10 Tips for Starting a Business - Tip #9 - The Exit

What is your Exit Strategy?

This is an essential question to answer, particularly if you are going to be seeking capital from outside investors. Venture Capitalists want their money out in three to five years. Most expect you to sell your business or go public.

Developing your exit strategy means you have to think about what you want to do with your business and what you want out of your business. Do you enjoy starting things but not running them? Think about getting the business going, then hiring a chief executive officer and other C-level executives to run the business for you. Think about selling the business to a larger firm in about five years. You could sell to competitors, suppliers, customers or strategic allies.

Companies with dramatic growth and profits that become household names can go public. (Think Google or Apple.)

Or maybe you just want to run and grow your business, letting it throw off cash in the form of dividends. Maybe you just want a business that is a joy to run and will steadily grow and provide you with a living.

In some cases, you can have a business that your kids take over.

Whatever you do, plan it out. Make your business do what you want it to -- be in control -- make your business suit the life you want -- not the other way around.

Ten Tips for Starting a Business -- Tip #3 -- Is There a Market?

There may be a need for your product or service, but is it a BIG need? In other words, how big is the market, and is it growing? You need to go out and do some research. The easy way is to do online research. But your public library can help, too, so can trade organizations in your industry.

Once you find out how big the market is, and if it's a growing market, then you need to find out how many competitors there are. Can you compete effectively? Again, you have to do research.

Maybe there is a small niche for your product, where you can fill a need that others can't.

One of my clients was a high-end fashion designer. Her creations were beautiful but very unusual. The market for unusual fashion design is small, and it is very crowded. Yet, she found a niche for her designs and was able to expand her sales by finding the boutiques that catered to the type of woman looking to make her own fashion statements.

Teroforma, which was just profiled in the New York Times Home Section, is in the crowded, large and growing market of tableware. But the company is positioned in the affordable luxury niche, which has virtually no competitors that can match Teroforma's quality or unique designs or sustainable and artisan-crafted manufacturing stories. Such stories resonate with consumers.

Remember:
How big is the market, and is it growing?
What is the competition like?
How are you different? Can you compete?

Teroforma in NY Times

Teroforma, one of my clients, was featured in the Home section of the New York Times today. Teroforma creates unique housewares by pairing cutting-edge international designers with old world craftsmen and artisans. Teroforma's designs are arresting.

The article is at: http://www.nytimes.com/2008/08/07/garden/07goods.html?ex=1375848000&en=17723e5568e4a23c&ei=5124&partner=permalink&exprod=permalink

Teroforma can be found at: www.teroforma.com.

When I called to congratulate Andrew Hellman, the founder, he said that I had been right when I said that as you execute your plan, things will change. Nothing will turn out was you expect. New opportunities and challenges will come up. You just have to grab them and deal with them.

Organic Growth for Your Business

More wisdom from the garden --

How do you deal with competitors? Competitors are like weeds in a garden. They can overwhelm your flowers and vegetables -- sucking the nutrients and water away and stunting the growth of the good stuff.

How do I deal with weeds? I don't like weeding, so I've set up a system to deter more weeds. In my garden, after digging up and disposing of the early weeds, I put down newspapers in my paths and cover them with cedar mulch or straw. In the beds where the flowers and vegetables grow, I put down grass clippings. When I see a new weed, I pull it up.

What does this have to do with a business? Simple. When you're confronting competitors or other potentially distracting and destructive forces, you need a systematic method for dealing with them. You need to read about potential competitors and have a plan for how to deal with them. You must stay aware of the ones that exist or are sprouting up and infringing on your space.

You can make a map of the competitive landscape. It can contain attributes or benefits or price. Put your competitors on the map. Put your company on the map and see where you fit. Figure out how you are different and how to appeal to consumers and customers in a unique way.

If your business can grow in an area that is reletively free from competitors -- because it's in a clear spot (or niche) by itself, you have a better chance for success. Apple has done this repeatedly. Its products are clearly in a market niche all by themselves, even though they compete in a very full and competitive marketplace.

How have you positioned your business in the marketplace? Is it a good spot?

Growth

Friday, I met with a PR expert. He suggested that I focus on helping companies grow, rather than just doing business plans. I've been thinking about that ever since. It makes sense, but it doesn't seem very unique. On the other hand, a business plan is only a tool that enables growth. It's a roadmap, a vehicle for fundraising, and a means of managing growth. The planning process helps managers focus on deciding what they want to achieve and the best way to do it. I realized that I already do help companies grow. That is the benefit I offer. And why not focus on the benefit?

I've decided I like the idea and will begin my own process of seeing how I can achieve what I want. I'm going to explore this new positioning.