As most of all know, not everything goes according to plan for a business. Errors, mistakes, and miscalculations will happen as long as a company is standing. Fortunately, most of those problems come with well-planned and well-executed solutions. Running a business involves creating safety nets, ensuring that entrepreneurs can handle a crisis or a controversy.
Businesses encounter so many issues that require immediate attention. Most of them result in financial losses, but you can recover from those. Some might lead to losing customer trust, which will require public relations solutions. However, one issue you might want to avoid is business closure. Entrepreneurs don’t want to see their dreams fall after working hard to create them. However, the practical approach is to create safety nets for that situation as well. Here are a few things you can perform should you find yourself in a business-threatening problem.
Seeking a Merger or Acquisition
Business closure can happen in many forms. One of those options involves having no more funds, resources, or personnel to run the direct operations. You might be receiving profits, but they are not enough to sustain your company. Fortunately, there remains hope to continue running your venture. However, it does come with a cost.
A merger can help you seek support from another business, combining resources to ensure that operations continue to flow. However, you might end up losing control of your company depending on the agreement. Your business partner might want part of your company, and you have no choice but to accept it due to desperation to save it. However, you must determine if the merger is a good fit for your business.
An acquisition, on the other hand, is a more direct exit strategy. When another company buys your business, your ownership is part of the deal. Both deals require you to valuate the business before negotiating price terms. Some offers might be higher than the estimated price, especially when they come from direct competitors.
Grooming Another Person to Take Over
Your business might not be booming, but it remains a profitable venture. When you reflect on your actions, you might think that the reason for the struggles is you. Maybe you are not the right person for the job, leading you to find an experienced leader to take over the helm. That professional might already be in your company, maybe even your second-in-command.
However, this exit strategy should only become an option when you feel like you are no longer adapting to the competition. You may remain in the company when you take that approach.
If you want to sever ties completely, you can transfer ownership to the person you want to take over. However, disclosing liabilities and issues should come first before the sale to avoid destroying professional relationships. It takes a lot of guts to accept that you are not the right person for the job. The exit strategy might be a heartbreaking one, but it could benefit your venture.
Starting a business requires you to find creditors and investors to fund operations. They are the people you want to please the most because they supply your operations and efforts with financial resources. Unfortunately, your business might not be racking enough profits to grow. If you are struggling, you might end up with a ton of debt to your creditors and investors. Entrepreneurs could attempt saving graces, but they might not work. In the end, you might feel stuck with a struggling business and disappointed stakeholders.
The exit strategy should be liquidating your assets, which signals business closure. The equipment and supplies you have will turn into cash, which you will have to give back to your creditors and investors. Liquidation means you no longer have a business, making it a clear-cut strategy that lets you walk away with nothing but an experience you might want to improve.
Entrepreneurs are relentless and passionate, which means they might perform multiple attempts at salvation before calling it quits. But they might reach a point where profiting is a lost cause, leaving a ton of debt instead. If you are in that unfortunate situation, the best thing to do is abandon ship and prevent the debt from swelling.
That leaves you with one last exit strategy, which is filing for bankruptcy. The option might help you relieve your financial troubles, but it means that your business is no longer running. Filing for bankruptcy can be tricky, making it necessary to learn what you can about it.
A true entrepreneur prepares for any situation, even the worst ones. Should your business enter the moment that involves closure, the safety nets should be readily available.