Tag Archives: transition

Pain of External Factors Discourages Business Owners Preparing to Cash Out

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Are you uncertain about the future for you, your family, or your business? If so, your instincts and intuition are on target – you can’t afford to ignore the facts. There’s an unavoidable confluence of factors that require your immediate planning and action.

  1. Sellers’ Competition Increasing - 8.1M Baby-Boomer Business Owners think they will sell/scale or in some way cash out of their business by 2018. It takes 2-5 years to prepare the business so you can achieve the maximum returns. Another 8.1M Baby-Boomer Business Owners intend to sell in 5-10 years. Anyone in the first group who was slow to market will now compete with an added group of 8.1M peers – likely even more desperate to get out quickly and seeing how difficult it was for the first group of Baby-Boomer Business Owners to transition.
  2. Seller’s Window in the Market is Shrinking – 2013-2018 is a seller’s window (sellers have the advantage in a transaction, buyers have the liquidity, and this is the leading edge of a huge selloff/transition of ownership across industries). If you wait too long, you’ll miss this window. In 2018, the market itself flips and becomes a buyer’s market until 2022 (buyers will have the dominant advantage in a transaction, there will be even more sellers than buyers, and buyers will have more choice and can drive prices down).
  3. Inflation Will Wipe Out Any Leverage – Quantitative easing will not solve the US debt problem. The only option the government has is to allow inflation to rise – some say up to 50% – in order to wipe out the debt. Inflation, which is being held down artificially, will rise to heights we have not seen since the 1980s within the next five years. After that, inflation will wipe out any leverage or advantage that sellers have in a transaction.
  4. Longevity – In your retirement and investment planning, your business will likely be a dominant source of the cash to fund those plans. Do your reinvention plans assume you’ll live three years beyond your exit? Until age +/- 85 as some of the newer data suggest? Or do you want to be on the other end of the curve suggested in a recent TV commercial by Prudential and live to 100 or 110? The bigger question then becomes, have you indeed made adequate plans for your resources to provide for the lifestyle you want for another three or four decades? Or to leave a legacy that will last another 100 years?

There’s no denying these trends are happening. As much as business owners are taking a beating from all these factors, a wait and see approach is about as effective as hiding your head in the sand like an ostrich. Rather, look at these external factors as a warning bell to plan now so you get to cash out and move on to your transition on your terms and your timeline.

It’s never too early or too late to plan your exit. At Exit This Way, we can help you through this minefield with strategy, tactics, and much more, the sooner you call.

Successful Entrepreneurs as CEOs

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If you really own the CEO role and responsibilities, you always have an eye out for the bigger picture of what you want your business to become with a purpose much bigger than yourself. Successful entrepreneurs know their strengths and build on those strengths to successfully achieve their vision. The most successful CEOs are very disciplined strategists who stay focused on their own goals, their own “blue sky strategy” and are not easily distracted by “new shiny object syndrome.”

If this were the only secret to being a CEO who launches a business that explodes in the marketplace, then indeed we would see the 95% failure rate dip a bit. But that’s not the only secret you need to know to make a dent in that statistic.

The problem for the majority of CEOs is that they never grasp the elements that are central to their long-term success. They unintentionally and unconsciously set themselves up to never achieve their goals and never realize the wealth and freedom their businesses could provide.

Ninety-five percent of all entrepreneurs are locked into running a business that perpetuates the three fatal flaws compounded by the three biggest oversights.

By bringing each flaw and oversight out into the open and identifying each one, entrepreneurs wearing their CEO hats can take the first steps to reverse course. Instead of murdering their business, they can lay a foundation for success, prosperity, achieving goals and transitioning out of the business on their own terms.

Stagnant 95% Statistic

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It’s devastating. Ninety-five percent of all businesses never achieve their goals for the business and beyond, not to mention the long-term financial expectations for their families. This 95% statistic is widely accepted as an unchangeable fact and “the risk of doing business.”

I can’t understand why it is still the accepted norm. Just like you confront and address every other risk you face in business, why not illuminate this gap, address it and fix it. I want to help you minimize the risk and overcome this statistical barrier to your success, to fulfill your dreams.

The core causes of this problem have been around since you launched your business. The solutions aren’t easy but they are so inexpensive that you can afford to implement every one and still stay within your budget. The key is, that we must reveals the flaws of businesses today and owners’ biggest self-imposed barriers.

