Planning an taxi business exit strategy

Planning an taxi business exit strategy

The time comes for every business when an owner must exist their firm. For taxi firms and independent drivers, an exit typically means closing or selling the business. For example, a sole trader driver could sell their car, brand and contact list, whilst the owner of a firm could sell their shares. Whether you intend to sell your business, or just stop working and let the business dissolve, it’s important to plan so you exit your business on your terms.

When to exit

Selling a business does not usually happen quickly. You must identify a buyer, allow for legal process and transition the business across. This means knowing you want to sell your business in advance and transitioning to a defined timeline. Similarly, shutting down a business requires paying off taxes and completion of any outstanding commitments, so adequate planning is required whichever route you take.

It’s recommended that you anticipate when you will leave your business and what you want to achieve from an exit. Do you wish to retire with a lump sum, sell your assets or just move to something new? There’s no right or wrong answer, but whatever you decide you should give yourself plenty of time and opportunity to ensure that what you are doing day-to-day is supporting your exit ambition. If you wish to sell your business, do you know how much you want to sell it for and is what you are doing day-to-day helping you achieve this ambition?

How to exit

Your exit strategy will depend on how you wish to exit. As an independent driver, you may decide that you just want to stop the business and keep your car for private use. In this case it may well be as simple as ensuring your taxes are paid, cancelling any contracts and turning your phone off. However, it is worth considering selling your phone number and address book to another driver, even if you are not selling a business.

However, you may look to sell your business as a going concern, offering your branding, assets and customers to another driver or firm. Whilst this is generally relatively simple, it is highly recommended you involve a solicitor to provide a contract so that both you and the buyer are fully aware of the arrangement you are entering. Quite often buyers include a non-compete clause, which prevents you from re-engaging your clients and starting another taxi business for a specified period of time. Involving a solicitor is essential if you are selling a larger business with employees or significant assets.

Succession planning

Exiting a taxi business ultimately comes down to planning and timing. Once you know what you want to do, you can take control. Professional advice is always recommended, but it starts with you and a plan. Remember, the desired outcome does not always happen so be prepared for contingencies. You may not be able to sell your business and you may be liable for unexpected taxes. Whilst planning improves the chances of your desired outcome becoming reality, don’t assume the perfect buyer will come along and you’ll smoothly transition exactly as you expect.

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