Business exit plans or business exit strategies are ways of cashing out investments. When a business is created, the business strategy states or charts the way for a company to continue and possibly develop, thus adding value to itself. An exit plan is usually included and defined in the home business plan which is part of the business plan.

This is imperative because at some point small home based business owners, entrepreneurs or venture capitalists would like to part ways with a company in order to harvest their investments. Some investors could decide to leave a company to pursue other interests. Some could decide to retire. And others may be forced to part with a company due to illness or some other tragic situation. In any case a good exit plan will help reduce the complications which may prohibit a successful exit.

3 Common Types of Exit Strategies

Succession
This preference is preferred by business owners who have kids and would like to hand over the business to them in 30 years or so. However, there is no assurance that the offspring would be interested in the business when the time comes. Business owners with this exit plan should attempt to get their kids interested in the business from a young age through involvement to increase the chances of them being interested in taking over the company in the future.

Liquidation
Business owners or sole proprietors usually decide to close their doors permanently when:

For some reason, a company owner has to retire and all other options are found to be not viable.
A business is too dependent on a particular skill the owner posses yielding it unfeasible to handover the responsibility to a family member or an outsider.
No one is interested in taking over or buying over the company.

Please keep in mind that before a company is legally allowed to cease business it has to first fulfill all the legal demands. Such demands would include settling all outstanding arrears and meeting all other obligations. Sometimes, after settling all outstanding arrears and liquidating all assets, the business owner is not left with much.

Moreover, liquidation will erase the value of the company's name, business associations and client lists which the company has built up over the years.

Acquisition
This may occur either through management or employee buyout or via a sale to some other company. Before a sale can be closed, the business must first seem to be an attractive investment. Most businesses are snapped up because they have a particular strategic advantage that could give the purchaser a synergistic value when acquired.

A company will seem more appealing if:
- The company is seen to be continuously making a profit
- The company has good customer base due to its money making products
- All company assets are in good condition