Your business plan is a valuable roadmap that guides you through start-up, and as your business grows and evolves. It can be your guide as you exit your business.
Exiting a business, also known as succession planning, is not usually as simple as closing your doors. Whether you’re selling your business, transferring it to family or friends, or closing your business for good, there are various legal, tax, financial, and emotional implications that you should anticipate and plan for well before you choose or are forced to exit your business.
Develop Your Exit Strategy
Carefully research your options and consider the implications of each one.
There are four common ways to exit your business:
- Transferring your business to an employee, family member, friend, or others
- Selling your business
- Closing your business
- Declaring bankruptcy
Refer to our Legal Requirements—Exiting section for more information about each option. If you are uncertain about which option would be best for your business and personal circumstances, we highly recommend that you consult an accountant and a lawyer before you make any decisions.
Detail Each Element of Your Exit Strategy
Your exit strategy should be composed of several distinct plans.
- Succession plan. When you buy, sell, pass on, or dissolve a business, there are a number of issues and regulations that you need to be aware of.Refer to our Legal Requirements—Exiting section for more information.
- Operations plan. Depending on the type of succession you have in mind, your company should have an operations plan that contains contingencies for legal and contractual obligations, and employee termination. Refer to our Operations Management—Exiting section for guidance.
- Human resources plan. If you have employees, you need to be aware of and take into account their rights if you plan to sell or dissolve your business.
- Market research plan. If you’re planning to exit your business, you can use market research to understand the value your company might bring if you put it up for sale. Refer to our Market Research—Exiting section for guidance on how to use market research to prove the value of your business.
- Marketing plan. Depending on your particular reasons and circumstances for liquidating and your timeline, you might or might not be able to get full value for your assets and inventory. Advance planning can help you be more prepared. Refer to our Marketing Sales—Exiting section for some strategies to get the most value if and when you need to liquidate your business.
- Financial plan. Selling your business, transferring it on to your family members or others, or closing for good (either by dissolution or bankruptcy), triggers a number of financial events that you’ll need to resolve. Refer to our Financing—Exiting section for guidance.