The solution I present is a system that builds a strong foundation for your business, whether:

  •  You are just starting out, or you’ve been in business a while
  •  You have a team or no team
  •  You have revenues less than $100K or more than $10M
  •  You are on a fast-track to be acquired or want to cash out to pursue your reinvention

When you systematize your entire enterprise for long-term results, it will transform your business and your life. You will gain time, control, freedom and flexibility all while the business prospers, grows and breaks through to achieve new heights of success you didn’t dare dream of – until now. Everything you do to accelerate growth and maximize value makes the business more buyer ready and buyer attractive.

If you are in business delivering product, content or services, then you have a few options to grow your business exponentially. Simplistically, your choices are to:

  •  increase the number of clients
  •  increase the volume you sell/client
  •  increase prices
  •  decrease costs
  •  or a combination of these four

When you take action to build a sale-able business, you join the 5% who successfully complete the transaction and transition to their reinvention.

Qualifying Questions For Your Virtual Partner In Exit Planning

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When you are ready to ask for help planning your exit – how to get out, where do you turn for help? Here are five questions to ask potential advisors to determine if they will focus on your best interests.

1. What is your specialty? What is your core business?

You want an exit strategist whose focus is exclusively on your optimal exit, who is not distracted by other disciplines.

 2.      How will you charge me for exit planning services pre and post transaction?

You want to know you are being charged for exit planning expertise and exit planning time, not attorney time to do exit planning. You need an exit strategist on board, engaged in your situation years before you need your attorneys, accountants, and wealth and insurance advisors.

 3. How engaged will you be in my operational implementation and transition up to the transaction?

Leading up to the transaction, licensed advisors will be focused on the expertise they bring to the table. Their availability will be limited to help you with operational decisions and issues leading up to the transaction. After the transaction, you will need your exit strategist engaged to ensure your total integration into your reinvention lifestyle, but after the transaction, licensed expert advisors will move on to the next transaction. How much will they/can they be there for you?

You want an exit planner who will be fully engaged in operational implementation, growth and optimization strategies and your own transformation from operational president/owner to the strategic CEO of a stronger more profitable enterprise, not just the 6-month end game.

 4. Will you help me assess exit options and timing/tax/liquidity impact of each?

You need an exit planner to help facilitate discussions with all your exit advisors to integrate their recommendations and tradeoffs for each exit option you are considering. An exit expert who stays focused in their own silo of expertise cannot provide the wider perspective you need to make the best decisions.

 5. What will you do to assist me in determining my reinvention plan and my goals and lifestyle beyond the business exit?

The licensed experts you engage for their expertise can ask you all the right questions, but they expect you to prepare and deliver the answers on your own. You need an exit strategist who will assist you in developing your reinvention plan and lifestyle beyond the exit, test it, refine it and lay out a blueprint to implement it from Day 1 of your reinvention.

Whether you engage the Exit This Way Out Group as your virtual partner or not, you need to use the materials, checklists, tables and guidelines provided here on the site and in this blog to make your business a wealth producing machine that will provide the financial independence you dream of to fund your reinvention.

The Sun Never Sees A Shadow

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sun never sees its shadow

Think of the most successful business leaders you know. They are never idle. They don’t stand still. They are always moving forward. They don’t look for problems and opportunities just from one angle. They keep moving and view their business from all directions. They see the shadows and explore what’s hidden in those shadows. To accelerate growth and maximize value, they seek out and find new solutions and get meaningful, life-changing results that their competition never will. In every decision they make, they are always asking; “is this decision taking me closer or pulling me away from my long-term plan to sell/scale or find a successor.”

Obviously, there’s much more to learn and much more that can be achieved to make your business a wealth producing machine that allows you to transition to your reinvention, fulfill promises and walk away with the financial freedom to live the life of your dreams.

I can help you get there faster, sooner. I can make the job easier, and far more enriching for you if you’re interested in my personal assistance.

Exit Planning for Your Transition to Reinvention

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Ideally, exit planning occurs before action in every area.

Too often business owners/CEOs assume that because they want to exit the business soon, that they just have to act to make it happen. In fact, they are often surprised by how extensive the planning is that they must work through before they can get out and transition to reinvention.

Exit planning must include each parameter on this list.

