1.4A END GAME
Entrepreneurs live for the struggle and exhilaration of launching a business. It is among this excitement, and in the flood of hard work, that the business owner may not realise that decisions made on day one will have implications in year five.
By the time you’ve decided you don’t want to run this business anymore, your mind and mojo will have already exited the building. By this stage, it becomes difficult to sell the business because you’ve lost the enthusiasm to have the right systems, financials and audience in place. That’s why it’s imperative to map out your exit strategy, and continue to follow this map, before you even set foot in the door.
1. What is your endgame?
2. How long do you intend to stay in the business?
3. Do you want to pass the business on to a family member?
4. Is this business a not-for-profit which would ideally continue to thrive after you exit?
5. Do you want to sell this business?
6. Do you have other business ventures in mind?
7. Do you want to remain in the business for your lifetime in some way?
1.4B EXIT OPTIONS
Let’s Do This:
Answer the following questions on paper.
- Who is your ideal buyer? Consider big and small players in your field, or even in other industries.
- How will you sell?
- Do you have a strong pitch already written?
- When it comes to the pitch, will you be bringing a team member with you?
- How will you structure the business during your ownership?
- How will you make it attractive to buyers?
- What do you need to be doing at years 1, 2, 3, 4 and 5 to get this business in a position where it’s going to be attractive to buyers?
- How do you ensure buyers will be prepared to pay a fair and reasonable multiple of the profit for the business?
In the same way that you would renovate, repair, clean and stage a home in preparation for sale, you want to package up your business with a big red bow. Ensure that it is visually enticing but also highly functional.
Spend money on marketing and branding in the lead up to selling.
Gain loyalty. You can build your email subscription list or database in a few ways: give away small tips so that people sign up for more advice; regularly post an interesting blog; email receipts; or offer points, incentives or discounts.
Ensure your Brand Book is relevant, evolving, comprehensive and clear.
Get as much profit on the bottom line as possible.
Lock in contractors. If applicable, have contracts in place for a minimum of two years post-sale, otherwise you might just be selling your tools or materials on Gumtree. Your contracts and client safety nets ARE your business.
Ensure your operations, logistics or technical manual is consistently updated.
1.4D FUTURE YOU
You will need to determine the role you will play after the acquisition of your business, and which outcome is best for you personally. By planning your exit in advance you can maximise the value of your business and enable it to meet future needs.
Consider the following roles carefully for your future self.
- Minor Shareholder – continue to receive dividends into the future.
- Freelancer – if you are the face or voice or body of the company, you may choose to stay on as a freelancer.
- Retiree – if you want to retire and buy an island, go for it.
- Employee – if a client is buying you out because it’s the best outcome for both of your businesses, yet you’re not ready to part ways, you may consider staying on in management.
- Board Member – continue to contribute to executive decisions of the organisation.
- Entrepreneur – you may want to sink your teeth into a whole new business.
1.4E SUCCESSION PLAN
Be decisive of your exit strategy from the beginning.
Be proactive with your succession plan.
Keep manuals up to date.
Have an open mind and be willing to pivot.
Visualise your future.
Make the vision known.
Provide training to potential successors.
Do a trial-run when you are on leave.
Use succession planning to develop a hiring strategy.