Believe it or not — when you start a new business, you need to think about your business exit strategy. Are you trying to establish a lifestyle business that generates income without plans to sell it in the future, or are you building equity in a business that you may want to transform into cash? It may seem odd to develop a strategy this soon to leave your business, but potential investors will want to know your long-term plans. Keeping your end-game strategy in mind will help you make the most of your business every step of the way.
If you plan to exit your business and transform your equity into cash through a sale, merger or IPO, you need to build your business from the ground up to prepare for that. You’ll need to build value and equity in your company by creating unique products, services, relationships and distribution channels, building an intellectual property portfolio and expanding your customer base.
Or, maybe you want to keep the company and reap the profits. That’s called “lifestyle company.” Rather than reinvesting money in growing your business, in lifestyle companies, you keep things small, take out a comfortable chunk, and simply live on the income. As one of my clients quipped when asked why he wasn’t investing in expanding his very profitable manufacturing company: “What part of 30-hour work weeks and a $5 million personal income don’t you understand?”
The lawyers at Shofner & Associates know how to build the right exit strategy and when to put it into action to make it work for your business.