I can raise my hand and say that I've not followed these before and it caused all sorts of problems. When you first talk about them it almost seems like you don't trust each other, but end the end you won't trust each other if you don't get everything worked out before hand!

Hey Robert – I agree it might feel like you don't trust each other, but if that feeling lasts too long during the conversation (and after) that's a warning sign right there that you're getting yourself into trouble.

Thanks for commenting!

Nice list, Ben. Not sure #1 is as relevant as asking what does success look like for this endeavour. No-one can seriously predict what the exit strategy will be but rather you should be focusing on what value the venture will bring. (unless it's to build to flip) For example, is it making a lot of money or building a great app or creating a huge community? I think it's important to ensure that all participants have the same core values because they are fundamentally what will dictate how critical decisions are made.

Nevertheless, great food for thought. Thanks for the post.

Vernon – thanks for the comment!

Core values are definitely key, but the question of what does success look like can be quite vague. Lots of people might say, “make a lot of money,” for example (although that's not the only definition of success.)

The question of an exit strategy really forces a very specific look at what needs to be done to succeed, since in this exiting is a real/tangible measurement of success.

So asking, “What is the exit strategy?” is like the point of the triangle to success. (or something like that!)

I hope we can continue to discuss this and further related issues! Thanks!

Vernon has a point that 'exit strategy' has a somewhat negative ring to it. My choice would be 'plan b'; it's positive and action-oriented.

Also, it's important to watch for the potential partner's reaction to the questions. Are they welcomed as part of the process or are they trivialized?

Carolyn

You shouldn't look at “exit strategy” as having a negative connotation, because that's certainly not the point. I also don't think of it as plan B, it's plan A.

Having said that your exit strategy might be, “to earn a comfortable living and run a business till you retire.” In effect your exit strategy is to grow to a certain size and keep it going…not really an exit strategy per se (in the traditional sense of being bought out, acquired, IPO, etc.) but asking the question with the focus on “exit strategy” really helps focus the purpose/drive of the company.

Carolyn – you're definitely right about watching a potential partner's reaction. After all the questions are there to create dialogue, not be an interrogation. That dialogue hopefully lets you learn something more about the potential partner.

Oh. My understanding of an exit strategy was more on the order of bailing out. Nevermind. 🙂

I think the “bailing out” conversation is related. It's not a bad idea to say, “We're going to give this a try for X-period of time. If we're not where we want to be, we need to look at finding a way out / next steps.”

But a real exit strategy is a success story not a bailing out story…

Thanks for stopping by!

Thanks for the explanation.

Here are some related posts on the subject of partnerships:

http://www.greatfxbusinesscards.com/news/busine…

http://www.greatfxbusinesscards.com/news/failed…