should include all machinery, supplies, office equipment, electronics, stocks, website & applications and should even consist of the business name & goodwill. In order to ease out the process, upon the completion of the list of assets, create another list of prospect buyers who would be interested to purchase your business assets & approach the buyers.
Paperwork & Transitions
Prepare a list to reduce the business’s legal liabilities – cancellation of contracts, business licenses & connect with existing customers, clients, suppliers & vendors to settle all legal matters. The transition of ownership can be extremely unsettling without a clear & defined plan. You must be mindful about the business buyer & the existing employees, as valued employees could be affected under the new management, which will eventually lead to a collapse in the business performance & brand image. To take a sidestep from such situations, every business should have an exit strategy that states the duties & responsibilities of the new business owner/s.
Ensure that all management and employees know the business’s long-term goals so they are prepared in advance but avoid informing them too early in the process as they may take up jobs at new companies before the closure of your business. Take into consideration the effect that the closure of the business will have on employees, clients & customers & make the announcement as easy as possible & beneficial for all; this would allow them to make decisions based on the provided deadline. It is also important to have successful sales & marketing strategies to demonstrate to the potential business buyer that the business is expected to generate profitable income in the future.
Develop a Sales Proposal that reveals all the business’s assets, financial documents, yearly sales and budgets & the selling price of the business. Collaborate with a business broker to assist you in preparing your business for sale – Business Valuation, preparation of all documentation & discovering a suitable business buyer. Once the documentation is ready, find the most appropriate business buyer to ensure you receive the best value for your business. Approach all professional relationships developed over the years for recommendations & references on the business sale, which in its due course of time could lead towards selling a business.
Thinking of selling your business or looking to buy a business but you are not certain about the outcome? Choose to depend on a reliable professional. Choose Bexit Co. email@example.com | (+965) 66774530