Do You Have an Exit Strategy for Your Online Business?

Most people spend a lot of time thinking about building their businesses up, but have you ever stopped to think about what you would need to do to if you wanted to ramp your business down or close it completely? Perhaps you’ll want to sell your business one day or pass the torch to a family member. Whatever the case, you should put some thought into an exit strategy.

There are many different reasons why people form and execute exit strategies for their business. Some of the time it is a planned event, such as retirement, or perhaps you built the business up enough to where you are ready to reap the reward of selling it for a big payoff.

   

While these are good reasons, sometimes leaving a business doesn’t happen by choice. You or a loved one might have a health crisis and you are no longer able to attend to the business. Maybe the product you sell is no longer relevant in today’s market, or a downward economy means that people don’t have any extra money to spend. Having an exit strategy in mind beforehand can mean the difference between selling your company for what it’s worth or shutting down your website and disappearing into the night.

Here are some exit strategy ideas for you to consider:

Shut It Down. Although this might seem like the easiest exit strategy, there are a few things to consider before you start announcing on your website that you’re closing down. Do you still owe anyone money, and if so, how do you plan to repay the debt when you no longer have the income coming in? If you are a sole proprietor, a larger income at the end of your business could mean a larger amount of income tax owed. If possible, run the business with no growth a few years ahead of your planned closing. Pay off any debt before closing. Pay yourself a larger income or give yourself bigger bonuses. Spread these expenses out over a couple of years. This will lower the amount of tax owed at the end, and and if executed properly you will simply shut down your store or website and walk away.

Liquidate. While selling everything at market value (or below) can be a quick way to shut down an online business, it also means you may have less income as your inventory dwindles. This could be a potential problem if you still owe creditors or have transaction fees accumulating on Amazon or eBay. If you have no other option, set aside an amount each time you sell something to ensure you have enough money to pay any fees and other debts.

Sell your business (and your business name). When you work from home and sell items on a website, such as eBay or Amazon, it sometimes doesn’t feel like an actual “business”. Keep in mind, however, that the business name you built up over the years established you as a brand. If your business was successful, you can generally sell the name and brand identity along with your customer base by advertising that the business is for sale.

You may wonder why someone would pay someone for a business name when they could just make up one of his or her own, but some people will buy the “goodwill” of an established business so they don’t have to start a company completely from scratch. Buyers will actually pay you for your reputation, website, trademark, logos, client list, and other intangible items. In some cases, you may find that the commodity of your name is actually worth more than the amount a buyer will pay for your inventory. This is something you should consider if your exit strategy is to sell the business.

About our Guest Blogger
This guest post was contributed by Kat Simpson. Kat is a trusted eCommerce author, speaker, educator, and entrepreneur. Kat Simpson has been a successful eCommerce merchant for over 10 years; is an eBay Education Specialist and Gold Level PowerSeller, as well as a successful Amazon merchant. Currently Kat is the hosts the popular weekly eCommerce Podcast That Kat Radio

 

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