What is an exit strategy? Exit strategy is defined as a process through which a business owner plans on getting out of an investment that he or she made in the past.
After reading an article from Entrepreneur it gives two practical reasons why someone would need an exit strategy. The first reason is that the outside investors desire their return on investment, which requires the company to be sold. Secondly, many people that start companies thrive on “starting” things, therefore once a company takes off and starts to grow the thrill of starting quickly wears off.
Within the business world there are several exit strategies ranging from initial public offering (IPO) to liquidation and close. The term ‘exit strategy’ may carry negative connotations, I would argue that it is smart planning. Entrepreneur states, “the best reason for an exit strategy is to plan how to optimize a good situation, rather than get out of a bad one.”
This was a huge mental shift for me. I am not planning how to exit things in my life rather I am planning and being prepared for great situations that come along. This idea of exit strategy is equally if not more important to have in our personal lives.
There are many times where we need to have exit strategies in our lives in preparation for those good or ideal situations. For me the negative connotations tied to ‘exit strategies’ seemed to become less pertinent as I began to think about some of the freedom that sometimes comes from exiting or saying ‘no’ to things in our lives.
Jeff Schinabarger makes this concept exceedingly clear in his book More or Less when he states that our ‘no’ turns into someone else’s ‘yes’. The idea is that when we exit something because it is the right timing and we have enough, than we create opportunities for others.
For me this seems to come full. If in a business setting this concept still holds true, if we decide to liquidate our company and close we are saying we have had enough and basically say no to continuing this organization. Does this liquidation and close not provide an opportunity for someone else?
Exit strategy allows a person to get out of an investment they have made in the past; the question is “What is your investment?” Time? Money? Or something else?
