<img class="alignleft size-full wp-image-3508" title="Journalism Accelerator" src="http://www.journalismaccelerator.com/wp-content/uploads/2011/08/ja-bug.png" alt="Journalism Accelerator" width="50" height="50" />
<p style="padding-left: 65px;"><em>Journalism Accelerator (JA) brings a different kind of service model to market; we are taking the approach as entrepreneurs launching a startup. As the JA has sought expertise from the field, we’ve had the good fortune of some top notch consulting from Rusty Coats. Rusty is a new media news business thought leader with deep expertise in successful content product development. The first question Rusty asked us was “so, what’s your exit strategy?” What a great place to assess the unique value a product or service brings to targeted communities! We were inspired by this question and the thinking behind it. And thought our community might be as well.</em></p>

<div class="underwrite">
<h3>About the Author</h3>
<img src="http://www.journalismaccelerator.com/wp-content/uploads/2011/09/rusty-100.jpg" alt="" align="right" /><a href="http://www.journalismaccelerator.com/members/rcoats/">Rusty Coats</a> is <a href="http://www.coats2coats.com/rusty.html" target="_blank">President</a>, <a href="http://www.smashwords.com/books/view/47212" target="_blank">author</a> and cofounder of <a href="http://www.coats2coats.com/" target="_blank">Coats2Coats</a>, a consulting firm focused on a media future that is mobile, participatory and <a href="http://www.coats2coats.com/wordpress/2011/04/26/as-traditional-media-revenues-decline-digital-dollars-grow/" target="_blank">sustainable</a>. He and his partner, Janet Coats, work with <a href="http://www.knightdigitalmediacenter.org/speakers/name/rusty_coats/" target="_blank">clients</a> including startups, foundations, media companies and academia. He has worked in interactive media since 1992 for a variety of media and research companies, with positions ranging from a reporter covering Silicon Valley to website manager to corporate overlord.

</div>
<strong>For most startups, it’s the second question its founders answer – right after articulating the vision of the company.</strong> The more startups I work with, the more Zen I find that dynamic:
<ul>
	<li>Step 1: Here is why we exist.</li>
	<li>Step 2: Here is how we will exit.</li>
</ul>
It reminds me very much of an underlying theme in the 1996 film “Phenomenon,” in which the protagonist, inexplicably gifted with amazing powers that also shorten his life, says: <strong>“Everything is on its way to something else.”</strong> Biology and economics have life cycles that begin, grow, peak, diminish, plateau, diversify and even reproduce. The key is being aware of this reality – and planning for it.

<strong>The news entrepreneur space has seen an explosion of life.</strong> Some counts have neighborhood and niche news sites numbering in the 400s. All are small businesses – some with nonprofit tax status, some profitable enterprises. And all of them will become something different than they are now. <!--more-->

<div id="attachment_4609" class="wp-caption alignleft" style="width: 210px; margin: auto 15px 15px auto;">

<img class="size-full wp-image-4609" title="Robo News dispensary Tomorrowland Disney World" src="http://www.journalismaccelerator.com/wp-content/uploads/2011/09/robo-news-200.jpg" alt="Robo News dispensary Tomorrowland Disney World" width="200" height="267" />
<p class="wp-caption-text">RoboNewz dispensary in Tomorrowland at Disney World. Photo by Rusty Coats.</p>

</div>
&nbsp;

<strong>They may:</strong>
<ul style="padding-left: 225px;">
	<li>Sell their site and assets to someone – another site, network of sites.</li>
	<li>Go public.</li>
	<li>Merge with someone.</li>
	<li>Buy someone else’s operation.</li>
	<li>Turn over the site to a family member.</li>
	<li>Change incorporation status.</li>
	<li>Franchise.</li>
	<li>Become their own endowed foundation.</li>
	<li>Simply cease operating.</li>
</ul>
&nbsp;

&nbsp;

&nbsp;

<strong>The key is to have that conversation before the conversation has you.</strong>

Startups define a successful exit strategy by necessity. Investors don’t want to be in your business forever; they just want to know how and when you’ll cash in their chips. Local small businesses and franchises are the same. If you apply for a small business loan, banks want to know how and when you’ll repay it – and how you’ll grow from there.

<strong>Even self-funded, owner-operated businesses have exit plans.</strong>

Foundations are starting to have the same conversation. Funders may call it sustainability, but the implication is clear: <strong>They want some assurance that their grants are funding something that is viable in the long-term – or contributes something to others if it is not.</strong> That is a critical part of business exit strategies: Capturing the value of what was learned.

<strong>A starter kit on exit strategies includes a few key elements:</strong>
<ul>
	<li>What exit strategy you desire. Use the list above.</li>
	<li>How investments will be repaid. Even if you’re self- or foundation-funded, this is a good exercise. This focuses you on the accumulated value of your enterprise and how you’re refilling the coffers.</li>
	<li>Who are the key investors/contributors and how will they be affected by the exit strategy? List everyone who has a stake in your operation. They may not get anything (I have plenty of worthless IPO promises, believe me) but you should correlate their contribution with a specific value.</li>
	<li>How is knowledge being captured now and how will it be transferred. This is particularly of interest to funders right now.</li>
	<li>When you expect this to occur.</li>
</ul>
<strong>So what is your exit strategy?</strong>