The exit strategy is a very important aspect of any business. To prepare your exit strategy will be dependent on your understanding of what the concept of exit strategy is.
It is an unfortunate turn of events that entrepreneurs(LINK) especially those in Sub-Saharan Africa are yet to grasp the importance of having a good exit strategy right from the moment of startup.
Exit strategies are meant to be part and parcel of the business plan and your ability to prepare your exit strategy gives you a more complete and comprehensive business plan.
We will give you a brief explanation of the subject matter and hope that you understand the need to prepare your exit strategy.
According to Investopedia, “an exit strategy is a contingency plan that is executed by an investor, trader, venture capitalist or business owner to liquidate a position in a financial asset or dispose of tangible business assets once certain predetermined criteria for either has been met or exceeded.”
Wikipedia, on the other hand, sees exit strategy as a “way to transition the ownership of a company to another company (e.g. through a merger or acquisition) or to investors (e.g. through an initial public offering).
Simply speaking, an exit strategy is a way to leave a business you had in the hands of other people. Investors look out for the exit strategy in your business plan because they want to be sure that if you are no longer in the picture, their interests will be protected.
To prepare your exit strategy, here are some of the things to consider that will be of immense help.
How To Prepare Your Exit Strategy For Your Business
Hire outside your comfort zone
When starting a business, you will need to hire employees that will help in the day to running of the business. It will be in your best interest to hire people outside your comfort zone.
Don’t surround yourself with people who are short-sighted if you are short-sighted in your goal setting. It is best you hire for diversity.
According to Keith Martino, “As the business begins to take on momentum, the owner often fuels the fire by hiring individuals who share his or her perspective, It’s convenient. But the price for this convenience is a company built on a foundation that lacks diversity. So, from day one, hire outside of your company’s(LINK your company’s) comfort zone. Find people who challenge decisions and ask questions. Start by looking outside of the startup world.
This will help you get people who will help you to prepare for your exit strategy
Avoid employee referrals referrals
To prepare for your exit strategy, it will be in your best interest not to depend on employee referrals. It has a disadvantage of giving you a small pool of employee’s family and friends when you are a small business.
When you depend on employee referrals, your early hires will not be very different from the founding team. You need diversity to put your exit strategy in order.
According to Srinivasan Leela, “Instead of relying on employees’ networks, turn to more diverse pipelines”.
For technical positions, Srinivasan suggested hiring coding-boot camp participants. These training programs provide people with the skills employers need. And, since boot camps occur all over the country, they give access to talent from a variety of backgrounds”.
Ask the right questions
Everything we are discussing today has, in one way or the other, a connection to diversity. Diversity is key to knowing how to prepare your exit strategy.
One important aspect of that is asking the right questions. This is the reason entrepreneurs build companies that lack diversity and not necessarily that the wanted to build it.
Here is an interesting piece from Tim Gates. He said that “Startup leaders should assess their current strengths and weaknesses from a ‘people’ perspective. In many cases, diversity gaps in the workplace(LINK) aren’t intentional, but leaders simply aren’t asking the right questions.”
Train for diversity
The last but not the least is to identify the place of diversity when you want to prepare for your exit strategy and know that it is as important as the business itself.
When this is done, you are expected to consciously and deliberately train for diversity in your company. Despite the differences in the background of the employees, you can in-build in them through training the culture of diversity.
When an organization is diverse, leaders have access to multiple perspectives and ideas. While employees’ backgrounds play a big part in their point of view, so does their training.
According to Andres Angelani, “Don’t train people in mass quantities like big, traditional companies; instead, expose young people to different emerging technologies, new design trends and agile mindsets”.