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The Four D’s of an Exit Strategy

By Pavilion


Running a successful business doesn’t happen overnight. It requires planning. Lots of planning! However, many people who are running successful companies don’t have exit plans in place. Not all business relationships end well, so you must plan for all four D’s of a business exit strategy.

  1. Death
    • The death of a small business owner should be considered during the start-up of a business. It is crucial to develop a benefit plan and determine who will take over operations.
  2. Disability
    • If the owner is very important to the business operations, the financial strain can impact the business and the family who depends on the income. Keeping your small business afloat will likely take precedent over paying a sick or disabled partner.
  3. Divorce
    • If partners are not getting along, how do you split up the partnership without financially devastating each other?
  4. Departure
    • Sometimes, you or your partner may decide to leave the business to take a break, retire, or another opportunity. Who will be doing all the work, and what will be owed to the departing partner, and where is the money coming from?

It is important to be prepared for all of these situations as they impact income, family, taxes, and the transfer of assets. Determine the value of your business annually, so you are prepared for any event that may arise, and you or your partner will be compensated in a manner that truly reflects the value of your company. Develop a benefit plan that will assist with the exit of each partner in case of death, disability or departure. Finally, plan for who retains ownership in the company and who gets paid out (and how much).

To read the full article, click here to visit About.com Small Business Information

Source: Brent Dees, Brent Dees Financial Planning

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How can Pavilion help?

By planning your exit, all parties involved are aware of the next steps. To receive your free Exit Planning Guide from Pavilion Business Services, click HERE.

Pavilion Business Services is here to prepare your business for success and growth in the years leading up to putting the business on the market.

If you’re thinking about selling your business, use the expertise and the range of services provided by Business Brokers. Get the maximum value for your business, contact Pavilion Business Services for a free consultation, click here.


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