What is the simplest exit strategy? When it comes to exiting a business, the simplest strategy often arises from a place of distress. When someone seeks a straightforward solution for a complex situation, it usually means they are overwhelmed, stressed, and looking for a quick escape.
Desperation and Distress
A business owner in a desperate situation might need to get their business off their hands quickly while maximizing their financial return. Common reasons behind this urgency include:
- Non-viable Business: The business may no longer be viable, making further investment pointless.
- Pressing Debt: There may be debts to repay, whether personal or family-related.
- High Operating Costs: The cost of running the business could be too high.
- Loss of License or Insurance: The business might have lost its license to operate or run out of necessary insurance.
- Failed Sale Attempts: The business might have been on the market for months without selling, disrupting financial planning.
The Only Answer: Liquidation
In desperate times, the simplest answer is often liquidation. This involves selling all of the company’s assets, consolidating debts, and hoping there are remaining funds to take. Unlike finding a buyer, which can be costly and time-consuming, liquidation provides immediate value from the business’s assets.
As Rob Williams our growth and exit coach says, “When you’re asking for the simplest exit strategy, it’s a sign that you’re in a tough spot. Liquidation can provide a quick solution, but it’s crucial to understand why you’re considering this route.”
Understanding the Background
Questions about the simplest exit strategy often come from a place of struggle. Thriving business owners typically do not ask this question; it’s more common among those facing hard times and looking for a quick way out.
The Reality of Business Sales
It’s important to note that 80% of businesses don’t sell, and 70% of those that do often sell with regret. This is because the founders haven’t made their businesses attractive and defensible enough to command the price they want.
To avoid desperation-driven liquidation, ensure your business is attractive to potential buyers. Strong assets and a defensible business model are key to making your business sellable at the desired price.
Conclusion
Understanding the simplest exit strategy is crucial, especially for those in desperate situations. Liquidation might be the answer, but preparing your business to be attractive to buyers can provide more favorable outcomes.
If you’re considering your exit strategy, take the time to evaluate your business’s attractiveness and financial stability. It might save you from the stress and loss associated with a quick liquidation.