Most entrepreneurs focus on how they can grow their businesses and maximize their profits. Those things are important, to be sure, but you also have to think about how you’re going to eventually depart from the business. For some companies, the goal may be to get acquired by a bigger company. That happened with YouTube and Instagram, for example.
How does this work if you’re a freelancer, though? Putting aside the debate about whether writers can retire at all for just a moment, do freelancers need to have an exit strategy? Do we need to devise a way to “get out of the game,” so to speak?
Part of the Business Plan
If you’ve ever watched a show like Dragons’ Den or Shark Tank, the investors oftentimes ask about a business plan. What is your product? Who is your target demographic? What are the market conditions? What is your cash flow situation? What are your plans for the next five years?
And one other question that they sometimes ask: what is your exit strategy?
Absolutely, as a freelancer you’re going to encounter many business factors that you can’t control, but that doesn’t mean that you should avoid planning around them. It is important that you put in some thought about what’s going to happen when you want to retire or move on to something else.
Who Is Your Successor?
It depends on how you’ve set up your business. If you are a solopreneur, working directly with your clients to complete your projects, then you may have some fellow freelancers who would gladly take on these clients when you choose to stop working. You may one primary successor who can take on your Rolodex or you may have several.
On the other hand, if you already have a staff of writers who are already doing the work, you may consider selling your company to someone else. The successor can then maintain the contacts and continue to outsource the actual writing to your existing staff. That’s an option.
To maintain a certain level of income, you may also consider negotiating more and more for some sort of residual. In the case of blogging, for instance, you may request to have your AdSense block placed in your posts. In the case of books and e-books, you may request an ongoing royalty from the profits. Passive income is possible.
Freelance Growth in Reverse
Clients come and clients go. Some hire you for one-time projects and others may have ongoing work. When it’s time to “get out of the game” for whatever reason, then, you can almost do what you did to grow your freelance business, but in reverse.
Just as you may have been able to turn a hobby into a business, you can then turn that same business back into a hobby. Take on fewer and fewer projects, referring prospective leads to your fellow freelancers. Be increasingly selective and over time, your client list will shrink and you can enjoy a leisurely exit from the industry.
Or, just write more and more for yourself. After all, who are we kidding? Writers and other creative types can never truly retire.
The first thought that came to my mind when I read the title of this post, “Freelancing IS an exit strategy.”
Sorry I don’t mean to be rude, it’s just my personal opinion.
You’re entitled to your opinion, but I disagree. Running a freelance business is still running a business. As such, you need to consider not only how to grow it, but also how to “get out of it” when the time is right.
In a freelance writing business I don’t see you having a complete exit strategy. You like to write, so I see a cutback in the amount you write, but not an “I Quit” or “Retire”.
Which is more or less what I say in the final section of the post. That said, you stop being a “freelance” writer when you stop writing for other people. If upon my “retirement,” I choose to only author my own books, then I have effectively exited the freelance writing business.