Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
Entrepreneurship is a risky business and requires a certain type of personality to really succeed at this lifestyle. Every and any business or idea will certainly end when the time is right and it is important for those wishing to exploit profits when to get out of the business. The purpose of this essay is to explore the options that entrepreneurs and investors have to recoup their investments and continue on to the next stage in life. This essay will explore exit strategy options and the considerations that must be taken into account before performing these actions. Ultimately this essay will describe how exiting a business venture is just as important as any other component of the process.
Why Get Out?
There are many reasons why anyone would want to change something up in their lives, but when it comes to venture capitalism it is important to understand all the implications that accompany such a move. There are many conflicting and interesting reasons why someone would begin retreating away from a business investment. It requires a sense of profit, timing and the ability to take advantage of the current circumstances.
With entrepreneurial businesses, it is vital to plan for the future, growing the value and attractiveness of the business by implementing a clear development strategy from the beginning, including putting in place a strong management team to lead the business following the eventual departure of the entrepreneur. Taking an exit is not something which can happen easily overnight and time spent planning for the inevitable and structuring the business correctly should be approached with care.
Many times it is difficult for investors to leave their projects. Emotional attachment is very dangerous in the business world and it is important to keep profit margins and victory in mind when deciding to stay or go. Bloomberg (2006) suggested that "Small-business owners and entrepreneurs are involved and invested and personally identified with their businesses in ways that employees in large companies just aren't. When should they start thinking about retirement? It's hard to say when, because they don't feel the same pressure as an employee to retire by a certain age. They make the rules, and they don't have to retire if they don't want to. It's rare for a person to walk away from the business unless they want a child to take over."
It appears that there are basically only two reasons to employ an exit strategy as an entrepreneur. The first is that outside investors want to collect their return. Equity investments are not like loans with interest. The investor sees no return until he cashes out, or the company is sold. Even three years is a long time to wait for any pay check. The next is that Entrepreneurs love the art of the start up and running a business. It is in their blood and engrained in their mind to do this type of work. Assuming a startup takes off, it will probably find that the fun is gone by the time you reach 50 employees, or a few million in revenue. The job changes from creating a "work of art" to operating a "cookie cutter."
For some investors, an exit strategy sounds negative. Actually, the best reason for an exit strategy is to plan how to optimize a good situation, rather than get out of a bad one. This allows leaders to run important startup and focus efforts on things that make it more appealing and compelling to the short list of acquirers or buyers to target (Bernard 2013).
Strategy 1: Take the Money and Run
One very simple and transparent way to exit a venture capital business is to simply pay yourself out as much as possible before just simply leaving. Bleeding a company dry, may seem like a destructive method, but holds great advantage to the entrepreneur responsible for the start up. Through this type of exit strategy, entrepreneurs usually make the smallest amount because they are selling their business assets and that too at a price buyers are willing to pay. This is called a lifestyle business and investors should realize if their business falls into this category. Robbins (ND) agreed with this idea. He wrote " rather than reinvesting money in growing your business, in lifestyle companies, you keep things small, take out a…[continue]
"Exit Strategy Entrepreneurship Is A Risky Business" (2013, September 13) Retrieved October 27, 2016, from http://www.paperdue.com/essay/exit-strategy-entrepreneurship-is-a-risky-96193
"Exit Strategy Entrepreneurship Is A Risky Business" 13 September 2013. Web.27 October. 2016. <http://www.paperdue.com/essay/exit-strategy-entrepreneurship-is-a-risky-96193>
"Exit Strategy Entrepreneurship Is A Risky Business", 13 September 2013, Accessed.27 October. 2016, http://www.paperdue.com/essay/exit-strategy-entrepreneurship-is-a-risky-96193
Global Corporate Strategy: Continental AG Compare and contrast the meaning of 'corporate entrepreneurship' and 'strategic leadership'. Corporate entrepreneurship is a term used to refer to the spirit of entrepreneurship of people within the company. In this instance, corporate entrepreneurship can be used to describe the attitude of many of the employees that worked for Continental. Corporate entrepreneurship is the "process by which individuals inside organizations pursue opportunities without regard to the resources
Creating Organizational Value through the Integration of Information Technology: A Management Perspective Change Management and the Construction of a Receptive Organization Transformational and Participative Leadership A Decentralized Organizational Culture Effective Utilization of Resources Simulations Performance Monitoring Systems Risk Management and Support Strategies When considering the ever-changing and highly competitive global landscape of business today, firms must stay at the cutting edge of their respective fields in order to sustain profitability in the long-term. With the current exponential growth
Market Entry Strategy FedEx FedEx's market entry strategy is what is described as a 'frontal-assault strategy.' FedEx's strategy is aggressive, high cost and Americanized. The first thing noted is that their strategy in China is exactly the same as in any location. As the executive vice president of FedEx is quoted as saying "we've got a pretty good formula for attacking any market...whether its China or Japan or Germany, it really doesn't make
Capital Works seeks to explain the venture capital industry, debunk myths and offer a view of what the role of venture capital is to the U.S. economy. Zider begins by explaining that venture capital does not provide as much money to start-ups as is often considered to be the case. In general, venture capital goes to follow-on funding for projects that were originally developed by governments or corporations. Those latter
Many companies go public so that they can expand and so that they can offer employees additional benefits. In addition Shepherd, et al. 2001 asserts that An initial public offering appears to offer the entrepreneurial company a number of benefits, including legitimacy with stakeholders, access to debt capital (Sutton & Benedetto, 1988), and a mechanism by which entrepreneurs can reacquire control from investors (Black & Gilson, 1998). For investors,
Railroad Policy Analysis The national railroad system has been a tremendous asset to this country since its debut. Without the iron horse, our country would not have developed the means for transporting large quantities of goods from coast to coast. The changing of time has created many technological changes for the rail industry, but to a great extent these changes have been slow to be implemented. Additionally, the nation has undergone
Southwest Airlines Before 1978, the federal government regulated the U.S. airline industry. Airlines were given profitable routes but were also obligated to serve unprofitable routes in the public's interest. Increases in airline costs were routinely passed along to customers due to the lack of price competition. In 1978, the airline deregulation act enabled airlines to set their own fares and enter or exit routes without government approval (Lam, 2003). The major airlines