One simple, smart, and brave demand that capitalism expects
Capitalism demands that business owners have an exit strategy, for the sake of the free market. It’s a simple, smart, and brave demand that capitalism expects. And business owners critically need capitalism and the free market to give them that opportunity. There are three factors that exist for this very reason. If capitalism did not demand a business owner to have an exit, it would not be capitalism.
If you don’t know who I am, my name is Robroy Wiley. I’m a business exit planning strategist. This post is reflecting on how I view capitalism and the free market.
Capitalism and the free market are aware of the fact that 100% of business owners will exit out of their business. This goes up and down the market capitalization ladder. It does not discriminate on size or sector.
Competition
Competition is a key component of capitalism and the free market.
As Seth Godin recently wrote in his blog post — “ Exit, voice, and loyalty”,
“Capitalism ceases to be an efficient choice when those served have no ability to exit. For-profit prisons, for example, or cable monopolies. If you can’t exit, you’re not really the customer, and you are deprived, as a result, of voice.”
No competition results in no need to create efficiencies and lower costs. Eventually, an exit will happen to rid the market of an antiquated dinosaur. Competition affords the business owner the opportunity to exit out of the marketplace to a bigger stakeholder or competitor.
Darren Hardy in his book “ The Entrepreneurial Roller Coaster” devotes a section explaining why an entrepreneur needs to begin with the end.
Innovation
Capitalism and the free market birth innovation. Who can create a more efficient service or product? How tight is the supply and demand in a sector? How many players are competing in the marketplace?
Innovation has to occur to keep the tide of the capitalism landscape in constant motion. Because of innovation, the marketplace demands that businesses have an exit to create room. Either to be absorbed by a bigger company — that has the capabilities to increase the depth and range of the product or service or to bow out to a better system.
Market Capitalization
Market capitalization is the final factor. What is the value of the company worth? Which is why capitalism demands that a business owner have an exit strategy. Because capitalism places a high value on companies that have transferable value. In order for a company to get maximum value, the owner needs to be inconsequential to their business.
An exit strategy is the one simple, smart, and brave demand that capitalism expects. All because of competition, innovation, and market capitalization. So tell me, what do you think?
