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Planning an exit strategy from your startup

You have dreamed for ages about running your own startup. You have spent countless hours figuring out how to get it off the ground and make it successful. So why in the world should you start planning an exit strategy?

After building your company from the ground up, the last thing that you want to do is leave it. Exiting your company sounds crazy right now, but the business world can be volatile: Sometimes, it is necessary for even the most successful entrepreneurs to exit a startup. Failing to plan an exit strategy beforehand is actually a huge mistake.

Popular exit strategies

There are several potential strategies that entrepreneurs can use to exit their company. Some of the most popular include:

  • Selling

The most straightforward exit strategy is probably finding a seller for your startup. This could include another business, a fellow entrepreneur or even a friend or relative. Selling allows you to repay any investors and possibly even reap a profit for yourself.

  • Use it as a revenue stream

Another option is to hire a staff to run your company for you. That way, you can continue making money from your startup while exerting less effort. You would continue to own it, but could put up your feet and relax.

  • Liquidate

After a while, you may grow tired of your company. After all, entrepreneurship is a tiring and stressful life. As an exit strategy, you could liquidate your business and decide to shut it down.

Exit strategies and entrepreneurs

There are important financial and legal implications to having an exit strategy. You will need to plan an exit strategy so that you have a way to repay your investors, even if your company was not especially successful. It is far better to prepare an exit plan while your company is still promising or successful, rather than struggling to come up with a strategy if your business flounders. Not to mention, many entrepreneurs’ favorite part of doing business is starting an exciting new venture. Exiting one project may allow you to start a brand new one.

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

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