Exit Objectives – Before you proceed, you must identify your exit objectives for the business and for your life beyond the exit.

Value Drivers – You must identify your value drivers, the value drivers that will make the business buyer attractive and the value drivers that secure the future growth of the business and protect your employees.

Transfer Control/Ownership/Management – Control, ownership and management are not the same thing. So planning how to transfer these different skill sets to successors is essential. You need to break them into distinct skill sets before you decide who you will train to succeed you in each area.

Contingency Planning – When things are running smoothly, owners think contingency planning is irrelevant. But if illness or an accident incapacitates you, your valuation will plummet unless you have a contingency plan/continuity plan established, documented and ready to activate.

Wealth Management/Preservation – You have to decide how much of the illiquid wealth of your business you want to leave in the business, to maximize valuation and secure future company success vs. how much do you need to liquidate to achieve your exit criteria and the financial freedom to pursue your reinvention.

Successful Exit – Defining and planning what a successful exit means to you is important. There is no vanilla answer. It’s unique to you, your family, your goals, your business, the lifestyle of your dreams. If you can’t describe it, you will never know when the package on the table meets your needs.

Exit Options – The earlier you start exit planning, the more options you have, the wider range of exit vehicles, wealth vehicles and reinvention options you can have.

Exit Criteria for your Transition to Reinvention

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You can exit your business on your terms so you can transition to the lifestyle of your dreams with the wealth to pursue your reinvention (venture, adventure, avocation, hobby, retirement)
But what you can’t do is assume you can simply hire a team of experts and just walk away from your business in the next six months.

Start with your exit criteria to achieve your ultimate goals as you transition to your reinvention.

• Freedom — What does freedom look like to you when you exit your business, after the exit transaction is complete?

• Control — Who’s in control of decisions, strategy, budget, operations, and sales now? Who will be in control of each area of the business when you exit? Have you transitioned the decisions and control to one person, to a team of leaders or to no one leaving a vacuum in the business?

• Wealth — What is your wealth requirement for your reinvention and lifestyle after you exit? How do you define wealth? How much of the wealth you need for your reinvention must come from the business? Can you liquidate the business to produce that level of wealth to achieve your other exit criteria?

• Liquidity — How much liquidity do you need immediately when you exit? How long can you wait to receive final payment?

• Timeline — What is your ideal timeline for your exit? For your reinvention? For liquidity?

• Legacy — What’s your definition of the legacy you want to leave behind? What do you and your business stand for? What do you want to be remembered for? How can you achieve that?

• Dynasty — Do you want to build a family dynasty? What would that look like? What do you have to put in place to realize your dynasty?

Transition to Your Reinvention

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If exiting your business does not need to lead to retirement and death, what’s next? It’s your choice, both because you’re the exiting owner and because your opportunity is not your parents’ retirement expectations.

What’s next can and should be your reinvention.

Our parents worked 9-5 jobs for large companies with a pension and retirement benefits built into their compensation package. They were loyal to the company for 20, 30 or more years and were rewarded with a secure pension to rest and relax for the rest of their lives.

That model has all but been wiped out. In its place every working individual has to plan, save, and invest over a lifetime of jobs, career moves and other changes to create the wealth to provide financial independence. As the owner of your business, you have been working long hours for many years to build the business to provide an income, while benefiting from and enjoying some tax-advantaged benefits of ownership (e.g., company paid and/or tax deductible health insurance, use of a company car, paid vacations, etc).

When you sell or pass on your business, many of those benefits become expenses instead of deductions if you want to maintain the same lifestyle.

Your reinvention in the 21st century will look very different from your parents’ retirement. Some general observations:
1. The actuarial tables for the second half of the 20th century forecast life expectancy to be retirement + 3 years.
2. Our parents left a job or career to go home and read, knit, cook, play golf or play with the grandchildren.
3. There was no expectation they would pursue gainful employment, start new businesses, or make major contributions as ‘old, retired’ people.
4. They were sidelined by society.

