What’s Your Exit Strategy?

In life, there are many things that you invest your time and money into. Some of them have clear goals set. When going to a University for a 4-year degree, your exit strategy is simply 4 years. That is pretty straight forward. However, as you start to move through life, the exit strategy sometimes gets lost.

In any investment, whether it be education, a job, a business, a car, a house, you must have an exit strategy. Otherwise, the chances that you will lose focus, lose money, and lose time are greater. Whenever I look at any sort of investment, I work backwards. I think about the end goal, whatever that may be, what it will look like and feel like and then from there I work to create a time frame. Knowing my exit strategy and having a time frame increases the focus of the goal. It also helps to take the emotion out of the investment, which plays a huge role.

This is especially true of business. When a business is being formed, one of the keys to success is to imagine the business how you want it to look and feel, how your clients will respond to your brand, all those details-in 10 year, in 20 years, in 30 years. Maybe you are building a business to be bought out by a corporate giant. If that is the case, you have a different set of goals that to a business owner who has planned to build up their business to a certain level without being bought out. If in 10 years, you are not bought out by a corporate giant that you like for the price you like, then you re-evaluate the company, its goals, your goals, and if you should stay for another 5 years before exiting. In any event, knowing when and how you can “exit” will pay off in the long run.

This can also be applied to the individual as well. And, I think it is very important that individuals adapt this exit strategy mindset. An employee needs to know when to leave a company that is not meeting their expectations. In other words, they need to form an exit strategy if scenario A does not work. In order to adapt this mindset, however, it is important not to think just like an employee. An understanding of the business models within a given industry, how competitors are doing compared to the firm you are currently at, and how the markets and economies are affecting sales are all important aspects to study and take into consideration. It is a different mindset- yes you are an employee, but you are also capable of looking at the big picture and seeing where you want to place yourself and where you need to be in order to meet your personal and career goals.

As I mentioned above, emotions plays a big role into why we buy. When looking at buying a car or a house, the salesperson gets you to feel emotionally attached, to imagine yourself living in the house, or driving on the open road. And while you may be buying a car or house for your use, it is still an investment. It is important to know the life cycle of that investment, for example, how long the car will last and how long the warranty is good for. Based on those numbers, you can get a rough estimate of when to trade in that vehicle and get another.

If you can keep your emotions out of the equation, you will be able to make much better decisions.