Part of the Project management glossary:

An exit strategy is a planned approach to terminating a situation in a way that will maximize benefit and/or minimize damage.

The strategic approach can be applied to exiting any type of situation but the term is most often used in a business context, in reference to companies, investments, partnerships or jobs, among other possibilities. 

An exit strategy is often part of business planning. An entrepreneur, for example, usually has a plan for exiting a startup, such as selling the company at a profit. Alternatively, the plan could involve running a business while the return on investment (ROI) is attractive and simply terminating it when that ceases to be the case. In a business investment context, an exit strategy is sometimes called a harvest strategy or a liquidity event.

In the stock market, one example of an exit strategy is a trader’s stop-loss order that instigates a sale when the value of a security drops to a specified level.

In an employment context, exit strategies are becoming increasingly important not just for corporate executives but for all employees. People change jobs much more frequently than they did in the past, whether voluntarily or involuntarily through firing, downsizing or outsourcing. As an employee, an exit strategy might include updating your resume and distributing it, maintaining lists of potentially helpful contacts and securing funds to cover a period of unemployment.

Given the realities of the current employment market, an exit strategy should be developed as soon as you start a new job -- or even before. The best time to negotiate a severance agreement, for example, is during the hiring process.

 

This was last updated in July 2013
Contributor(s): Ivy Wigmore
Posted by: Margaret Rouse

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