None of that is true for today’s BabyBoomer business owners, the primary audience for this book. As BabyBoomers, we:
1. Expect to live decades into the retirement years
2. Have the health, vitality, wisdom and creativity to reinvent ourselves, our lives and start over if we want to
3. Have no intention of retiring by any definition
4. Have more plans for the next three, four or more decades of our lives
5. Have the wealth, financial independence and education to expand our options and choices in reinvention.
6. Are choosing and planning our reinvention to be some combination of:
a. a new venture – for profit or not, a spinoff of the business just sold, or something entirely new – whether the liquidity from the exit transaction will be used to fund it or not
b. an adventure – whether that means moving to the coast, to the mountains, to a resort community, to a 55+ community, or moving to Panama, Belize or Singapore, or sailing around the world for a year
c. an avocation – a cause or organization to contribute more time and resources to
d. a hobby – whether it’s learning golf, a musical instrument, or a new language or spending more time on an activity you love like horseback riding, scuba diving, sailing or skiing.

You must plan your transition to reinvention in the same systematic way you approach the sale of your business. One is closing out a chapter of your life. The other is setting up, structuring and preparing for the next chapter of your life. It is essential that these two projects progress in tandem to achieve a smooth handoff from one to the other when you exit your business.

Seven Keys to Success

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Before you can implement your transition to reinvention, you have to plan it starting with some quiet time to reflect on you, your life purpose, and your outstanding Bucket List of goals, dreams, and adventures; the accomplishments you wish to pursue or complete beyond your business. Journal about the following “Seven Keys to Success,” in terms of the quality and richness of your life that you want to build after you exit your business. This should become an ongoing exercise early in your business right through the exit transaction and transition to your reinvention.

1. Awareness: It’s important to know who you are, how you got here, and what kind of decisions you’re making. We all get programmed as kids, but that doesn’t mean we have to live our whole lives with that programming.

2. Vision: Imagine the details of the life you want to live. We each make our own roadmap – consciously or unconsciously – and having a vision lets us know where we are going.

3. Purpose: Understand why you want to get to the destination. There’s more to life than hard work and grubbing after money. Finding purpose in everything you do puts a fulfilling life within your grasp.

4. Belief: We all believe in ourselves to some extent. Increasing that personal belief – your confidence – is a major component for being able to move forward.

5. Action: There are different types of action we take based on our awareness, vision, purpose, and belief. The momentum we build with our actions serves to propel our growth and development.

6. Gratitude: This is a deep and personal thing. I’m thankful every day for Uncle Tony and my dad. Being able to have gratitude for what we have in life – no matter where we’re at – is the hallmark of success.

7. Forgiveness: This is the hidden key to achieving and keeping success. Setting aside “what has happened” in favor of “what can be” means you’ll have your hands free to hold your success when it comes.

Is Retirement the Same as Death?

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Entrepreneurs in the US for the most part are stuck. They are working hard long hours to create an income stream. If they stop working, there’s no income.

The fallacy is that there is no exit, and never will be, if you only focus on generating an income stream to pay your salary or to meet payroll. Without a wealth plan in place, a wealth plan established from profits, then retirement might as well be death because those same hardworking CEOs have no assets to walk away with, no assets to invest for their future.

When I talk to some CEOs and the subject of retirement comes up – you would think I was talking about their mortality. They equate any form of leaving the business as death. They live for the business. They have become so immersed in the business; they’ve lost sight of the purpose of commercial enterprise, their commercial enterprise.

The purpose of all commerce is to make a profit. When a CEO can turn a profit and exit on their terms and timeline, that’s a successful exit.

My assumption is that every CEO wants to liquidate their position in the company they built/own at some point, whether to fund their next step, even if it’s not a classic retirement; secure the future for their family and loved ones; or fulfill the terms of a will or trust. Even those CEOs who resist planning their exit, often procrastinate because they don’t know what to do or how to do it. No one intends to leave their business feet first without a plan for its continued success; but in epidemic proportions, they just don’t initiate and implement a timely exit plan.
When a CEO can walk away from the business with liquidity to fund their reinvention on their terms, instead of a rocking chair, knitting needles or fishing pole, that’s not retirement or death. That’s freedom and financial independence. You can too.

Before you can implement that transition to reinvention, you have to plan it starting with some quiet time to reflect on you, your life purpose and your outstanding Bucket List of goals, dreams, and adventures, accomplishments you wish to pursue or complete beyond your business. Journal about these seven keys to success, in terms of the quality and richness of your life that you want to build after you exit your business.

Getting Out – Have You Prepared A Transition Plan?

