You Must Have An Exit Strategy
You must have an exit strategy for your small business enterprise. Few do. Some think they do and really don’t; they are dreaming, not preparing. Eventually selling is not an exit strategy, it is a dream. It is a huge failing to not have an exit strategy and a real problem that has built-in self-destruction potential. However, it is never too late to resolve this time bomb.
Without knowing the final goal and ultimate objective, the end play–such as when, and how–cannot be planned for. How can you make appropriate decisions leading up to it? For example, if your plan is to bring your children into the business and pass it on to them, have you devised an appropriate training program for them? Have you devised an effective way to transfer ownership? Have you determined whether or not they want to take over the business, and whether they are capable? Is it all just a dream and a wish that, if it happens, will happen on its own merit in its own time and in its own way? That’s a perfect way to assure it never happens or that if it does, it will be with a low likelihood of success.
If it’s your intent to sell your business have you determined when? How you are going to accomplish this? How much can you sell it for and what about your debt? Are you preparing for it by training your own replacement, by flattening your management, by creating systems that are written and trainable, by training all your employees to do their job effectively? Are you keeping accurate records, able to demonstrate your profit and success?
If the business is built on the owner’s skill and the business cannot survive without his input and management, it cannot be sold. When the business should be sold is a key issue or it will go on forever. If you have predetermined that you want out in five years then you can create a schedule of events that lead to this conclusion. If the idea is just to “someday” sell, it will never happen. Are there partners who want to buy you out at some point in time? Then better to figure out the formula in advance rather than attempt to negotiate it when you are ready, at the wrong time. If you want to sell to your employees, much preparation is required and this project needs a few years to develop and conclude but will remain a wish and a dream if not prepared for long in advance.
Most small business owners think about this matter way too little and way too late–or never–and simply allow the business to control their lives as if that is the only way it can be. Not so. Take control of your destiny and future and honor the business and your employees with effective exit strategy planning. Everyone will benefit.
