At what point should I start thinking through an exit strategy?
I'm thinking through the business plan for my next venture and I'm not sure what the ideal exit strategy should be. Should I work with a consultant and decide ASAP or can I afford to wait and see how the business pans out first?
The word "strategy" makes is seem like this has to be a big, formalized endeavor. It's good that you are thinking about it now. Without knowing more specifics, my best advice would be to keep the same alert and mindful attitude that you have right now. Obviously, there are threats and opportunities in your future that can't be specifically described at the present.
Put something in your plan then toss the whole plan out. :)
Hi Rob, When you are building a business plan, you should consider all the variable can affect it and how can you solve it. My recommendation should be to watch what are de limits of your proposal and develop an exit strategy.
Short answer (given by others as well) is "right now."
The longer answer is to have a plan of what you're doing with your life beyond your "next venture" - and the venture after that...
I suggest developing a hierarchy of outcomes: a) going up (bigger chunk) and b) going down (smaller chunk)
To go up, what's your answer to the question "What will your next venture give you?"
What ever your answer is (say it's "Financial security, and a sense of achievement") feed the answer into the same question form: "And what will 'Financial security and a sense of achievement' give you?"
Keep repeating this format until you can go no higher.
To go "smaller chunk" ask, "in order to have your next venture, what do you need to do first?" And feed the answer int the same format.
This gives a hierarchy from something really tiny (like "pick up the phone") to something massive and unconscious like "Peace, purpose"
It should also let slot your ventures and consequent exit strategies into the broader, unconscious plan of what you want to do with your limited time on this planet.
Best to have an exit strategy form the beginning. A good consultant could do this with you in a couple hours IF you have a vision and business plan. This is a decision with only a limited number of options based on your industry, business model (revenue, margins etc.), and other factors. The main problem is usually some iteration of the business model happens as you enter the market which could change some of these things. You not knowing this says you need a mentor or coach who has built a business before. Building value is the first step and many proceed without this plan but I could not say without seeing an executive summary. Alternately you could get an advisory board together but early on a single highly experienced entrepreneur with gray hair is best. One phone call can save a lot of research, worry and money.
I have been working with a client for almost 4 years on an exit strategy. That business was mature but the point was that there were several deviations along the way, details not known or considered at the point. For a start up if you aren't sure if you want to be in it for 5 years or 15 then you might not be looking for a strategy that is solely about time. What I do for clients is to create "Trigger Metrics (TM)" that allows decisions and actions to be hinged to measurements, whether they are financial or operational so they may or may not be time specific. But really, most important is do not hire a consultant unless you have a strong idea of what you want, when you want it or what conditions create actions and opportunities for you otherwise you risk money less well invested. I only do exit strategy plans, for example, if a client can answer those basics for me then we do the detail, otherwise you might be doing what you think you should be doing but not what you need to be doing.
when I have only two more options left, i.e. exit or restart
The exit strategy is one of the most important parts of the business plan, if not the most, when you are seeking VCs.
Rob, Your business plan is your road map.
Just as you plan mile stones along the way up.
You should be putting in place Points of concern.
With then you should also plan what "counter measures" you would consider to turn things around. (It's a bit like a "Disaster Plan")
Within that side of the planning you will finally end up at the point of "No Return"
Many people become extremely burnt simply because they
1) Failed to read the sign posts.
2) Failed to plan - (have a action plan in place)
3) Became to emotional or attached.
The time to overcome all of this is at the beginning, when you are thinking before you are doing.
A great business plan is balanced on both the positives and the negatives.
No body want to go there, but it you are not prepared. your not prepared.
Early. Assuming you didn't get into a business that you intend to die owning, you should structure your business with several specific goals:
1-WHEN do you want to exit?
2-HOW much capital/income do you want from that exit?
3-HOW do you need to structure the business (repeatability of systems, employee training, replacement training...)
When done correctly your business plan becomes your exit plan
Unless you have all the money you need to start-up and reach your vision, you'll need the exit strategy well researched, analyzed and ready for presentation BEFORE you make any pitch to potential investors.
My professional advice is to engage a consultant to help you with a professional report , the content of the report should have optional exist strategy , justified reason to different exit strategy, product life cycle extension on diversification is any should be considered, review of existing business plan. Professional with a mix ideas and experience will be of advantageous to your firm.
Think people really detailed this. Be maybe you should add a succession strategy for the company to the exit strategy from yourself at the start as well.
Although the word exit, sounds like your out, finished, cashed up, whatever, IMO, exit strategies are much more, exit strategies should be thought of as, trigger points, so, what happens, when this happens or what happens when we achieve this, all of these are 'exits' from the current path, sometimes it will involve cashing up, other times it may need restructuring or new machinery, all of which need some kind of implementation strategy at the creation of the business plan.....
Fiona, Mel and Mikael are right. You must know/see the end since the very beginning
Practically, I would go with all the expert consultants who seem to agree on their response to your concern... Exit Strategy is as an important element of the business plan as the Methodology to develop it. However, philosophically, it will depend on what objectives you have in mind (primary, secondary, tertiary... so on) from the activity you have undertaken...! Remember the Cheshire cat from Alice in the wonderland...!?!
I'd strongly recomend to do it now, when your are working in the Business Plan, even when it may change with the time. Hope it helps.
The moment after you decide to start a business is when you should think about your exit strategy. You need to decide if you want to grow a business that you can run for the rest of your life or if you want to build a business and sell it.
Not everyone is good at growing a business and then running it - at some point most business founders realise that they need to hire someone to take over the day-to-day running of their business.
It is always best to know right from the start roughly when that time will be then you can plan accordingly