A new business should be concentrating on making a successful start—not on how to best “exit” their business. Here is what Mark Cuban, billionaire startup entrepreneur and Venture Capitalist, has to say about the first two most important rules of starting a business:

1. “Don’t start a company unless it is an obsession and something you love.”
2. “If you have an exit strategy, it’s not an obsession.” –Mark Cuban

The main point here is that when a person is starting a business they must not only be passionate (obsessive?) about their business, but they must stay focused on getting their business started–not ending.

In most cases, an exit strategy will form “automatically” as the business grows and begins to mature. Here is how this will usually happen:

• The vast majority of new businesses that start up each year will fail. This is a hard statistic to swallow, but unfortunately, it is true whether an exit strategy exists or not.
• Many of the surviving businesses will grow and be approached by someone inviting them to consider merger or acquisition. No exit “strategy” is involved here, but it might be decision time.
• Some of the surviving businesses will be successful and the owner/founder will tire of the business and put it on the market for sale—never planning this as a specific exit strategy when they started their business.
• In a few cases, as a business grows and matures, a founder/owner may decide to retire and simply close their business. This is a deliberate decision, but usually not part of an exit strategy plan when they start their business.
• In some instances, a business may take off and grow beyond all expectations, forcing the owner(s)/founder(s) to develop an exit strategy that might even include an IPO.

The one exception to the above  “automatic” exits is the company that wants to pursue Venture Capital. Venture capitalists will want the business owner(s) to provide a projected exit strategy showing an incredible return on money invested, before they will even consider investing in the business.

Actually, Venture Capital involves a very small number (less than one-half of one percent) of the over 6.5 million businesses that will start up every year.

Incidentally, the same holds true for Business Plans. If you want to read why business plans are useless, check out this post.

Well, what does everyone think about this concept? Agree? Disagree? Let me know.

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Thinking about this, I recalled some studies on the subject of planning that I ran across some time ago. These studies have been published many times in many places, but I thought they were worth repeating here. The first one is from a study sponsored by the Ford Foundation:

• 23% of the population has no idea what they want from life and as a result they have very little.

• 67% of the population has a general idea of what they want but they don’t have any plans for how to get it.

• Only 10% of the population has specific well-defined goals, but even then, 7 out of 10 of these people reach their goals only half the time.

• The top 3%, however, achieved their goals 89% of the time.

Why is there such a drastic difference between the top 3% and all the others? It doesn’t stop with this one study either. Let’s look at a couple of other studies:

• Some years ago, Yale University conducted a study that found 3% of Yale graduates had more wealth, years later, than the other 97% combined.

• Harvard Business School did a study on its students 10 years after graduation and found that only 3% of them were financially independent.

What is the significance of this 3% number that keeps popping up in various studies? Well, it is quite simple really…in every case of the successful 3%—they wrote down their goals!

Dreams and wishes are not goals until they are written on paper as specific desired results. In some real sense, writing them down materialize them and brings them to life. The experts claim that the act of writing makes an imprint on the brain that helps set the direction of actions by a person.

Therefore, it stands to reason that as we visualize our enterprise, if we write these thoughts down in an orderly fashion, as goals or action steps, the better our chances are of successfully achieving them.

The question you need to ask yourself then, is “Do you want to be one of the 3% who fulfill their goals in life, or will you be among the 97% who generally fail?”

“Life will not go according to plan—if you do not have a plan.”
—Gary Ryan Blair (“The Goals Guy”)

Do you think writing a business plan is a waste of time? Let me know what you think.