Every entrepreneur starts a business with a vision and a problem to solve. Creating the product or service is only the beginning, getting customers and scaling your business and maintaining your dream and vision along with your growth may be a challenge. Last week Groupon’s CEO and co-founder, Andrew Mason, made an exit and tweeted his message to employees :
— Andrew Mason (@andrewmason) February 28, 2013
Here are some ways that Small Business /Start-ups can think about an exit strategy:
- No Exit : You made a lifestyle choice to run a small business and you want to stay, grow and nurture the business and possibly hand it over to younger members of the family to run. Or you plan your funding in such a way that you grow along with the company and bring in the the expertise you need. Maybe Google and Facebook are examples of this
- Opportunity Exit : The business is doing well and an exit is not on your mind but circumstances change and you get an offer you cannot refuse
- Planned Exit : You realize you have grown the company beyond your wildest dreams and the growth and scalability depends on getting funding and the bringing in a management team that can take the company forward. I would like to think this is difficult but has been done
- Unintended Exit : There could be several reasons here and this can be hard but not uncommon. Specially in businesses where a large amount of capital is necessary and the funders of the capital have or would like to have more control on how their money is spent
- Conflict Exit: The team that founded the company realize they have to part ways and many a time this is not a pleasant exit. The blow can be softened by having a plan for such an eventuality at the beginning phase itself.
As you think of starting a business or scaling your business, you should think about the ‘cost” of getting financed. Would love to hear from you on your experiences on exit strategy for businesses. I heard a VC say one time that the best business is one where the entrepreneur does not have an exit strategy and is in the business for ever. What do you think ?