business-plan, exitI’ve been at more than a handful of startups, and my experience is that the exit plan has a deep impact on strategic planning. That said, I’ve never seen a single source that covers common exits for startups, and what if any impact such exits might have on strategic planning. What types of exits are typical for startups and do they impact strategic planning?
I’d think about the question from the opposite side. For a given class of exit, there will be ventures where that’s plausible and ones where it isn’t; and there will be execution strategies that are more and less compatible.
So if there’s an exit class that attracts you, look at success cases and think through how you might follow a similar path. Also look at the fail cases, because most ventures fail, and the nature and consequences of different classes of failure (never getting traction, not hitting targets, running out of cash etc) will vary.
Now here’s the caveat. What’s rare isn’t understanding exits, but creating acknowledged value for users. If there isn’t a path you’re burning to tread, then sometimes the best wisdom is to say - I am working towards a trade sale. The value is going to be around some multiple of a clear metric that’s used in your particular space - typically revenue or profit, so if you’re relying on some other factor such as users then you will want evidence that there’s a market valuation for that metric. So press for those goals - which should be in your mind anyway - and you won’t go far wrong.
The most common exit would be becoming revenue positive and selling it.
That said I see exit plans as a thing to keep in the back of your mind, but never should it be part of your business strategy. Instead your plan should be how in the next three years you plan to make money and grow.
Once your business is profitable … you will always find someone who will want to buy it.
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