SolveYourProblem
Article Series:
Start
A Home Business
When
Your Home Business Succeeds:
The Exit Strategy
by Jeff Cohen
After a few years, you might find yourself
with a successful home business. After a few more, you might
find yourself sick of it and ready to retire, only to realize
that you have no idea what to do with the business and all
the customers who rely on you if you take that course of action.
Here's what you need to do to get out of your business without
destroying it, and come away with a good nest egg.
Selling Your Business
A business has more value than you might expect. As a rule,
businesses are bought and sold for somewhere between one and
two years' worth of their profits. If you wonder why, consider
that the person buying a business gets not only a proven business
model, but also all the marketing materials and other intellectual
property (trademarks, copyrights, patents), an existing customer
base, and years of built-up goodwill.
Home businesses, however, can be more problematic to sell
than other businesses, for the simple reason that they do not
come with business premises. You might have the best luck allowing
one of your larger competitors to do a 'takeover' of your business,
in which they are mostly paying for your name, branding and
customers. This can be lucrative for them, as they get to both
eliminate a competitor and expand their own business at the
same time.
You will need to put some effort in to make your business
attractive to potential buyers - do some analysis on what each
element of the business is worth. Show that you have made lots
of sales in the past and will make many more in the future.
Above all else, buyers are looking at your balance sheet, and
the business' potential for growth. They're in this because
they want their future earnings to be more than the amount
they pay, and if you can demonstrate that they could make that
happen quickly then they'll have no reason not to buy.
Getting the Right Price
Don't sell your business to the first person who offers, however
good their offer might sound - you need to get offers on the
table from everyone you can think of who might be interested.
You may even find that they're quite willing to have a meeting
with you as a group, and get into a little bidding war. Alternatively,
if you already have staff, you may wish to offer them the option
to bid too, providing them with a finance agreement. Before
you do anything like this, though, it's good to get your lawyer
and your accountant to advise you on the best course of action.
You will do better on the price of your business if you've
planned your sale in advance, instead of waiting to the last
minute. The people who get the best prices are the ones who
take years to sell their business, and are always prepared
to walk away from the negotiating table.
Time to Skim
One thing you need to remember when you sell your business
is that if there are any shareholders other than yourself,
they need to receive their percentage of the business' final
sale price. Depending on the terms of the agreement, you may
have to buy their part of the business before you can sell
it, or give them the option to buy your part before you offer
it on the open market.
On top of that, you will also have to pay tax on the sale
of your business. Always consider how much an offer is going
to be worth to you after tax, not before.
Starting from a Powerful Position
Once you've sold your business, there's one thing left that
you can do. With the lump sum you just got from the sale, you're
in a great position to start a new business! If the sale didn't
include your equipment, then it shouldn't be too hard to get
started again - and this time, you'll have a lot of money to
invest. Not only that, but you've proven yourself to be good
to lend to, so any finance you need should be far easier to
obtain.
Keep building businesses and selling them every few years,
and you can quickly get hold of the resources to build something
truly great. Good luck!
# # # # # SolveYourProblem.com : 2007
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