The Importance of Having a Proper Exit Strategy When Selling an Online Business

Selling an online business is a process that may initially seem complicated, but hiring the support of an experienced online business broker can be made that much easier. It is equally important to consider the exit strategy that you will use after it is time for you to officially leave the company and hand it over to the new manager.

The key to success is having a proper exit strategy. An exit strategy is a detailed plan for how investors or business owners will exit their business and get back their investment. It’s a plan to help people make better decisions, bring in more investors, and make sure the change goes smoothly when the time comes. For long-term success, whether you are a new business owner or have been in business for a while, you need to know how important an exit strategy is when it comes to financing your business.

What Happens When It’s Time to Move On?

The excitement of the beginning is often quite addicting for entrepreneurs. The concept of taking something and turning it into a complete business is exciting. However, this causes some entrepreneurs to miss out on the proper exit strategy to use in their company.

According to a study completed by BMO Wealth Management, around 65% of small business owners don’t have a plan in place for selling their company. That can prove problematic if you choose to sell your online business with the support of an online business broker.

It is far better to get the support of an online business broker and establish an exit strategy well in advance of actually listing the company.

Why Is It Important To Have An Exit Strategy

eCommerce entrepreneurs require a comprehensive exit strategy for three main reasons. First of all, this helps the business run more profitably and more smoothly. Next, having an exit strategy is critical in the often-changing world of e-commerce. It is a good idea to have a strategy set aside for when it is indeed time to move on.

Finally, investors love looking at an exit strategy in order to have a clear idea as to exactly when they may be able to see their investment come back. It might seem unreasonable right now to contemplate exiting your business, but there are plenty of reasons that these plans need to be generated immediately.

Exit Strategy Selling Business – Biggest Reasons to Plan Now

Some of the most popular include investors wanting to see when they are going to get paid and how life throws you a curve-ball that leads to a sudden departure in the business or retirement.

As you choose to move on to new projects and wrap up your involvement in this current business, you need to ensure that you have thoroughly thought out exit strategy possibilities. These can include mergers and acquisitions, and these strategies should always be developed with the consideration of your online business broker.

In addition to mergers and acquisitions, you can also use the exit strategy associated with selling to an individual. This is a great opportunity if you have someone who is already looking for a new opportunity, but you need not limit yourself to only those people you already know.

How to Determine the Proper Business Exit Strategy When Selling Your Business

Not every business sale goes as planned. When selling an online business, you might sell for less than it’s worth if you don’t have a proper business exit planning. You need to come up with a good strategy if you want to maximize value and make money while you are at it. When determining a business exit strategy, you can consider your needs and wants, your business’s situation, and possible exit strategies:

Needs and wants

Consider how much money you need to secure your lifestyle, pay off debts, or invest in other opportunities. You can also think about your tax implications, cash flow, expenses, emotional needs, and attachment to the business, team, and customers.

Business Situation

Assess your business’s financial health, customer base, and the industry. An independent business valuation can help you determine the right time to exit, set realistic expectations, and negotiate effectively.

Exit Strategies

• Initial public offering (IPO): This type of exit strategy happens when a private company offers its shares to the public, which can then be sold for the public trading price.
    
• Liquidation: A plan to sell all assets and business to pay off debts and stakeholders, which is often used when a business is no longer profitable. The liquidation purchase price can be decided by you.
   
• Family succession: This is the easiest strategic decision and most common exit strategy. This process involves a family member stepping up to assume responsibility for your business, while your as the owner retains some control to keep the business in the family, which can help preserve their socioemotional wealth.
   
• Management buyout (MBO): The company’s management team buys the business from the current owners. This strategy can ensure a smooth transition because the new owners are already familiar with the company. However, the management team may need to secure significant financing, which could be a challenge.
   
• Merger and acquisition (M&A): The business is either purchased by a buyer for a strategic aquistion, financial buyer, or private equity or merges with another business that has similar goals. A third party company, such as a competitor, may want to acquire the day-to-day of the business to increase market share, diversify, or gain access to talent, supply chain, or products.
  

Finding the Right Buyer

A brokerage service can help you to find a willing and able buyer, and this person will be able to step in and tell you what the company is worth and then use their network in order to find a buyer willing to pay that price.

This may also lead to a higher selling price, although it may be connected to your personal exit from the business as well. In all of these situations, the support of an experienced online business broker is extremely important.