Monday, 6 July 2009

Planning your exit before you burn

Ever sat on a plane during the safety procedure announcement and paid little or no attention? Yip, thought so. The reason we choose to ignore this is twofold: one, we don't really think it's not going to happen to us, and two, we've heard it all before and know what to do, right? Right…
 
The fact remains that a significant number of start ups don't get to enjoy a second Christmas party, and you need to consider what events (or "triggers") will cause you to exit the business ("OMG, the engines are on fire"), how you will exit ("If I can climb over this fat guy, I reckon I can make it to the emergency exit first…"), and what you'll do next (after the adrenaline rush of the emergency slide).
 
Now there are clearly hundreds of potential triggers, and it's up to you to try and anticipate what they could be and how you'll react if they occur. By visualising the potential triggers, not only will you be better suited to deal with them, but you'll also be less emotional and more rational. So, without boring you with an endless (and quite frankly, off putting) list of potential pitfalls, the most common include:
 
  1. Poor market research leading to unrealistic expectations of world domination
  2. Realising that while the idea sounded great at the pub, your level of expertise/knowledge/experience isn't quite good enough (no, scribblings on a beer mat do not constitute a solid business plan…)
  3. The cost of setting up a business and keeping you in beer money are at odds with one another (the need for beer money almost always wins, which means going back to being an employee), which means
  4. You spend the marketing budget on beers. The result is that no-one knows what you do. Not even your mum. And no, just because you've built something doesn't mean they will come…
  5. You get bored with the endless cycle of working hard for no money. And even if the recent shenanigans of financial institutions has turned you into a Marxist, the novelty of endless graft for no crust will soon wear off. Trust me.
  6. You sound the rallying cry, but when you turn around mid-charge, you notice you're on your own and that your business partners have decided that discretion is the better part of valour.
  7. Finally, you are in fact a genius, you've surrounded yourself with geniuses, you have a fantastic product at a great price that you've marketed brilliantly and someone makes an offer to buy you out.
So, regardless of whether you jump on your own accord, or are thrown unceremoniously by the vicissitudes of the market economy, your departure from the business needs to be pre-planned. As I mentioned earlier, there are a multitude of potential triggers, but they all lead to the same question: how does one exit quickly and cleanly.
 
So, next week I'll discuss more specifically the potential triggers we're facing at cozwecan, and the various exit strategies we're considering.
 
Cheers
 
Paul

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