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transition plans

Preparing a written transition plan is a critical element of your whole exit strategy. But surveys consistently verify that CEOs avoid this element regardless of age, or size of the business. There’s a concerted dearth of attention to how they will transition out of the business by CEOs, never mind determining to what they are transitioning.

Most owners:

  • Fail to get the highest possible value for their business, or
  • Transfer it to an ill-prepared successor, or
  • End up paying too much in taxes

or even all of the above.

Whatever your goals or your timeline, it is time to plan for your exit now.  Experts agree that if you want to maximize the value from all your sweat equity, you must invest in proper planning years in advance of your intended exit.

The ROCG Report results confirm:

  1. There is an overall lack of planning. Their survey found that only 9% of business owners have a formal written plan that includes succession and transition planning for the business. That means 91% of all CEOs in the US have no plan on how they will transition out of day to day operations.
  2. Current estimates report that more than 40% of business owners plan to exit within the next five years; and 80% of all business owners plan to exit within the next 10 years.
  3. But on a timeline of market trends, there will be many more sellers than buyers in the market place from 2013 – 2018, just when that first 40% are expecting to sell their business.

It is a disaster waiting to happen. It will only be compounded when you add in the fact that 21 million baby boomers will be selling off their businesses over the next 15 years.

Will widespread catastrophic losses be the result?

Without proper advance planning, we could see wave after wave of business owners fail to get out with the wealth they need for their reinvention. These CEOs:

  • May not be in position to maximize their personal finances for financial independence when they sell sale;
  • May be forced to sell at a deep discount or accept unfavorable conditions;
  • May risk a business closure, leaving them with nothing;
  • May have a business that ultimately fails and/or potentially destroys family harmony in the transfer to family members.

Timely transition planning is a core strategy to avoid facing these types of obstacles and despair. Pro-active strategic business planning and transition planning can help to ensure that the transition is successful at meeting all your goals for the business as well as your lifestyle and legacy objectives.

When To Do Strategic Planning?

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Strategic Planning

When and how long to spend on strategic planning depends on the company itself. At a minimum, any company serious about achieving goals, must allocate time for long-term planning, goal setting and review on a consistent annual basis. This project must be sacrosanct.

Especially, if you are already within the 5 year window of your target exit date, there can be no exception, no excuses for not doing strategic planning.

Your annual strategic planning should tie every goal, every system, every budget and hiring decision to your exit criteria and timeline. Following this strategic plan will help you position your company as one that ideal buyers will be eager to scoop up – maybe even before your target date.

But strategic planning is not just an annual event. You must then roll it back into goals, planning and tracking each quarter, each month and each week. At this granular level, your strategic plan will drive every decision, every expense and every task each employee works on thus increasing productivity and value daily.

To ensure your planning is done in a very comprehensive and detailed fashion consider the following guidelines. Implement your strategic planning process at each of these milestones

  • In the third quarter for the following fiscal year.
  • In preparation for a new major venture, for example, a new department, new product, new market channel.
  • Action plans are updated to be sure objectives, responsibilities, time lines and budgets are on course.

Implementation

The attorneys report that historically,

only 10% of all the deals business owners want to implement, actually get to the closing table and get done.

The list of reasons why they fail is lengthy. It comes down to the owner’s preparation and stamina in mindset and skill set to get the job done.

An implementation is the realization of an application, or execution of a plan, idea, or policy. To implement a plan (e.g., a strategic plan, an exit plan, or a succession plan) is to carry it out, to accomplish all the details of the plan. When you commit to implement a plan or strategy, it’s a commitment to ensure the fulfillment of that plan by specified concrete measures.

A strategic plan and an implementation plan are not the same thing. The strategic plan tells you what to do, why, when and the budget to do it. The implementation plan spells out the details of how, the resources, timeline, requirements, etc. They are two sides of your exit planning to think through.

The key to your successful exit is implementation. Full implementation of your desired exit option, to transition to your reinvention, requires following through on a detailed, well-constructed plan. Your exit plan has many moving parts. You must constantly orchestrate all of them. Internally, you must coordinate your team, successors, experts, vendors, clients, budgets, prices. You must align the company goals, market value and corporate objectives with your personal exit criteria and priorities. Executing your exit plan cannot be delegated or outsourced. You must take charge of every step of this implementation to ensure you get to the closing table on your terms, on your timeline.

