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You won't get money from businesses that are being run in enemy lands until they are no longer your enemies.
That way, I may make a play through for the next 500 days doing something....then I can come right back to the saved game and redo another 500 days, making new choices and options, without having to rebuild again.
I would suggest that you could try this. Pretty much in any game, the character joining a particular faction can turn the tide of war for that faction, so even if they are almost wiped out, you will make a difference.
In fact, there are some players who play in such a way that they try to keep all the factions balanced, since when they are ready to take over their own kingdom, it's easier to take out factions that are not overly powerful. On the other hand, it's also very rewarding to have defeated a large and really dominant faction.
The factions can eliminate other factions in native. On one of my games, the Nords, Swadians, and Rhodoks ganged up on the Vaegirs and then wiped them out completely. After that, all three declared war on the Khergits and did the same thing. At that point, the Swadians and Nords stabbed the Rhodoks in the back and declared war on it, with the Sarranids joining in with those two.
All of that happened with no involvement on my part whatsoever -- the entire time, my character was busy minding his own business running quests, killing looters and setting up businesses and was never a vassal or a mercenary for any of the groups.
This has actually happened to me, so I can answer it. When you lose your last fortress, the game tells you that your court has nowhere to go, and your faction disappears from the map and from the faction list. At this point you have two options:
1) You can go to one of the other kings and ask to become a vassal. The king says he is willing to forgive you for declaring yourself a king, and he accepts you as a vassal. In fact you can even do this if you still have properties; you get to keep them but they become part of the kingdom that you joined.
2) You can stay independent and try to take another fortress. It does not matter how much time passes; when you eventually take another fortress, your faction reappears with the same name that you gave it before.
I have also seen scenario #2 happen with the AI controlled factions. In one game, the Swadians lost their last castle, however a few of their war parties were still in the field, and they had enough strength to retake the castle a few days later. When they did, Swadia reappeared on the map.