Question

Which of the following are reasons for developing an exit or harvest strategy at the beginning of a business start-up?

a. developing it early ensures success of the business idea.
b. everyone will be unaware of what to expect if things do not go as planned.
c. there is a need to develop it early before personality clashes arise.
d. developing it early provides peace of mind to the family and the investors.

Answer 1

Developing an exit strategy early on in a startup is critical to ensure a plan is in place for various outcomes, providing peace of mind to stakeholders and managing potential risks (option d).

Step-by-step explanation:

The reasons for developing an exit or harvest strategy at the beginning of a business start-up include ensuring that there is a well-defined plan in case things do not go as expected, which can provide peace of mind to founders, family, and investors. The strategy acts as a safety net before potential issues like personality clashes can arise and interfere with business operations.


Developing an exit strategy at the outset also helps mitigate risk for angel investors and venture capitalists who may be trying to understand the business and management's future plans. An early strategy assures all stakeholders that there is clarity in terms of the direction and contingencies of the business.