Know How To Make A Profitable Exit From A Loss-making Business

As a business owner, you are constantly faced with the challenge of making decisions that can ensure your business’s long-term success. One such decision is knowing when to get out of a situation that isn’t profitable anymore. Making this decision can be difficult, but getting out at the right time can mean the difference between financial prosperity and total loss. In this article, we'll look at how to find the best opportunity for a profitable exit from a losing business. We will discuss strategies and tactics to help you make sound decisions and come up with an action plan that maximises your chances of successfully exiting while limiting your losses.

Fun fact: We got multiple companies here who identified the most profitable exit from their loss-inducing business after shifting their focus on different areas of the business to turn around their financials.

• Microsoft’s acquisition of LinkedIn in 2016 for $26.2 billion was considered a profitable exit from its loss-inducing business of online advertising.
• Google - The company's sale of its Motorola Mobility division to Lenovo in 2014 for $2.9 billion was considered a profitable exit from its loss-inducing business of manufacturing smartphones.
• IBM - The company's sale of its personal computer division to Lenovo in 2005 for $1.75 billion was considered a profitable exit from its loss-inducing business of manufacturing PCs.
• Oracle - The company's acquisition of Sun Microsystems in 2010 for $7.4 billion was considered a profitable exit from its loss-inducing business of developing and selling hardware systems.
• HP - The company's split in 2015, where it separated its personal computer and printer businesses from its enterprise products and services business, was considered a profitable exit from its loss-inducing business of manufacturing and selling consumer PCs and printers

Developing a clear exit plan; communicating those plan with the stakeholders; Identifying the potential buyers or partners; Negotiating the best deal possible; Preparing for the transition could be the cliff-hangers for the owners who want to manage their exits amicably or profitably from their business

* Maintaining transparency and open communication with the stakeholders throughout the process will help to build trust and ensure that the exit is managed amicably.

One of the most difficult decisions that a business owner has to make is when to make a profitable exit. An early exit can result in immature decisions and the loss of the slight possibility of regenerating the business.

However, a late exit from such a business can deplete your financial capacity, affect your personal savings, increase the risk of rapid failure, and pose a danger to your career as well as your successors'.

Identifying the right opportunity for making a profitable exit from a loss-making business is no easy feat. It requires an extensive and thorough analysis of all available options, as well as careful consideration of timelines, costs, and tax implications. However, if done correctly, it can be extremely rewarding financially and provide much-needed transitions to this difficult situation.

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Aruna Rajput (CRM)
Mobile: 8448459140