Many businesses go under without tasting success, but even those who have established strong foundations and riding on the crest of the wave cannot afford to get complacent. There is no single blueprint for success, only places dotted with tombstones serving as the evidence of failed business ideas and models. Focusing only on the positives is like building an organization on the quicksand, mistaking it for the concrete. It is the last part of the business plan which contains the key, in the form of the sound exit strategy. Exit Strategy in Your Business Model.
The Avenue of Escape
Business endeavors require you to commit to the process of perpetual learning, and figuring out ways of prospering, but also locating potential pitfalls that lead to financial ruin. The processes are undergoing a constant optimization, and integrated with latest tech solutions. One thing that does not change is the exit plan, something every businessman needs to be clear on. These notions influence how they are running the companies, and towards what end.
Some people plan on getting listed on the stock market, others want to pass on the torch to their children, but there are those willing to lead their ships through storms no matter what. In the heat of the initial phase of the startup’s life, and in an effort to overcome growing pains, business owners succumb to the temptation of spending the money they do not have in the bank account. Well, this is one of the most common mistakes leading to the fall by the wayside.
It is always necessary to manage expectations and make only the promises you can hope to deliver. Prioritize the tasks, and see what fizzles could lead to a possible disaster. In order to do that, the organization must encompass all the vital business processes, achieve impeccable product quality, assemble a clear business model, provide customer service excellence, and get a hold of money flows.
The killer products will not cut it if you do not make sure that you can supply and support the market. This involves defending it from other businessmen with deep pockets. Alas, you cannot always prevent the competition from taking away the marketplace and customers, meaning you should muse on such a scenario. One of the solutions could be merging: Two businesses can usually create more value than one, and the process can play out by one owner relinquishing all control and the other assuming the head role.
When the time seems right to prep for shipping out, some entrepreneurs opt for “let it run dry” exit tactic. It refers to the situation where you increase the personal salary and pay yourself a bonus. Note that at the same time, one should still strive to handle the debt. Another priority is to liquidate any remaining assets, and sell them at a market value. In partnerships, on the other hand, retiring individuals most often decide to sell their shares, preferably to the existing partners or a new employee.
Of course, being eager to sell means you could be at a disadvantage in negotiations. To make it worse, the internet market boom has revealed some potential hazards in the stock market. Namely, the IPOs’ prices fluctuate heavily, and take a prolonged period of time to prep. To cover the cost, though, one can go public and conduct intermediate funding rounds. The companies seeking to acquire other businesses want to keep the value for themselves, but the seller must not fail to come up with the own business valuation.
Some people tend to get lost in this decision-making labyrinth, and if you fall in that category, turn to companies and experts such as those from Pherrus Financial Services. You do not want to experience tax death due to your inability to grasp the financial aspect of leading a company. Remember that it is a good idea to act proactively as well, and identify companies that could be interested in making a good offer.
Selling outright is seen as an easy exit, and it provides you with the money from the sell or some equity in the buying organization. However, the list of possibilities does not end here, and you might have some other ace up your sleeve. Bear in mind that corporations adore startups that are just taking off, and will not hesitate to snatch the diamond in the rough.
Exit The Stage
To many people, it seems counterintuitive to think about abandoning the dream of owning a startup, when you have just managed to turn it into reality. The initial enthusiasm wanes, and once you reach a certain point, the fun is gone. Yet, less-than-stellar business stories can hold more wisdom that those depicting dazzling success. Do not let ego, overconfidence and dreams cloud your judgment, and always consider what comes after. If you can, get out of the firm cleanly, with earnings from the sale in your pockets, rather than fighting a losing battle to the bitter end.