This week is the SBA's Small Business Week, so we'll be featuring legal advice for small businesses all week long. Today's topic is closing up the shop you opened -- how to sell or end your business.
Most entrepreneurs don't want to think about walking away from the companies they've founded, but that day comes for almost all of them. Whether you're moving on to the next big challenge or riding off into the sunset of retirement, the day will come when you and your small business part ways, so here's how to be prepared and to sell or end your business in the right way at the right time.
Have a Plan
A recent study showed that over half of all small business owners planned to depart from their business sometime in the next decade, but of that group, almost 75 percent, had no definitive exit strategy. Knowing you're going to jump ship without knowing when, how, or into which other boat is what gets so many small business owners in trouble.
Knowing whether you plan to sell or transfer the business, and to whom, can ease the transition for all involved. Whether you want a partner to buy you out or to sell to the highest bidder, you need an exit plan. (And many entrepreneurs are building their exit strategies into their business plans from the start.)
Have a Purchaser
If you're selling your small business there are a few things you'll want to have lined up first. Adding value to your business, organizing your books, hiring a business broker, and putting together a tight sales contract will mean getting more bucks for your bang come sale time.
And not every sale is the same -- knowing whether an outside takeover or internal transfer is better for you, your colleagues, and your business is essential.
Have a Proceeding
Sadly, not every small business succeeds -- that's just a fact of the market. But there are better and worse ways of ending your non-performing business. Before shutting up shop, find out whether your small business should file for bankruptcy (and if so which kind), as well as whether you or other partners are personally liable for the business's debts.
Putting together an exit strategy, a sale contract, or a bankruptcy filing could all use some legal advice. If you're thinking of selling or ending your small business, contact an experienced commercial attorney near you.
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