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So how does it all end? If you have read How to Start a ….Business book you probably thought I would be recommending you to be researching the format of the legal form of business you want to create. But this is the software industry we are talking about - an industry that loves multiple rounds of investment and five year cash out/buy out/IPO plans. You might not be thinking about it that way. On the other hand, your direct competitor in the software market may be planning his future very carefully - and shaping the market in which your new software company will exist.

Planning your end game doesn’t mean you can’t change your strategy later - by choice or necessity. There are large technology companies that reverse course and switch back from being a public company to a private one.

The value in planning your exit strategy from the very start is that, knowing your ultimate goal, you can shape each business action towards meeting those goals, without letting your focus drift or committing other sins that can ultimately kill their software company.

Why Am I Starting this Company?

Ask yourself this question and be honest. This usually but not always leads you to the end game.

I want to build value into the business, then sell it in five years.

If this is your answer, then you view your company as a product, and every share of your company has to have a maximized value in order for you to sell it for its best possible value. When you are starting as a micro-ISV (as Eric Sink terms a lone developer running their own company), it is easy to have this format in your mind, when really you are starting the business for some other reason.

If you are true to your vision of building and selling out - create and regularly update a five year planner, and ensure that every major corporate action supports maximizing shareholder value. Prioritize each action and its supporting minor actions. The farther away each action is from this ultimate goal, you should restructure it or eliminate it.

You will either never reach this goal or, end up cashing out for far less than you could have achieved if you do not stay pure to your vision.

I want to build a business that has multiple streams of revenue.

Many software entrepreneurs have either been in, or already own a consulting, custom software development or systems integration business. Developing applications to sell is one way to vary the way you receive revenue. All three of these other businesses generate revenue, usually, on contract and according to a customer driven time table - those contracts usually pay you according to a time basis. When the time is over - the revenue stops.

Running consultative services and offering per unit product sales under the same small roof presents problems for the end-game. Consulting companies are acquired for very different reasons than software vendors. Unless you have created a highly integrated set of services and products - such as software-as-service solutions like Salesforce.com, you may need to plan for micro-end-games for each portion of your business. This can work exceptionally well if your consultative branch has highly profitable labor that generates code as a by-product - you can develop products, maximize return on those products, then sell those products off later.

I’m sick of the corporate world and I want to run one my own way.

If this is your answer, while it doesn’t directly answer the end-game question, it suggests that you want to develop a leisure company unless you have an innovative business method that you also want to integrate into your strategy - there is a tight interconnection between the product and business method. What is most important to you is the process of the business.

I have a product inside me that needs to get out.

You might be surprised at the number of non-engineers that give this answer - that’s because it is solution oriented, and solutions orientation usually means you have identified a problem your particular product solves - by feature or by process. This does not suggest an end-game by itself; it does suggest the creation of additional products that solve similar problems. Barring success with a stellar first-to-market release and a ladder game of cash infusion for growth, it is likely you will be soon faced with a competitor of a different stripe - that will by market dominance, build or acquire a competing technology OR come up with a new form of competitive solution.

Consider this: can Microsoft, Apple, Sun or the open source community produce, and desire to produce, a competing product in 1-2 years? If both the ability and desire are likely to be there, it suggests an end-game strategy based on your tolerance of competition.

This suggests a Final Chapter of selling out to a much larger and complementary entity (even a natural competitor) once you can demonstrate a maximum value of your business.