Creating an exit strategy for your business is important, especially if you feel you won’t want to run it for long or are considering retirement. The struggle of launching a business can take its toll, but making important decisions, and making good decisions, is key to longevity.
An exit strategy is one that shows you how you can get your money back if your business doesn’t work out or if you plan to move on quickly. One way to do this is by paying yourself a large salary; this means that you’ll make the most out of earnings. Running the company into the red makes it appear less profitable, as well. However, if your business needs money to grow later, taking too much at once can actually be detrimental.
Another possibility is a liquidation. With this, you simply decide to end the business and close. You need to repay any creditors you owe and make sure shareholders get a cut, too; you don’t have to worry about transferring control of your company with this method, since you’re closing your doors.
Another, potentially very profitable, option is to sell your company to a friendly buyer. Passing on ownership can help you get a sizable chunk of cash for your business while letting you leave and keep the business open for others.
These are just a few possibilities, and your Michigan attorney can help you work through the one that is best for your business; you’ll need to end your contracts in many cases, or you may need to file paperwork to transfer the business to another.
Source: Entrepreneur, “Exit Strategies for Your Business,” Stever Robbins, accessed March 15, 2016