The challenge to your successful exit is also implementation. It’s a big load. Often, most of the pieces need to stay confidential and independent of day-to-day operations. Balancing your exit with daily operational priorities can be distracting and exhausting. I believe that implementation is where most business owners buckle under and can’t get the deal done because, from their point of view, there are:

  • Too many balls to keep in the air
  • So many new once-in-a-lifetime decisions to make
  • All the changes to make in the business, in their leadership and in their business model
  • So many different experts to bring up to speed – all charging full rates
  • All the contacts and negotiations that take longer than anticipated

Moreover, there’s the loneliness and isolation of working through this process which takes years, especially when you try to do it alone. Our clients at This Way Out™ Group LLC appreciate the support of a virtual partner at their side through the whole process.

What Is An Exit Skill Set?

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Remember the campfire story of ‘going on a bear hunt’ It’s told as a round with everyone slapping their knees and pounding their feet to the rhythm. The refrain at each obstacle encountered is a version of: ‘Can’t go over it, can’t go under it, can’t go around it, gotta go through it.’

For every challenge and adventure the hunters face, they overcome it and find the bear.

The lesson applies to your business as well. Instead of settling, you need to equip yourself for your bear hunt, to maximize the value of your business so you can transition to your reinvention.

Your exit skill set must include mastery of the following:

  • Emotional Intelligence (EQ) skill set
  • Leadership
  • Time Management
  • Productivity
  • Planning and Strategy
  • Implementation
  • Delegation
  • Automation

If your goal is to get through the day, meet payroll, go home at night and enjoy the perks of ownership as business deductions , you could continue on with business as usual.

But if you want to accelerate growth, maximize the value and make your business extremely buyer attractive and buyer ready, there are other skill sets you must master starting now. Your exit skill set takes 2-5 years to learn, evolve, refine, implement and master.

You might say these are soft skills, that these skill sets are not essential to how you run your business now, and conclude that they are not essential. That may be. However, unless you are content to walk away with only 50-70% of the value you know is in your business (the value you are planning on liquidating to fund your reinvention plans); you need to apply each of these skill sets across every department, product line and your entire team.

Consider how each skill set once learned will benefit the business, your team, the buyer, your own exit and your reinvention.

Exit Mindset Shift

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Exit planning is a whole new job that you never had before and you’ll probably never have again. Your exit mindset will decide if this is a rewarding experience leading to the lifestyle of your dreams or a traumatic experience that wears you out even before close the deal. You need an exit mindset shift.

Transitioning to and maintaining an exit mindset shifts your priorities, focus and goals. With an exit mindset, any strategic decision you make in the business will be driven by a desire to show growth and add value for the buyer, and maximize the liquidity and financial freedom for your reinvention after the exit.

This mindset shift is taking all the strengths, assets, experience and opportunities for your business and applying them to one specific outcome – your exit on your terms on your timeline. They include all your:

Drive                  Motivation               Belief — spiritual
Passion             Determination        Conviction – emotional
Inspiration          Resiliency              Clarity
Focus

That’s a big shift. It’s a shift that most business owners do not and cannot make. They get stopped right here in their mindset along with their naïve exit criteria.

Mindset

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Your mindset going in to exit planning is the most critical determinant of your successful outcome. There are a number of mindset factors that you must recognize and consider. Your mindset will determine your ability  to set and achieve your hopes and dreams. You have to be able to recognize and adhere to the process to achieve them. Most CEOs have dreams and goals of the outcome they want from their business. Many fewer CEOs reverse engineer their goals into a timeline, process, and a sequence to get to that exit.

Challenges will occur that could derail your exit plan, guaranteed. Fighting or resisting those challenges is an unproductive waste of time and energy. Instead, install and master a mindset to address, overcome, resolve, and circumvent each challenge as it arises.

Attitudes/mindset are often ignored or minimized when exploring what we need to learn to achieve our goals and get to an exit.

Most CEOs trained to emphasize the strengths of left-brain thinking, resist addressing or developing the right-brain skill of mindset readiness. Mindset readiness requires the most time to develop and is not easily measured or demonstrated. But your mental and emotional attitudes are the most important of all learning components because your attitude/your mindset is the gatekeeper that determines how well you acquire, master and apply any other skill set and knowledge.

