Navigating the Path to Your Next Business Venture

At some point, maybe sooner rather than later, as a business owner, you are going to want to exit your business. Whether you’re winding down or are keen to pursue a new business venture, the decision to exit your business is a significant one to make and requires careful planning and consideration. Therefore, creating a solid business exit plan is a good strategy to have in place whether you’re planning to leave as soon as possible, or thinking ahead to the future   

For some business owners, the catalyst for succession planning and seeking a business exit is often retirement, however, sometimes a fresh start or a new venture can spark the thought process for business owners. Whatever the reason may be, ensuring a smooth exit and achieving maximum value takes a well-thought-out business exit plan.    

How to exit a business?Before making any decisions and putting together an exit plan, it is important to be clear on the reasons you want to exit your business. Are you nearing retirement and want to start winding down? Do you want to release some cash to enable you to travel or pursue some lifetime goals? Are you losing interest in your current business and keen to explore a new business venture?

What is a business exit plan? A business exit plan is a strategy that a shareholder or business owner makes to sell their company/share in a company. It is important as a shareholder that an exit strategy is carefully thought through.   

Planning your exit strategy: There are different ways to exit a business, and various options available to you when exiting your business.   

• Trade sale – selling the business on the open market.   
• Management buy-out – A management buy-out is often an easier way to exit a business, especially when some or all the management team have first-hand knowledge/experience of the company.   
• Passing it on to a family member – For many family-run businesses, passing the business on to younger family members, often children, is a time-honoured tradition. However, it is important to not let this tradition cloud your judgement into passing your business onto someone who is not equipped for the role. There are also a number of different options for the best way of bringing younger family members into ownership, and it is key you seek professional and tax advice on this.  
• Employee share ownership – We believe that employees having some share in equity is a key ingredient on the journey to business exit.  There are several ways this can be done, including staging their route into equity.  It is important that it is not employees just getting shares ‘on a plate’, but there is a mechanism where they can ‘earn’ their way into share ownership.  We find that empowering key employees, providing high incentives and a share in equity can have a significant positive impact on the business, which in turn facilitates a significantly more valuable business on exit.  You can also be safe in the knowledge that your key employees will have the skills and experience to continue to drive your business forward.   
• Wind the business down – Winding down a solvent business or a member’s voluntary liquidation is another possible exit strategy.  However, it usually only applies if the business has suffered losses or challenges, and the process needs taking care of by a professional advisor.   

It is often advised to have a plan A and plan B, to account for any unforeseen circumstances. Each option has its own set of challenges and implications when exiting a business, so it is important to choose the one that best suits your goals.  

Preparing your business for sale: Regardless of your reasons for selling, you are going to want to ensure that you are gaining the maximum value out of your business.  After all, you’ve spent years building it up to this point, so you want to ensure that you’re maximising the value before the sale. Therefore, part of your exit plan should be focusing on how to boost the value of the business prior to exit.

Seeking professional advice: Exiting a business is a complex process that involves legal, financial and tax intricacies. We advise seeking professional guidance for advice on business exit and succession planning.

Exiting your business as a sole business owner is a significant life and career decision. It requires careful planning, clear goals, and a solid understanding of your motivations. So, ensure that you carefully consider what it is you want to do next, and how much money you are likely to need for those plans. A clear idea of your future plans will help shape your business exit plan.  

We have compiled a free comprehensive PDF guide you can download here:

As always, we recommend speaking to your advisors about the best steps before making any changes. If you would like to discuss business exit options, please get in touch. Our tax advisors are skilled in such transactions and can navigate the process smoothly. For more information on how we can help you and your business, please contact us via info@oldfieldadvisory.com or call 02476673160 for support and advice. Let’s work together to grow and strengthen your business.

Please note: This article is provided for information only and was correct as at time of writing (07/11/23). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.