The Process of Getting Out of Business
Some business consultants believe that one of the most common mistakes of entrepreneurs is not having a game plan during the course of dissolving or transferring a business to another person.
By not being prepared with an exit plan, there will be a greater risk of disputes, lawsuits, and other legal ramifications.
One of the most common mistakes of businessmen is failing to have a complete game plan in business. According to business consultants, many people do not have exit plan that will be helpful when the time comes they decide to leave their companies.
While entrepreneurs have different reasons for leaving a business (e.g. it does not generate money or they want to retire), they have to prepare for this process.
Guidelines in getting out of a business:
Get authorization from other owners to dissolve a business
If a business is owned by two or more people, there should be a written contract that will state the consent of the other co-owners. To make sure that the agreement has no legal loophole, businessmen should hire a corporate lawyer to draft this.
Designate people who will organize the process of exiting in business
It is important to organize a team who will manage the three important aspects in business. human resources, legal, and finance. By designating leaders, businessmen can avoid lawsuits that may arise after their business is transferred to another owner.
According to experts, the team should be consists of leaders who have an expertise to a certain business aspect. However, this group should be small as possible to lessen the complexity of decision-making process, but large enough to be efficient.
Usually, the team is composed of valuation expert (also called business broker), legal counsel, and accountant who will be helpful in making the process of dissolving or transferring a business to another owner.
Review all the business aspect and identify problem areas
Businessmen should review all the possible problems which may arise during the whole process. These include expenses, worker’s benefits such as back pays and severance pays, potential disputes, and timeframe.
Compute the asset and establish a physical inventory
By having a complete inventory, businessmen can establish the approximate value of their companies, thus allowing them to make certain decisions regarding the distribution of assets and to prepare their tax returns.
All the interested parties should know what is happening in the business including competitors, target-market, contractors, employees, trade groups, contractors, creditors, and other aspects which are relevant in the process of dissolving or transferring a business.
Transfer all the contract obligations
Businessmen should review all the assets and obligations that will be passed to the new owner of the business.
Close the operation and bank account
This is when the production of goods and services will be stopped. After settling some obligations including debts and taxes, businessmen should also close their business bank accounts.
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