The great majority of business owners spend all their time on day-to-day matters and give little or no thought to how and when they will exit the business.
Most entrepreneurs swap one employer (a corporation) for another (the daily demands of their business), then work 30 years or more, a slave to the company they created.
Then one day life throws you an unanticipated curve: A terminal illness. Children not interested in taking over the business. A lack of retirement funds. A business so completely identified with you that it can”™t be sold. You die leaving estate taxes and other financial problems for your family. Or you end up working till your dying day just to have enough money to keep your home and afford basic necessities.
Is that how you want things to go?
The plan that can change your life
All of this can be prevented with a very simple plan known as an exit strategy. Instead of letting your business run you, sit down with your lawyer, accountant, bookkeeper, financial planner, spouse, children, perhaps even your employees 10 to 15 years before retirement and figure out when and how you want to exit your business. Then you simply plan backward from that date to ensure you undertake the necessary steps to achieve your goals. So when exit day arrives, you walk out the door into a new life that you had planned for.
In a brilliant book on this topic, “What”™s Your Exit Strategy,” author Peter Engel asks what might your business look like if you began it with an exit plan and worked backward to the launch?
Engel hits the nail on the head: Most owners are far too wrapped up in the day-to-day activities of their business. The longer you stay “down in the trenches,” focused on daily operations, the harder it becomes to step back and see that your business is simply an asset to be grown and managed to produce the greatest return on your investment when you are ready to leave.
Famed business development expert and professor Keith Cunningham concurs: The entrepreneur who can look at his or her business for what it really is ”“ an asset to be leveraged as much as possible ”“ stands the greatest chance of success.
An added benefit, if you follow this approach to building a business with an endgame in mind from the beginning, is you will get organized faster, make better decisions, stay more focused, make better hiring choices and ultimately stand a better chance of having a business that works in any economy, with or without you. This is because your focus is not on being just another employee. It”™s on being a strategic owner.
Choose your exit strategy
There are essentially six ways to exit a business:
- Sell to a strategic buyer, who sees it as a way to grow his existing business;
- Sell to a buyer who is just looking for an income-producing asset;
- Go public;
- Sell to heirs or employees;
- Liquidate assets; or
- Run it until you no longer can.
Each has pluses and minuses depending on your situation. And any one of these strategies can work for just about any business. However, you need to make a choice and create the plan to make it happen. Time won”™t wait for you to decide.
And wouldn”™t you feel more secure building the kind of business you want from the start rather than working yourself to the bone and hoping for the best?
Josh Slavitt is a certified business coach with Westport-based Next Level Strategies. Reach him at joshslavitt@actioncoachnow.net. Visit the firm”™s blog at www.youractioncoaches.com.
