Do I need to put the exit strategy in the business plan?

The "Exit Strategy" topic is an important part of every business plan. It benefits everybody involved in the business.

• Owners (and their families)
• Investors
• Employees
• Families

Show that contingency plans are in place for a number of different disasters and a plan is also in place for how and when the business will evolve.

"Does it make sense to put in the exit strategy as Yahoo!(or some company) will probably buy us out in two years?"

Yes, Acquisition is a very valid exit strategy. But there are other exit strategies to discuss, some more comfortable than others.

• What if one of the key partners dies?
• What if a key partner wants out?
• What if the acquisition strategy doesn't work out?
• What if the market for the key product dies?
• What if the necessary financing falls through?

Covering questions like these and others in the business plan makes everybody, including investors and bankers, feel more comfortable with the business plan and the people behind the business. It shows that you've thought these things through and that you're not operating in a fantasy land called "it won't happen to us".

Palo Alto Software