In nearly all the business plans I review for Tevel (the non-profit angel club I volunteer at), the last section outlines the company’s “exit strategy”. I was wondering if that’s some sort of requirement in writing business plans for investors? I don’t remember ever writing anything like this in any of my biz plans.
As I wrote a while back, I think it’s alarming when a company that has not even been funded yet is talking (or even thinking!) about exit strategies. In my book, a startup can only have a single strategy and that’s about how to grow it’s business. If “exit” is your strategy, it is almost guaranteed that you’re building for something small that will be easily swallowed (or worse – crushed) by the acquirers you’re aiming for. That’s a terrible strategy (unless your plan is to get hired to a company via an acquisition), and not one I ever want to invest in.
I’ve learned that exits have 2 inherit properties:
- They hardly ever present themselves the way or at the time you’d expect in advance.
- Real exit opportunities emerge only when you’re focusing on building a great business, not on exiting.
So my advice to entrepreneurs – drop the silly nonsense ‘exit strategy’ section from your biz plan, and focus on the ‘company strategy’ instead…
{image CC by tracer.ca. Thanks!}
