What’s Your Exit Strategy?
What is an exit strategy?
It can mean three things:
- What you plan to do once your business hits the goal you set, and how you step away after you get there.
- How you plan to recover if your business fails.
- How, when, and why you sell your business.
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Who should have an exit strategy?
Simply put: everyone. If your parents were anything like mine, you heard something like, “It’s fine if you want to be an athlete. But you still need to study and earn a degree in case you get hurt and can’t play anymore.” Or something along those lines. That is because we cannot predict the future. The same rule applies in business.
If you do not have a strategy yet, you are not alone. It has been shown (for example) that 48% of entrepreneurs look to sell a business without a prepared exit strategy.
What kinds of strategies exist?
There are two types of exit: the positive one and the negative one. The positive exit lets you leave with some profit, a reward for all the labor and sweat you put into your business. The negative exit is the one that lets you get out before you crash and leave with nothing, and in the worst case with debt. The goal is always to exit in a positive way.
Common exit strategy ideas:
- Hand the business over to a successor
- Sell the business to the employees
- Sell the business to a third party
- Liquidate and close the business