Author: Shankar Meembat, The Alternative Board (Milton Keynes)
If you’re a business owner have you ever thought about the time when you will no longer be carrying on with your business?
In other words, have you thought about your exit strategy?
If your answer is no, you’re not alone.
I recently met with a business owner, who had been running a business for over 32 years. She had now started a second business, which was much more fulfilling, and very much more in line with her passion. So she decided, she needed to exit out of her first business and was quite confident that her management would be able to take over.
Sadly she has just found out that that was not going to happen. Now she’s left with a situation where she does not have a definite date as to when she will be able to exit.
The fact is that she had started her exit planning too late.
This is more often the case than not.
In a recent board meeting, where I had nine business owners around the table, there was only one that actually had an exit strategy and was executing on the same. And the fact that there was even one is more of an exception than the rule.
Typically when I ask business owners about their exit strategy, I would get one or the other of the following, it’s either;
“I don’t have an exit strategy, I’m going to be working on the business all the way through” or
“I’m gonna build this up to be my pension when I retire at so-and-so age”
Another common one is “I’ve got to build up the business so that it would be running on without me and I’m just going to take a back seat.” And of course some of them would say they are going to be exiting by sale, whether it is the outsiders, to employees, or maybe by passing it on to the family.
In a majority of cases, the timeframe they give would be five to ten years and that’s quickly followed by the fact that that’s quite a distance away, so “I don’t need to start the planning now.”
Yes, things can change over time and the best laid plans can go wrong, but starting the planning just a year before you decide to exit is no answer – as the example I cited before shows.
So how do you prepare for your exit?
Bo Burlingham in this book “Finish Big” set up quite a few good points that I’d like to try and summarise for you.
First, have a vision of what it looks like when you exit out of your business. And be sure it’s in line with who you are.
Next have a succession strategy, and make sure you consider the impact of that on all different stakeholders.
Third, put yourself in the shoes of a prospective buyer or successor – what are their motivations? What would they want out of the business?
And most importantly give yourself plenty of time, years not months and multiple options.
And lastly, get help from others who have possibly done this themselves or who are in a similar situation to you.
In short, when you plan your exit strategy, get ready to leave.
L E A V E as in
L – Learn to look at it as a buyer or successor would.
E – Consider the Effect it would have on others.
A – Get Assistance from others who are in a similar situation.
V – Have a Vision of what you want out of an exit and lastly,
E – Ease into it, give yourself plenty of time.
So remember, start planning your exit strategy, but be prepared to leave.