Exit strategies for businesses

: Many investors are only interested in investing money into an enterprise for a limited amount of time. They want to know when they will get their money back and what sort of return they will be receiving at that time. Both issues are closely linked. Therefore, when preparing your business plan, to pitch to potential investors, you will need to make sure that you have outlined your long term plans and a sound exit strategy. In order to do this properly you will have to ask yourself a few questions about your own personal plans regarding the business. Do you wish to stay involved in this business in the long run, or are you more interested in getting it off the ground and letting someone else take over then? These are the kinds of questions you should deal with in your exit strategy. You will also want to know a little about the investors you are pitching to and what their expectations are regarding the future of the investment:

• If you are dealing with venture capitalists you have to be aware that they are looking for a high return. They will generally be expecting the business to go public at the end of the period or make some other high profit move. The period they are willing to invest is about three to seven years so you will need some sort of high return exit strategy at the end of that period. However, you should not opt for going public unless you are confident that it is a realistic goal for your company. Public offerings are very rare for small businesses and the investors you are speaking to will be all too aware of that fact.


• If you are considering an angel investor then again they will be looking for a high return but will not be overly concerned with the type of exit strategy under consideration, as long as it seems sound. They will be less sophisticated than the venture capitalists or institutional investors you may deal with and are more likely to be involved because of a personal relationship to you or the business.

There are a number of exit strategies you can consider:

• The most basic exit strategy would be to simply bleed the business dry. This can be done by giving yourself a huge salary or other remuneration, regardless of the performance of the business. While it is not appropriate in most cases, there is no doubt that it can get a lot of your investment back out of the company in a short time.


• Another simple option is liquidation. Simply close the doors and wait for the company to be wound up. All debts will be paid off, and then whatever is left over will be clear to the shareholders.

While these two options above are quite practical and effective, they are professionally frowned upon and you may wish to propose a more sophisticated exit strategy if you wish to impress potential investors.

• Another option could be selling to a friendly buyer. While you may have come to the end of your relationship with the business, there may be many people who would be saddened to see it end and may well be willing to step in to take over. This might include passing it on to another member of the family, or selling it to employees or customers. There are many businesses where this will be a realistic option, however it is difficult to predict it at the beginning of the venture.


• Another option is acquisition. This is when a rival firm, usually one wishing to expand, agrees to buy you out. You can negotiate the price and terms with the buyer and there is a good chance that both of you can come up with a very attractive price. You will get a good price because together with your assets, the buyer will be willing to pay for good will, market share, client contacts etc. This means you can get a very good price for the business.


• The IPOs that we previously talked about are the final option. These are potentially the most lucrative of all, but when reality kicks in, they might not seem like the dream you thought they were. In reality, a minuscule percent of companies manage to make it through an IPO. The process costs millions, includes lawyers, analysts, publicity agents and a lot of other costly professionals. The odds are against you ever making it. And if you do, you will probably be left with only a fraction share of the company you used to own.

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With over 500 "paid survey" companies on the Internet, it's clear that this is a business that's here to stay. Some of the sites offer you an opportunity to "get rich quick" while others offer you a chance to earn a few extra dollars in your spare time participating in panels. Can you make a living off of these sites? You sure can - but not by taking surveys. There simply isn't enough time in each day to earn a viable living off of the online survey gig. So how can you make real money with these websites? It's very simple. You create a "survey portal." While not easy to set up, once established, it's a way you can earn money and not even have to fill out one survey. The set-up fees are minimal, but some computer knowledge is required. Most of the online survey companies offer a "referral" fee for directing those who want to earn money by taking surveys to their site. And this is where the money is. The first thing you need to do is purchase a domain name. You will want to get one that is catchy and easy to remember as well as spell. Once our domain name is secured, you'll need to set up a website. It doesn't have to be elaborate at all, but should be attractive to the viewer. And, of course, you'll need to have a host. Most host companies charge about $25 a month. You want to make sure you acquire a host that allows ads. Some hosting sites like Yahoo are very user friendly, but don't allow advertising. You'll have to do a bit of research into the various survey companies that offer a referral fee. You can sign up for each site and you'll receive a "referral link." This link will be posted on your website in the form of a "hyperlink." You'll want to get as many referral links as you can to post on your website. When researching the companies, make sure that referral payments are made in cash, not points, and that you can receive them by check or through Paypal. If you decide to accept those that offer points, you'll have to monitor that site to make sure you cash in the points for cash periodically. Do not bother with any site that offers points in exchange for sweepstakes entries or prizes; you're wasting your time. Some survey sites offer "affiliate" programs. This is where you can actually post an advertising banner on your website. It won't cost you any money, and every time someone actually clicks on the banner and signs up for the survey company, you'll get paid. You'll want to use a lot of visual effects in your website giving the impression that anyone can make a living online doing surveys. I've seen a lot of survey portals, many of them have photos of large homes, pools, exotic vacation spots and fancy cars. Be careful that you don't use any images subject to copyright. You can also add some "testimonials" to your portal site. You have to be careful not to deliberately mislead people; but an ambiguous statement such as "I was working 56 hours a week at a dead end job and now earn over $10,000 a month - Brenda K." are not illegal. Because you're not directly saying that doing surveys is the reason Brenda K. is now earning $10,000 a month. Brenda K. could have won the lottery and is taking her winnings in a monthly payout. In addition to having several hyperlinks directing people to the survey sites for which you will receive a referral fee, you can also add other advertising on your website. There are several companies that offer pennies on the dollar every time someone clicks on their ad that's on your website. This is just another way to generate income for your survey portal site. The most important thing you need to learn how to do is market your site. In addition to hundreds of paid online survey sites, there are also hundreds of free blogging sites. Sign up for them, make as many "friends" as you can and tout the success of your online business daily in your blog (providing a link to your site, of course), While this method of making money may be just this side of the law and takes a bit of time, a small initial cash investment and periodic updates, this is the only way to make money in the online surveys for cash game. PT Barnum knew it; other people know it and now you do, too. There is a sucker born every minute. Just make sure the "sucker" isn't you.