Starting A Business Abroad: Why You Need An Exit Strategy

Posted on 11. Jan, 2010 by Emmanuelle Archer in Blog, Expat Life, Working Abroad
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You’re busy getting your business set up, and planning your exit strategy is probably the last thing on your mind. You haven’t even fully started yet, why on earth would you be thinking of getting out of your business?

Figuring out what to do with your company when you no longer can or want to work in it is a key piece of your strategic planning. It’s also one of the most easily overlooked.

Put your mind at ease

I guess it’s like buying life insurance: we don’t like to think about it too much, so we procrastinate until it’s too late, or until we have to scramble to make the necessary arrangements at the last minute.

But like life insurance, it’s much better to take care of your exit plan once and for all. Get that out of the way, and then you can go back to fully focusing on growing your business.

Plan with the end in mind

Although it may seem counterintuitive, planning with the end in mind from the very beginning ensures that your whole strategy is aligned with your end goal. The nature of that goal will depend on your personality, your ambitions and your aspirations.

You basically have three exit strategies:
- Dissolving your business
- Selling it once it reaches a certain size, or revenue, or profitability level, …
- Selling it when you retire

Structure your business accordingly

If you’re comfortable with the idea of simply dissolving your company once you’re done with it, then you can run it pretty much the way you want. You can operate under your own name or under a simplified structure such as a sole proprietorship.

Conversely, selling your company can be part and parcel of your overall business strategy. If you are a “serial entrepreneur”, or just someone who enjoys a change of pace every now and then, it makes sense to structure your business so that you can easily sell it down the road.

In this case, you will want to create an incorporated company with a strong branding, a solid client base and well-documented processes. What can you do to build a business that will appeal to buyers when it’s time to sell?

If your goal is to create a legacy, you may want to find a local buyer or a partner to continue your business. Or you may want to pass your company on to your children when you retire. Does this mean that you need to start training someone now? Where can you find a suitable partner or prospective buyer?

Taxes, lawyers and other fun stuff

Don’t forget to take the legal and fiscal aspects into account. The amount of red tape involved in transferring your company (or even dissolving it) may vary widely depending on your host country. It’s well worth consulting with a business advisor, a lawyer and/or an accountant early on, so that you know exactly what to watch out for.

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Emmanuelle

Images via Storm Crypt (top) and peminumkopi (bottom), via Flickr Creative Commons