Investors will look for an exit strategy before investing in your company. The exit strategy in your project plan tells investors how long their financial support will be needed, and what sort of outcome they can expect when that term ends.

It is important to know the type of investment you are looking to establish. Different investors look for specific details in your business plan.

The venture capitalist is looking to help take companies public, or to sell the company at the end of their term for a significant profit. The investment time usually falls between 3 and 7 years.

The angel investor typically is someone with whom you already have some personal or business relationship. Although there is incentive for profit, a business relationship with an angel investor is often more flexible with the timeframe.

You must codify the plan to paper. To help with the transformation, consider these points:

• When do you want to exit the business?
• Who should be the beneficiary of the business when you exit it?
• What are the tax considerations of your exit options?
• Will the name of the company continue with the business when you leave, or should it change to protect your reputation?
• Should the employees remain with the business or be replaced?

The exit strategy for your business typically involves handing off the company to another entity (e.g., passing it over to a family member, buying out the other financial interest(s), or selling or merging your business). Some points to consider for this transition:

• Assuming the investment will be more profitable than it could possibly become;
• Not specifying compensation details for the investor; and
• Failing to mitigate unforeseen incidents that could significantly alter the financial state of the company.