Entrepreneurs stubbornly adhere to tired outdated thinking which in turn sets up their business to continually struggle, not achieve its full potential and settle for selling their business for only a fraction of its worth. That downfall is totally preventable.

In the area of mindset, attitudes and beliefs, do you experience any of these? Make note of the ones that apply to you.

  • Have no exit goals
  • Can’t set exit goals
  • Don’t know how to set exit goals
  • No consensus on exit goals
  • Can’t delegate/afraid to delegate
  • Prisoner of the entrepreneur’s trap  – Trying to wear all the hats
  • Scared to grow – because of past experience, old belief systems, systems or staff that slow or prevent your growth
  • Scared to share control, responsibility, ownership or profits
  • Scared to lose control
  • Easily distracted – by environment, people, events, equipment
  • Minimal goals/easy goals/short-term goals that don’t stretch individuals or the organization – to play it safe
  • No personal accountability of the leadership team/ of you
  • Still running the business as an opportunist
  • Resist building a strong business foundation for growth or increased value
  • Ignore or deny the need for exit planning
  • Ignore or deny the need for contingency planning
  • Ignore or deny the need for continuity planning
  • Ignore or deny the need for succession planning
  • Ignore or deny the need to plan for your transition
  • Ignore or deny the need to plan for your reinvention

You’ve heard the phrase:

Your attitude determines your altitude.

Your mindset is the key to everything you will achieve to exit your business when you want to. When you decide each of these elements is important enough to the business and to your future beyond the business, only then will you take action and:

  • Develop the skill sets
  • Acquire the necessary knowledge (direct learning or surround yourself with experts)
  • Develop plans, strategies, and tactics to achieve everything you want for your business and from your business when you exit.
  • Apply the discipline and leadership to accelerate growth and maximize value on your timeline.

“It’s a mindset – you’re only limited in scope by your own imagination and your ability to see through problems, challenges and roadblocks to the opportunities.”

 

You Must Have a Business Exit Strategy

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I repeat, you must have a business exit strategy. It’s not optional.

Without an exit strategy, you may get stuck in a quagmire – where you can’t get out of your business. Why would you intentionally allow yourself to get into that predicament?

At its worst, an exit strategy will help you save face instead of closing the doors and walking away with nothing. At its best, your chosen exit strategy will tie your transition to the achievement of a specific objective worth more to you than the cost of continuing on as CEO.

When you do decide it’s time to move on and you want to ‘cash in’ on the successful prosperous business you’ve worked years to build, here are few steps you can take immediately to get started on your exit strategy:

  1. There is tremendous pressure associated with every step in the sale of a business. Make time to work on the strategic side instead of focusing exclusively on the tactical/operational side.
  2. To prepare for the sale, start thinking about it early: ideally 2-5 years before you intend to walk away.
  3. Put yourself in the buyers’ shoes. Recognize what they want, what they need, what they’ll ask for and what they’re looking for.
  4. Don’t even consider doing this alone. Loners can tell you the best stories about their failures but you don’t need to be one of them. Instead, assemble an integrated team of professionals. An exit strategist can become the virtual partner who facilitates your team of licensed experts to produce a cohesive exit solution.
  5. Make sure your financials are ‘clean’ and your projections are sound. You want everything in order well before the sale date.
  6. Prepare the business before you get a professional valuation to enhance the value of the business. This will strengthen your negotiating position with prospective buyers. The analogy is that to sell a home you de-clutter and make it spotless to get the best price, which takes time. The same is true, even more so, for your business.
  7. Get educated on the process of ‘selling a business’. There are many elements, many options, and many players. You want to be in control of the process.

Many CEOs believe the mythology that they can make the decision and exit the business less than 6 months later. In practicality, it takes 2-5 years for a CEO to fully exit their business.

If you try to rush it, you face many risks and consequences that are avoidable:

  1. You reduce your choices
  2. You eliminate strategic options to grow (top line, bottom line, etc)
  3. You minimize the value you can get
  4. You don’t have enough time to think through the integration of personal, professional and business goals
  5. You may not be satisfied with hastily chosen results
  6. You may not prepare staff and successors enough for an optimal transfer and transition
  7. You may not be able to prepare adequately for the tax consequences of your decisions
  8. You may not be happy with the outcome even if it is on your accelerated timeline

Tame your exit strategy. Start early. Plan ahead