What's Your Exit Strategy? Hopefully You Already Have One.

closeouts, shutting down business, liquidating inventory

One thing you never think about when starting a business is how you are going to get out of it. In fact, most business owners haven’t even considered it at a late stage in their career. But it’s important to not only think about how you will exit your business, but it’s imperative you have a plan.

1 Transfer Business To A Family Member. If you are fortunate enough to have children who want to go into your business, this would be an excellent option. It keeps the business in the family, where you can feel good about the security of the company and the level of commitment it will get. This is much better than selling excess inventory and closing your business. Although there would be many overstock buyers who would be interested in working with you in shutting down your warehouse and getting rid of inventory, it is much better to keep the company running and in the family. Not only will it support your children, but it will continue to generate future profits and create wealth for future generations.

2. Sell To The Employees. This is a pretty good option, too. You can avoid closing your business and you don’t have to sell excess inventory to other closeout buyers. You simply sell the business as is, including all assets and inventory, to your existing employees. You don’t have to worry about shutting down your warehouse because under this plan, your loaders and order checkers all keep their jobs. There will be no need to sell unwanted inventory or discontinued merchandise; it stays in the warehouse and you sell the complete package to your new buyer. They can determine if they want to keep the inventory levels as they are, or if they want to make a plan to sell overstock merchandise and get rid of obsolete inventory.

3. Explore A Merger. This one is a little tougher, but still a good possibility. If you do some research, you may be able to find a competitor in your space who is interested in merging companies. This can be a healthy option of both companies have something to gain by merging. In other words, if the whole is greater than the sum of it’s parts then this is a good way to go. Each company may need to eliminate and sell excess inventory so they don’t have duplicate stock or competitive lines.

4. Liquidate The Business. This is definitely another way out, and actually a very good way to get all your equity out of the business quickly. In this case you would contact overstock buyers, closeout companies and inventory liquidators who will buy all your inventory. Then you would auction off any other assets (desks, chairs, computers, racks, warehouse equipment, etc. This would all be for fast cash and you can walk away with all the proceeds. The downside is the business closes and does not live on. You will be shutting down your warehouse and closing your doors.

5. Go Public. This option is not as common as all the others because not all companies are in a position to go public, and not all owners are interested in this. Most business owners want to preserve the culture they have spent years building and nourishing, so they aren’t interested in having managers and an outside panel or board of directors voting on how the business will run. They also may not like the idea of being told what inventory to keep and what inventory to liquidate and get rid of. Most owners feel they know best which products they and sell and which are unwanted inventory to get rid of.

So as you see there are many exit strategies ranging from selling excess inventory to closeout companies and overstock buyers, to shutting down the warehouse, selling to the employees, or closing the business entirely. It is all a matter of which option you feel is best for you.