7 Exit Strategies For Virtual Business & Small Business Owners
So you decided to start a business… now what? Before you get caught up in the daily routine of growing your company, take a step back and think what you will do with your business AFTER you spent all those thousands of hours building it. Or, if a tragedy strikes, ask yourself, what will happen to your business then?
Don’t have a clue?
Don’t worry, you are not alone. Most virtual business or small business owners do not plan that far out, they are just trying to make it by the day. So I thought I’d give you a few ideas on the best way to move or sell a virtual business when the times comes, this way you will have a clearer idea of where you are heading already before you start.
Remember though, the meaningful to building a business ready to be sold at any time, is to remove yourself from the daily operations. This is the reason why, it is imperative to build a course of action pushed, instead of an owner pushed company. If you ultimately do not make this change, your business will be worth less and you will most likely receive less for your company!
Here is an overview of the best 7 virtual business (or small business) exit strategies:
- Employees: A few methods to selling a virtual business to your employees are the ESOP (Employee Stock Ownership Plan), an MBO (Management Buyouts) and MBI (Management Buyins)
- Charitable Trusts: This is a great strategy for those virtual business owners who want to assistance from charitable giving. A few methods are CRTs (Charitable Reminder Trust) and CLT (Charitable Load Trust)
- Family: This is when you want to move your virtual business to your children or a family member. A few methods are gifting stock, GRATs (grantor retained annuity trust), FLPs (Family Limited Partnerships), SCINs (self-canceling installment notes), IDGTs (deliberately defective grantor trusts) and private annuities.
- Co-owners: When buying out a partner the co-owner move channel is a good method. It includes buy/sell agreements, rights of first refusal provisions and other move techniques.
- Retire and Sell to an Outsider: When retiring, numerous of the past mentioned methods can be used. Such as charitable trusts, private annuities or grantor retained annuity trusts.
- Continue in the Business but Sell to an Outsider: This strategy is usually implemented when an owner needs growth funds but does not want to invest personal assets. It can be sold to a private entity or to a public one.
- Going Public: This is the time of action of offering securities (shared or preferred stock) of a private company for sale to the general public.