When an entrepreneur starts a business, it makes sense to consider what the long-term strategy for the idea is. If there is no way to create an exit strategy, it may not be the right business choice (depending on your life goals).
Let’s look at the reasons why every entrepreneur needs an exit strategy and the different types of exit strategies.
people burn
If your business is run only by you and you are the only face of your business, it can cause serious burnout issues. Forming an idea in your mind and putting it in writing about how you will go out of business and approximately when can help you avoid burnout because you know what the options are.
You may want to retire one day
Many entrepreneurs, especially individual freelancers and service providers, have the idea that they will just work forever. The problem with that is that you’re probably grossly underestimating how you’re going to feel years from now. If you’re 30 today, you have no idea how you’ll feel in your 50s or 60s. If you’re planning an exit, it doesn’t mean you have to stop, but it’s good to have a plan in case you ever want to retire.
Helps create better decisions
When you have planned your business from start to finish, it will be easier for you to make business decisions that work. If you are ready to retire and someone offers you money for your business, you are more likely to accept the offer.
Improve the value of your business
Building a business that can exist with or without you naturally increases its value. The reason is that you can essentially live forever if you adopt and change based on the market rather than the people who work there.
To make more money faster
If you’re willing to sell and build your business to the top of the profit curve, selling at that point can be a real winning move. When broken down mathematically, every business looks like a bell curve with a peak profit moment that can last for years and years, but probably won’t last forever. Selling at the top of the bell curve will give you more money with less work than holding it down.
Types of Exit Strategies
There are several existing strategies that you may want to investigate as you build your business so that you can plan to do what is most realistic for your type of business. Some options include an initial public offering (IPO), liquidation, mergers, acquisitions, sales, and more. What will work for you depends on the type of business, the lifetime potential of the business, and more.
