By MATT PIKE
St. Joseph Post
With a new year underway, it's important for business owners to make sure they have an exit strategy prepared. But what is an exit strategy?
Missouri Small Business Development Center director Rebecca Lobina says it's simply a strategic plan to have about leaving or closing your business.
"Whether that is selling it, closing it down and liquidating everything, passing it on to a new generation, giving it to your employees, there's all kinds of different strategies out there," Lobina tells host of the KFEQ Hotline Barry Birr. "But basically, an exit plan is just having a plan in place that shows what you want to happen with your business in the future."
Lobina says it's important to have your exit strategy prepared three to five years before you plan to leave the business, so you can ensure you have everything in place.
"Those are when you want to bring in those resources and make sure that the exit you have planned is going to be executable and turn out the way that you want it to be," Lobina says. "And in the meantime, just make sure that you have a plan in place so that you can work strategically toward
Lobina says that three to five years is critical because the last three years tax returns are what will be looked at to value your business and you want to be sure you have all of that maximized to show value to a potential buyer.
Lobina says there are several different strategies you can put into your exit strategy
"Everything from selling to employees, so there's the employee plans like Hy-Vee, locally owned and operated but employee owned, so the employees each have a little bit of stock in business and so they are actually all owners of the business," Lobina explains. "And so that is one way a business owner can exit is to sell to his employees."
Lobina says other strategies might be selling to an existing partner, liquidating the business, or even being bought by a direct competitor if you've grown enough.