The Exit Plan.
MODULE 8: How to Do Business Exit Planning
“You wouldn’t get in a car and drive around aimlessly, hoping to eventually arrive at a pleasant destination. So why would you even consider doing this for your business?”
― Koos Kruger
Welcome to Module 8: The Exit Plan
At the end of the day, entrepreneurs and investors are in this for the same reason, to generate a return sufficient to justify the effort and risk. An exit can mean different things to different people so business exit planning is an important part of the process. Consider how you will define success and craft an exit scenario that satisfies your ambition. Be sure to ground your expectations in reality. For example, many venture capitalists seek opportunities that can gain massive scale so if you can’t see your business as a $100 million company in the future, VCs are probably not for you. However, success comes in many flavors and it is up to you to define it.
It’s might seem strange to spend time thinking about the end of your journey when you are only getting started but proactive business exit planning is a very important step in the entrepreneurial process. It’s critical to have a goal, a target, a measurement of success so you know what you are working towards. An exit can mean different things to different people; ranging from a merger/acquisition to an initial public offering (IPO) to a closely held sale to a plan to harvest the company’s cash flow or a liquidation. All of these options have pros and cons, this is definitely not a “one size fits all” analysis. Factors such as capital required to launch, growth prospects and your personal goals all impact the exit strategy for the business.
A compelling Exit Plan has the following:
- You have taken the time to identify your personal goals and your vision for the future.
- Exit options have been evaluated, the most likely option(s) identified (M&A, IPO, Strategic Partnership, License, Harvest Cash Flow, Liquidation), and succession planning is in place.
- Timing has been considered with respect to achieving goals based on expected performance and market comparables.
- Value has been considered with respect to achieving goals based on expected performance and market comparables.
- Your team and advisors have experience regarding exit planning and transactions.
- You are prepared to take risks, work hard and make sacrifices in order to be successful!
Congratulations on finishing the StartUp BreakDown. Remember, I’m here for you if you want me to review your business plan, answer questions or provide guidance.
— Craig Markovitz
Click to download your very own StartUp BreakDown template. Take the lessons from these 8 modules and apply them to a framework for your business or idea!
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