Whatever it is, there is a reason why you started your business. Maybe it was to build it up, sell it, retire young and set sail the sun or work on your golf handicap. You may have the dreams, but do you have a business Exit Strategy?
My dream when I started my company was to be free to travel the world whenever I wanted and to wherever I wanted – all the time! Shortly before I started my business, I had backpacked around the world for a year and had the most amazing experiences of my life. I had joined an unofficial club and I had well and truly caught the travelling bug. The opportunity to create a new business came unexpectedly but with a new and more relaxed outlook on life, I turned the opportunity into reality. From that day on, I was clear in my focus that the business would provide and opportunity to give me the financial freedom to be able to travel the world forever. And it happened!
If indeed you want to retire at some stage then planning your exit strategy is as important as planning the business success. And having the final goal /dream in the back of your mind is key to pushing you to make the right decisions along the way.
Achieving business success is not plain sailing and business leaders face many challenges. Some will fail. In fact, it was reported by ‘Ormsby Street’ that 4 in 10 businesses would fail in the first few years. To grow a successful and profitable business takes time, especially if the nature of the business is labour intensive. It is not easy and it will drain energy from you. You can never really detach yourself from the business and no matter what you’re up to, you will always be thinking about work in some way. Thinking of the business idea is the easy part, even starting a business is simple compared to the difficulties you will face trying to run it.
Exit planning is something you should do years before you actually hand over the keys to your business. You should create a vision of what you want to happen in the business, how big it will be, how many employees it will have, the geographical locations it will operate, the types of customers, the financial results, and what it will be worth. A clear understanding of this will help you to create a well put together strategy of how you will actually make this happen. You are effectively Designing Your Destiny.
A good exit plan will help you to drive your company to greater success. Understanding your plan will help you to make the right decisions and even more importantly, let go if the things that are not important. Getting involved in the trivia is something that too many business leaders do, and it causes undue stress and takes up way too much time that should have been allocated to the important task of running the business. Knowing your exit plan will keep you focused on the priorities and get you to your goal a lot quicker.
Using a business mentor is an excellent way to building your exit strategy. Rather than trying to learn things the hard way, you can tap into their wealth of experience and set a robust strategy that gives you confidence. In fact, using a good mentor throughout your business journey is an investment well spent. I would always suggest that you use a mentor who has actually led a business to sale and exit rather than someone who deals in theory. Working with a fellow entrepreneur who understands exactly the position you are in would be the best route.
Buyers want to buy a business that will stand on its own two feet so that they know that when they took over it would still be able to be run when you left.
Building a management team is the key to this. It will generate new ideas and energy, and will help you to build your business quicker. You will create a layer of staff who can take responsibility and be accountable for their element of the business. You will delegate many of the tasks that you shouldn’t be doing and you can focus on the strategy – the exit strategy.
When I built my exit strategy, I found that I was enjoying running the business more. By building a good management team, and letting go of many of the tasks that held me back, I had more time to focus on what was important. I believe business leaders should be focusing 80% of their time on strategy, and looking for the next opportunity. When I learned this and put it into practice, I started to enjoy my role so much more. I allowed the management team to get on with what they were good at and had been trained on, and I focused on the high level elements only, and got back to my entrepreneurial ways of thinking of new ideas.
Business leaders who have already started planning their exit route, tend not to get so stressed, as they have already passed on the responsibilities to their management team. They have a belief that they will be ready to leave the business when the opportunity comes, knowing that they have a strong team developed that will continue to run the business very effectively into the future.
Everything that arises, passes by. At some stage you will need to leave your business. Doing it under your terms is a lot better than being forced to do it from unfortunate circumstances or outside pressures. So start planning your Exit Strategy now.
Contact me for a free initial consultation on how I can help you to build your business and exit strategy.
I’m David Gowans, a proven entrepreneur and business mentor. My aim is to help people across the world to build their business and live the life they dream of. more