“Your Exit Strategy”

For most entrepreneurs, the journey to success and prosperity starts with a vision. When properly developed, this vision soon formulates in to a plan of action which some professionals like to call a “BP” or “Business Plan”. A typical business plan should consist of all the basic pieces, but certain sections may be omitted depending on the product or service offering. One section that I feel should never be omitted is the “Exit Strategy” portion. From personal observation, the majority of business plan templates have disregarded this section. When you walk into someone’s home, building or facility, there is always an exit. When an issues arises there’s always some alternative available that will help you resolve an issue. Whether your house is on fire or your business is crumbling, there should always be more than one way to escape. Exit strategies are alternatives that can be implemented in negative and positive situations.

Acquisition is one option that can associated with your exit strategy. According to Robbin Abrams, author of the Six Week Start Up, a company can be acquired by another entity if it is a good fit for the larger company. For example, a well developed company presents several opportunities for other companies that lack in certain areas or may be looking to expand a product or service offering. The key word here is “DEVELOPED.” An advantage that comes along with the acquisition strategy is the number of interested parties that may be willing to buy your business. In some cases, multiple bidders present offers to a company and this can be used as leverage in the negotiation process. Abrams states that the price of a company can skyrocket to stratospheric levels when this situation occurs. However, there is one major factor to consider with regard to the objective of an exit strategy. Abrams insists that when you construct your company around a specific “be acquired” market, you set limitations on who you can market your business to. This is the REAL reason why the addition of your exit strategy is important. The exit strategy not only provides you with a way out, but can assist you in the development of your business. We are now in a situation where we are attempting to sell a percentage of our business, but if our concept hasn’t experienced any growth throughout the life of the company then the probability of the business being acquired decreases. With no definite direction for the long-term future of the organization, peaking the interest of other companies will be added to the task list. An idea is to target a few industries and develop a plan to expand and test those markets. This presents us with a realistic long term outlook and can provide an analysis of our current plan. Who knows, maybe we won’t have to sell the business at all because of the ideas that were generated from the innovation process. In order for this acquisition strategy to be implemented, this development process must take place.