Your Exit Strategy
1. In 5 years if my business is returning profits of more than 10 million a year, I would protect the venture as a family business and pass it down to my family. However if the business has been mildly successful over the 5 years, I would strongly consider selling it to a larger corporation for a large return so that I do not have to worry about running the daily operations that a business entails.
2. I choose these exit strategies based on the amount of money that the company will have brought in over the 5 year span. If a company is highly profitable, there is no reason to sell it for a lump sum when you can bring in recurring revenue every year for the rest of your life.
3. I do not think my exit strategy has affected how I identify an opportunity. However, it definitely affects the way I plan on acquiring resources and growing the company. I definitely want to put more resources in to the company and grow it as big as possible so that I am bringing in enough profits that I can keep the venture in the family. However if the resources do not help the company grow, I would limit the amount of resources I would acquire and just sell the venture in 5 years.
I think your exit strategy is right on point. I am a strong believer in keeping something going if the money is right and you are in it for the long term. It is smart though to keep your eyes open and realize that after 5 years if things aren't working out for the best that it may be time to sell the company and move on. Your idea is great and I still look back and think you have a great chance of connecting with large corporations to buy your software. Keep your strategies open and I think you will know what to do when the time is right.
ReplyDeleteReed,
ReplyDeleteYou chose an excellent exit strategy that is depended on future outcomes, rather than optimistic aspirations. You marked specific profits that would determine your course of action. I think it's smart to sell the business to a larger corporation if you aren't making a lot of profit because you'll likely lose more money if you don't sell. However, if the business ends up exceeding your profit expectations, I can certainly see this business idea becoming a family tradition. Family-run businesses have been around for centuries, and one's like the Rockefeller's are an excellent example of the potential a business can have if it is kept within the family. You'd of course have employees from outside your family, but the decision-makers, the board of directors, would likely consist of your family members.
hey Reed! The exit strategy is so crucial to finishing a business successfully. It is also incredibly important to have in the back of your head what you want to do with it in the end. This is helpful for decision making throughout the process of building your business.
ReplyDeleteHello Reed, I agree with your approach, with that type of income who would have any Interesting selling the business. I would for sure keep the business and pass it down to my family because it is such a valuable point of income. As you mention before, if the gains were relatively small then I agree selling it would probably be the best Idea because you could invest your time in something more valuable.
ReplyDeleteGreat Post!
Reed, I totally agree that it is dependent on how the company does. There is no way to know and we don't want to guess best case scenario always so trust your product till that time frame is up and decide then.
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