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Business strategy: Plan for the end from the beginning

The end-intention is always huge success, naturally. However, we have to bullet-proof against the risk of failure too. In business it is important to be both unwaveringly optimistic and to keep your feet solidly on the ground at the same time. With this in mind, if you are serious about making it in business, you have to firstly act and prepare definitely for success – yes. But you also have to know how to respond if you find yourself in a position where you need to close the enterprise down or sell the enterprise, possibly as a rescue deal.

If the business fails, it doesn’t mean you have to give up on the dream, but it may mean that sooner than later, you have to realise that starting again might be the best option. Remember failure can be the best teacher of what went wrong and can simply be that stepping stone in the right direction of eventual success.

Apart from cost savings and less frustrations that you benefit from early planning, in the event of closure, the fact of the matter is that preempting and preparing for such an eventuality can actually be a positive factor: one that helps you stay on track – and never close in the first instance.

Here are five tips to take note of so that if you need to, you can easily close or sell off your enterprise:

  • Identify each owner’s roles and obligations – It is important that you document each person’s duties, rights and interests. Depending on the type of enterprise there are legal and contractual steps that one can follow to make sure such is spelt out clearly. This makes it easier to divide assets, even liabilities and responsibilities, during the process of business closure.
  • Keep business loans separate from personal loans – When taking out a loan for the new venture and respective operating costs, make sure it is a business liability so that, if you are unable to repay it, your business will be blacklisted and not your personal credit profile.
  • Protect your intellectual property – Get the assistance of an intellectual property lawyer, and find out how to protect your ideas, products and business plans. These can later be sold as your property (tangible and intangible assets) if your business is failing and you are willing to let someone else try with your products and ideas.
  • Draw a well-drafted operating agreement to help resolve conflicts – Instead of wasting time and money in courts to resolve disputes, have a plan in place to decide on a method of arbitration in front of a neutral party to resolve issues effectively and as quickly as possible.
  • Take out insurance – Business insurance, such as cover against profit loss, closure and so on, is a very good idea as it can help you pay-off debts, give your employees severance packages and tie up any loose ends.

No one starts a business with the intention of it closing down or being sold under rescue. However, it is a reality for many start-ups – and ignorance is not bliss, more so in the real business world than we often imagine. These five guidelines will help you align your mindset on being prudent and well prepared for the unpredictability of business, and help set you up to be able to bounce back quickly from a sticky situation that may be encountered.

Proudly brought to you by the National Small Business Chamber (NSBC).