When an entrepreneur starts a business, it makes sense for them to consider what the long-term strategy is for the idea. If there is no way to create an exit strategy, it might not be the right business choice (depending on your life goals).
Let’s look at reasons every entrepreneur needs an exit strategy and the different types of exit strategy.
People Get Burned Out
If your business is run only by you, and you’re the only face of your business, it can cause serious problems with burnout. Forming an idea in your mind and putting it down on paper about how you’ll exit the business and approximately when, can help you avoid burnout because you know what the options are.
You May Want to Retire Some Day
Lots of entrepreneurs, especially individual freelancers and service providers, have the idea that they’ll simply work forever. The problem with that is that you’re probably vastly underestimating how you’re going to feel in a few years. If you’re 30 today, you have no idea how you’re going to feel at 50 or 60. If you plan for an exit, it doesn’t mean you have to stop, but it’s good to have a plan in case you ever do want to retire.
Helps Create Better Decisions
When you have your business planned out from start to finish, you’ll have an easier time making business decisions that work. If you are open to retiring and someone offers you money for your business, you may be more likely to take up the offer.
Enhances the Value of Your Business
Creating a business that can exist with or without you naturally ups its value. The reason is that it can essentially live forever if it’s adopting and changing based on the market rather than on the people working there.
To Make More Money Faster
If you’re open to selling and you build your business to the top of the earning curve, selling it at that point can be a real winning move. When you break it down mathematically, every business looks like a bell curve with a top-earning moment that can last for years and years – but probably won’t last forever. Selling at the top of the bell curve will garner you more money with less work than keeping it until it goes down.
Types of Exit Strategies
There are several existing strategies that you may want to investigate as you’re building your business, so that you can plan on doing what is most realistic for your type of business. Some options include an initial public offering (IPO), liquidation, mergers, acquisitions, selling and more. What will work for you depends on the type of business, the lifetime potential of the business, and more.
Every successful entrepreneur occasionally makes mistakes in their business. They wouldn’t be human if they didn’t. It’s all part of the learning process. Although mistakes are going to happen, you can avoid a number of common business mistakes. Download my free checklist, The 10 Most Common Business Mistakes at https://jonallo.com/mistakes
Author: Jon Allo