“I want to work harder, for longer, while earning less money”, said no business owner ever.
If you are a business owner and you want to be able to fully enjoy the fruits of your labour, you will need an exit strategy, or at the very least, you will need the systemisation and independent management that comes with the application of an exit strategy.
An ‘exit strategy’ normally means you are planning on selling your business at some stage in the future, and this strategy is best established before the doors open for day one – if not up front, then the sooner the better. The sale of your business is the ultimate return on the significant investment you have made, and could make a massive positive difference to your life and the life of your family, opening up all sorts of new possibilities not previously considered.
What if you are a business owner who is so truly passionate about their business, and you can’t imagine a day you would want to sell or exit the business completely? Well, there are other factors to consider.
First, if that is the case, then it might be that you also haven’t gotten around to fully systemising your business so it can run without you. It could also mean that you haven’t been able to take that 3-month European adventure that you’ve been dreaming about, or whatever your version of that dream might be.
Second, it is possible you could change your mind over time, or your circumstances might change somewhere down the track. The later you leave the planning and implementation of an exit strategy, the more you limit your options around timing and the more difficult, stressful and time consuming it could become.
Third, if something was to happen to you unexpectedly, even a nasty flu that required a lot of rest for 3 weeks, and you haven’t fully systemised your business, and set up independent management, you could be left with something very messy. If you were unable to attend to all the mission critical activities that you and your business currently take for granted, then you, your business, your customers and the other people who are dependant upon you could be negatively impacted.
And finally, creating an exit strategy doesn’t mean you necessarily have to sell your business, but the resulting systemisation does mean the business can run without you, and you take on the ultimate freedom to choose how you spend your time.
An effective exit strategy doesn’t need to be complicated and it should be considered as just another business process. You would set a goal with a financial outcome, a timeline and clear accountabilities. As a part of that process, you would consider what kind of buyer is likely to be attracted to the business, and look at the risks and opportunities in the market place, as well as the strengths and weaknesses of the business. Finally you would agree on a set of actions in response to that assessment and start putting it into action.
If you are a part of a family business and you want to see one or more family members taking over in the future, it’s a good idea to create a succession plan as a part of your exit strategy. This will ensure you have all the people and processes in place to enable you to step away from the day-to-day running of the business, long before you get close to a sale, or any other kind of exit.
