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An Exit Plan for Your Business
Starting a business can be both an exciting and busy time. Many decisions need to be made that can affect the way that the business operates as well as the business’ future. Far too often the idea of an exit plan (also known as an “exit strategy”) is lost in the excitement of actually getting the business up and running. Having an exit plan from the start can give your business much needed direction when making crucial decisions in the startup process as well as make life a lot easier down the road.Whether you are starting a business or you already have a business that is up and running, if you do not have an exit plan, now is time to get one.
Benefits of an Exit Plan
In his book “The E-Myth Revisited,” author Michael E. Gerber stresses the importance of a business having an exit plan by quoting the founder of IBM, Thomas J. Watson, as saying:
“IBM is what it is today [because] at the beginning, I had a clear picture of what the company would look like when it was finally done. You might say I had a model in my mind of what it would look like when the dream – my vision – was in place. […] From the outset, IBM was fashioned after the template of my vision. At the end of each day, we asked ourselves how well we did, and discovered the disparity between where we were and where we had committed ourselves to be, and, at the start of the following day, set out to make up for the difference.”
Having an exit plan for your business can provide several benefits to you and your business. These include: giving the owner of a business a plan on how to react to unforeseen events if they occur, stopping losses in the case that a business stops being profitable, and helping the owners of a business in their retirement planning.
Exit Plan Options
What you decide to be your business’ exit plan depends heavily on your ownership situation. Depending on whether you are the sole owner of your business or are one of multiple partners, your options could range from selling the business to someone outside of the business, liquidating the assets of the business and ‘closing the doors,’ or simply leaving your business to a family member(s) to continue running the business. Talking with an experienced business and corporate attorney will allow you to know what your options are and which option will best suit your business and individual needs.
When deciding on what your business’ exit plan should be, there are several factors that must be considered. These include tax, business, ownership, and legal issues.Throughout the life of a business, the end goal of a business could change; meaning the exit plan of that business will change. It will be important for you to talk with an experienced attorney about your options and what steps can be taken to better serve your business and your own economic interests.Our experienced Arizona business and corporate attorneys at Gunderson, Denton & Peterson PC can provide you with guidance and help you create, as well as tailor, an exit plan for your business and individual goals.
Written By Brad Denton
1930 N. Arboleda, Suite 201
Mesa, Arizona 85213
40 N. Central Avenue, Suite 1400-1532
Phoenix, AZ 85004
GDP Business Blog
Mesa, AZ 85213