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Business owners developing new companies should always consider the end of the road. Commonly known as the exit strategy, these decisions determine the eventual outcome of the startup and allow a business to grow or even come to an end once specific benchmarks are reached. Two major types of exit strategy exist.
A success-based exit strategy determines what the owner will do if the company meets its predetermined goals. These include divesting ownership to members and managers or taking the company from a privately-owned to public entity. Since the tech boom of the early 21st century, another type of strategy has emerged. In this new strategy, the goal is to develop the company to profitability and then sell it to large competitors or interested parties.
Failure-based strategies deal with the possibility of a company's failure. This could be due to market forces, managerial mishaps or other unforeseen events. Typically this is a last resort option enacted only when specific benchmarks fall below an expected level. Such strategies include selling the business and its assets to the highest bidder or closing the company altogether to move on to other projects.
Exit strategies require hard decisions and expert knowledge. Business.com remains a great source for the latest information on the development of a solid exit strategy and other key business factors.