Think About Your Exit Strategy

I know that it feels a bit odd to think about your business as something with an end before you even get it off the ground, but the exit strategy is one of the more frequently overlooked parts of a fledgling business plan.

It's important in that investors who want to see a return, will want you to think about where that money is going to come from. Not to put too fine a point on it - it's unlikely that it will come from direct profits in the timescale or quantity that will satisfy all but the most 'angel' of investors.

In fact, many investors will force your hand, and sell out (or go public) at the drop of a hat, if the going looks good, just to turn around their initial capital investment.

You can preempt all of this by taking a few hours to consider, if you had to, how you would get out. Here are some options:

• Retire - in other words, you leave the business when you've had enough, and either keep an interest so that the income can support you, or just never look back;
• Sell Out Early - find someone willing to take on the company as a going concern, or sell to a competitor;
• Float on the Stock Market (IPO) - this is interesting in that it can raise a lot of money an increase your personal wealth, but you may well find yourself deposed or sidelined as shareholder interest takes priority;
• Wind it up - just cease trading, sell the assets (if there are any), and do something else.

There are other options, but these are the most common. There are also businesses that are created purely with the end goal to sell out to a bigger company, and which don't make any money in the interim.

For these kinds of business, the Exit Strategy is the business plan, and it can be a hard trick to pull off!

By thinking about your exit strategy, you may even show investors that you are also emotionally disconnected from (but passionate about) the business, and are likely to make good decisions. You will also be prepared mentally for the end, and it will help you to formulate a worst-case scenario, if it all goes horribly wrong.

To end on a more positive note - a successful business that is sold to a competitor, or complementary business, will make you rich, and free you up so you can launch the next big thing!