The Myth of the Big Exit

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What I’m consuming

I've known Mark Schaefer for decades. We met as part of a group of entrepreneurs who were all launching businesses around the same time. Since that time, Mark has become a best-selling author and sought-after keynote speaker, including speaking at SXSW, Social Media Marketing World, The American Bar Association, and corporate events including Dell, Pfizer, Microsoft, and the U.S. Naval Academy.
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Your retirement shouldn't rest on a huge windfall

16%.

That is your chance of successfully exiting a startup venture.

Yet, virtually every founder will start their journey dreaming of a big exit where they come into a windfall of cash.

They envision ringing the opening bell of the stock exchange after their company just closed its Initial Public Offering (IPO).

What happens if you are in the 84% that doesn’t successfully exit?

What happens if your retirement plan was built around being in the 16% club?

The best-case scenario is that you build a sustainable, profitable business.

The worst case is that the business goes nowhere and you are forced to shut it down.

Or, maybe you are a startup employee who is counting on your equity jumping in value. Did you know that in 2023 more employees left startups than joined them?

Even if your startup is scaling nicely, there are some steps every founder should take to secure their financial future.

1. Be fiscally responsible - live as lean as possible while your venture is in its early stages. I’m not suggesting you live off of Ramen. But don’t expect to eat steak every night either.
2. Increase your income slowly - don’t increase your income until the business is consistently bringing in more money. A lot of the excess cash flow is going to be needed for growth, so be diligent about when you take more money off the table.
3. Invest what you can - if you live lean and by a budget, you should be able to invest along the way, even on a limited budget. Remember the power of compounding. Even small amounts regularly invested in the right opportunities can help you build up a nice retirement nest egg over time.
4. Protect yourself and your co-founders - if you have co-founders you will want to have a buy-sell agreement in place. This agreement delineates the process of one founder buying the other out should that founder choose to exit early. Having this agreement in place from the start is key to avoiding uncomfortable discussions. Buy-sells also come in handy should one founder pass away prematurely. It helps ensure that the surviving founder isn’t suddenly in business with their co-founder’s spouse, family, etc. One way to fund buy-sell agreements is by using life insurance policies where each co-founder is the beneficiary of the other. Should one pass away the insurance policy pays out a lump sum, equal to the agreed-upon buyout amount, to the beneficiaries of the co-founder that has passed.
5. Think about tax implications early and often - whether you are a founder or an employee at a startup, there are tax implications for any stock grants that you receive. Having the right tax strategies in place, early, is key to avoiding huge income tax bills. The right financial strategist can help you avoid paying more than you should, or worse yet, having to forego your stock grants because you didn’t have the cash to exercise them. This is where the power of tax-deferred and tax-advantage strategies come in handy.

Preparing for your financial future doesn’t have to be complicated or time-consuming. By following the above five-step process you will be miles ahead of most founders who don’t bother thinking about these things until it’s too late.

I get it. You are putting practically all of your attention on your business. That doesn’t mean your personal finances have to suffer.

Just as you need a plan for how your business will win in the market, you should have a plan for your finances. Unfortunately, most founders don’t have a plan.

I build financial plans for founders all the time. In fact, in 2023 I built over 940+ plans for busy founders.

I'm happy to build you a custom financial plan as well.

The best part is that I don’t charge a thing and I have no minimum investable requirements if you choose to work with me.

To get started complete the information here.