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?
Exit Strategy should be planned during the business planning stage. So you always know the conditions in which you will Exit the business. This gives you an idea on how your plans will be throughout.
Nevertheless, Exit Strategy can be planned at any stage as the one who is doing business is a human and lives in Dynamic world where the market, society, relations and personal life may affect the decision for quitting the business.
To be frank only one thing is important, unless you start bearing losses, donot leave the business. Check the graph of your losses, if you find its increasing, sell off the assets and take whatever is left so that you earn something from it rather than loosing more.
All the best for your new Venture.
The easy answer is of course; right from the start. However, that also implies that you know excactly what the end result of your venture is, which is probably not the case. Depending on whether it is a product, a service, a new business model or any other propoistion - or any combination of these - the exit strategy will be different, require different resources - such as external consultants - and will need your attention at different points in time. So my advice is - stay clear of easy answers...
You definately need to start now.
It determines focus, startegy and organisation. Why waste time, years even by not understnding where you need to get to.
Treat your exit strategy target just like any other customer, what will provide the best value proposition at the end to the customer, they are the ones that are paying at the end of the day. If you answer that, then you know how you will build your business.
Does a builder construct without knowing what it is he or her are building?
You don't have to know the exact exit strategy because you can't predict the future, but you can plan for it. I think you should think about how long of a venture you want this to be, you should explore the different types of exit strategies i.e. different investor plans, acquisition, IPO, do you want to stay private forever or are you thinking about going public?
I think it is really important from the get-go to understand what your options are so when the time comes you are prepared.
It also allows you to properly plan and execute your plan. There are big differences between a 9 month app venture and a full-fledged business that could end up being more than just a venture.
I don't think you necessarily need to work with a specific consultant for an extended period of time, I just think you should spend some time thinking and doing some research on the different types of exits and how they apply to your venture before you move forward with the business.
You can't predict the exact final destination but you can prepare for the journey!
You should know your ENTRY and EXIT strategies before even start the venture. Why?
Perhaps the best answer comes from the behavioural finance. When people deal with uncertain and risky matters (like any business), they start behave IRRARIONALLY. I am not going to enter into details, but there are A LOT of different irrational behavioural patterns that are emerging under these circumstances. That is to say, that BEFORE you get involved into the venture, you think more RATIONALLY than AFTER you get involved. This inevitably means that your decisions BEFORE entering are much more valuable than AFTER entering.
This is a paramount rule for any trader - to know his/her enter and exit levels BEFORE he/she got into the trade.
When you start the company, glib I know but the earlier the better as it will tend to shape the other critical decisions that need to be made. Good ideas help but market share (or potential) and earning multiples are still the key attractions for investors and buyers.
ASAP. How do you know when you get there if you don't know where you are going? Yes get a consultant who specializes in exit or generational transition.
try: www.galliardinc.com You can find a certified specialist there.
If you are looking only to assist a new business to form then I would say an exit strategy should be a major part of your plan long before you begin anything else. I wonder though if thinking about getting out before you even get in may be the biggest fault.
You should always plan for exit strategy in any situation.You should have several options in the event your business don't go as plan and in the event it turn out better than plan. The ideal exit strategy depends on what ventures you're in and what your interest is. Because sometimes your exit strategy don't have anything to do with your current business. So, I still would like to have a three legged chair to stand on.
Exit planning should begin during your business planning stage. The form of corporate entity and whether you decide to protect intellectual property as trade secrets versus patenting, copyrighting, etc., and what parts of the world you will obtain patent protection, will have a large impact on your ability to effect an exit with a party of your choosing. Also, obtaining investment from a strategic (industry) venture investor will afford far gentler terms and less dilution in exchange for a "first look" provision on your proposed sale down the road. I have seen companies formed to develop a product line with a particular acquiror in mind. One must always be prepared to pivot if circumstances dictate and your exit target may be acquired or change its business model (sell of a line related to your product). One cam never start too early in planning an exit if that is your goal.
Good Evening Mr. McLaughlin. To answer your question as to whether or not you should have an exit strategy right now with your new business, I believe that you should. Part of your Business plan should include an exit strategy. You can seek the advice of a consultant and decide what the best strategy would be for you along with executing the rest of your business plan. This will allow you to understand where you are, where you want to go and where you want to be in the future should you decide to do something different. Hope this helps!!!
I believe that the "exit" strategy needs to be part of the business plan. It is the ultimate end-point of where you want to go. Happy to answer questions, etc.
You may contact me through a PM.
If you are asking this question, go read the E-Myth (and the rest of the series.)
I think you should have 'some idea' of what/if there is an exit strategy before you get started in the business. Also depends on how much you know about the business, and how long you'd like to be involved, or not.
It's never too early. In fact, you should have been thinking about your exit strategy before you ever started your business. Begin with the end in mind grasshopper.
None of us is going to run a given business forever. Knowing what you really want to do when you grow up is a great guiding thought and principle.
I suggest you read Tony Hsieh's excellent book Delivering Happiness. After he sold Link Exchange to Microsoft and netted $30 million-plus, he felt unfulfilled.
Before getting involved with Zappos, first as an investor and then as CEO, he realized that what he really wanted to do was meet and interact with exceptional people and create memorable experiences for himself and others. That realization has guided him through Zappos' growth and it's acquisition by Amazon for $1.2 billion.
He's now having a great time delivering happiness to millions of people. I wish the same for you Rob.
The decisions you make now (at start-up) can seriously impact on your eventual exit from the business. For example, your legal structure alone and even the Articles of Association can restrict how you can exit.
With this in mind, you should plan your exit strategy at the outset of your business planning and include it as part of start-up business plan. Furthermore, it should be reviewed and revised as part of your annual business planning and budgeting. This way, if need be, you can optimize your exit outcome by steering your business resources in the direction that your exit option demands.
However, if you don’t consider a strategy upfront and later try to make them fit, it might prove impossible and/or highly costly.
Note: most funders/venture capitals demand to know Exit Strategy before investing or loaning monies. However, if you are self-funding, then the call is yours.
I think having an exit strategy before starting is good. A few tips, is to describe what success or failure looks like and have a plan on next steps on if the venture is unsuccessful. The key is to be specific from the starts on when the assessment for an exit kicks in. For example, if revenue is till less than $10,00 after 6 months, execute exit plan. Hope this helps.
Dear Rob, you start as soon as you are starting up the business that is during consultation to find the one most appropriate to your business.
It might seem odd to think about getting out of your business when you are just getting it started, but planning an exit strategy at the same time as your business plan is optimal. It gives you a chance to think through your options in terms of financial goals and who you might choose to groom to take over for you. If you didn't plan a strategy at the outset of your business, then think it through as soon as possible. When you are having issues in your business or feel ready to try a new venture, you may find that because of lack of planning, you are stuck where you are.