Consider your exit strategy when starting up
What do you want from your business?
Before you think about the commercial factors that will determine how you will exit your business, it's worth considering more personal matters. Your reasons for starting a business and the type of business you set up will help determine your exit options.
Your objectives when starting a business might include:
- being your own boss and drawing a salary and arranging a pension scheme
- creating a business to pass on to family members
- generating capital growth and making money by selling the business
- creating an invention or piece of intellectual property, developing it and selling the business quickly
A hairdressing business may fulfil the first objective. But whether you can sell it as a going concern might depend on whether you still play a hands-on role.
If you are no longer styling or cutting hair it will be easier to sell on your salon, its customers, goodwill, and regular cashflow. If most customers still want you to cut their hair, it will be more difficult to sell the business as it will be harder for potential buyers to differentiate the business from you.
If you're starting a business to make money through capital growth, your exit options may be wider. If you build a high-growth business in a thriving sector you may be able to sell the business to trade buyers, consider a merger or even a stock market flotation.
For further information, see the pages in this guide on exit option: selling your business and exit option: float your business.
To find out more about the option of passing or selling a business on to family members, see the page in this guide on exit option: family succession.
Other options may also be available to businesses coming out of a controlled environment with an established reputation - such as a business-incubator enterprise or spin-outs from companies or universities.
Subjects covered in this guide
- Introduction
- Why you need an exit strategy
- What do you want from your business?
- Decisions that could affect your eventual exit
- Exit option: family succession
- Exit option: selling your business
- Exit option: float your business
- Exit option: close your business
- The exit process
- Here's how I planned an exit strategy
