WWondering what your business plans exit strategy should be? This is a valid question and not an uncommon one. There's a contentious debate about what the exit strategy should be included in a business plan at all. One school of thought holds that it's too presumptuous to speculate about, and that savvy investors will find the idea insulting. If there have only been a handful of IPOs in your industry in the past decade, don't you risk coming off like a dreamer if you mention in your start-up's business plan that you hope to exit by offering ownership shares to the public at large? Famed start-up expert and current investor Guy Kawasaki, for one, argues against the inclusion of an exit strategy in business plan documents for this very reason. But what if yours is an existing business? If you're putting the business plan together simple to seek expansion capital, or to put ideas on paper for your own benefit about what the roadmap could be going forward? Surely then there's no risk in an exit strategy, right? This can be debated, but most people would agree that including an exit in this circumstance is appropriate. But what are some exits you can choose from? A few appear below:
• IPO
• Buyback of investor shares
• Merger with a parallel business
• Acquisition by larger competitor
• Remain privately owned indefinitely
• Employee Stock Ownership (ESOP) scenario
There are other ways to exit your business, but these are some of the most common. Just be sure that your business plan, if it includes these hypotheticals, also posits some hypothetical rate of return (investor IRR) percentages for the investing parties. A formal proposition to investors is never a bad idea, even if it's just a starting point or a placeholder while you prepare for face-to-face meetings and negotiations. Need more help with this topic? MasterPlans.com is the industry's leading business plan writing company with more than 8,000 successful documents created to date. The team's deep experience with a variety of industries and keen financial modeling abilities can help you with your business plan exit strategy or any other part of the business plan. Call today at 877-453-2011.
