If you’ve never stopped to consider the big-picture future of your business, take a moment to do so now. Maybe you’ve been focusing so much on simply surviving, or on growing your business, that it hasn’t occurred to you to determine how you’ll leave your business, should you decide to down the road.

Having an exit strategy in mind can help you, your employees, and your family understand your business’ long-term goals, and help achieve them. And, should you — heaven forbid — experience an accident or worse and be unable to communicate your vision of what should happen to the business, having this information on file can help others make decisions on your behalf.

Your Exit Options

Typically, you have 5 options when it comes to what you can do with your business:

  • Sell it to another party
  • Pass it down to a family member
  • Transfer ownership to a partner
  • Get acquired by another company
  • Close it down

Knowing what you want — even if it’s decades away — can help you prepare for the situation. For example, if you’d like to pass your business on to your child in 20 years so that you can retire, that gives you time to train your son or daughter on running the business, as well as even see if he or she is interested in taking it over.

If you want to sell your business, you’ll need time to build it up so that it’s a fantastic investment, and you can get what it’s worth. If you have a business partner whom you’d like to take over the business completely in a few years, start the conversation now so that you can be assured he’ll continue running it the way you would (or hash out that argument if that’s not the case).

And if you simply want to close up shop, there’s nothing wrong with that. But if you’ve got assets — physical or intellectual — they might be worth something to someone, so consider selling the business or even breaking down the assets piecemeal and profiting from them.

Points to Consider

Do you have investors?

If you have investors in your company, factor them in while planning your exit strategy. You’ll need to be able to repay their investment as well as give them their due equity upon selling or closing your business, and this may put a financial damper on your retirement plans.

How does your family feel?

If you run a family business, you won’t be the only person affected, so make sure to discuss your plans with those that make decisions with you, as well as your immediate family, who will be impacted by such a large financial decision.

What time commitment can you make?

If you plan on being acquired or selling, decide how much of your time you’re willing to give for the transition. If you sell, you likely can hand over the keys and provide a few pointers on running the business, but if you’re part of an acquisition, you may be required to stay on for several years as an advisor or consultant. If you’ve got plans to move to the beach, this could postpone your beachy dreams.

Is your business info organized?

If you sell your business, the buyer will want ample information about your company for his due diligence. Be prepared to provide tax forms and accounting details, as well as inventory receipts and more. It can be quite a lengthy process, so factor that into your timeline.

Even if you’re completely content running your business right now, write down what you’d like your exit strategy to be. Having it on paper can help you move in that general direction, even if it’s not going to happen for decades. And realize that preparing several years in advance of selling a business can help you get a better valuation for your company — as much as a 400% increase! Don’t wait until you’re ready to hand over the keys to keep careful records on your business, or provide audited or reviewed financial statements. Preparing in advance will make the process go smoother, and give you results that keep you smiling into the next phase of your life.