Hi there fabulous Masterminder!
In all the excitement of starting your business and getting it profitable, many entrepreneurs don’t ever think ahead to what happens when their company finally gets profitable and outputs a stable income. This is called the phase of business maturity – I like to think of it as thriving.
The vast majority of entrepreneurs also start their business with the goal of financial and personal freedom in mind. Freedom, both personal and financial, is a big deal for entrepreneurs! Is this you?
If freedom is important to you, I would like to challenge you today to think about your business EXIT STRATEGY. As Steven Covey’s Habit #2 from 7 Habits of Highly Effective People states: Begin with the End in Mind.
I encourage you to think about your business exit strategy because your business needs to support your life vision and goals in every way. Your exit strategy will help you create your future vision. Thus your business becomes a meaningful expression of your time and energy.
Exit Strategy Options
Your exit strategy concerns the final stage of your business. Exit options available to you include:
Lifestyle business: You love the self-employed lifestyle! Continue drawing as big a paycheck as possible from your company, rather than investing in capabilities or exit.
Corporate style business: Set up a management team and processes to run it for you, so you can free up your time for other activities or just work less.
Stop the business: Owner quits and liquidates at the end date.
Build to sell: Design your business carefully to make it attractive for acquisition by a buyer.
Franchise or license your business: Duplicating a successful model.
List on the stock market: You might consider an IPO if you have a winner.
Starting with the end in mind will help you design your company appropriately. For example, if you plan to franchise one day, you will create really well designed repeatable processes and systems. If you are planning to sell the company, you may have a focus on profitability of the company. If you plan to have a management team doing the hard work for you, perhaps you will reinvest by building your team.
Finding Your E-Date
What I would like you to do is plan an exit date now. This is done by very few entrepreneurs, so pat yourself on the back when you have taken the time to think about this and do it! This is a critical part of your personal life plan and goals.
It is less important what that date is, but that exit date should be something that your whole company plans towards. Let’s call this “E-Date”.
Step 1: Start with these soul searching questions:
a) What do I want my life to look like 3 years, 5 years and 10 years from now?
b) How will this business support my life goals?
c) What would my exit plan ideally look like?
Step 2: Set your E-Date
a) Pick a date for your planned exit and describe the type of exit you envisage.
Step 3: Fast forward to E-Date and ask these questions:
a) What would have to have happened professionally for you to feel deeply satisfied with what your company has delivered to you and your clients?
b) What capabilities, teams and systems are in place, allowing you to exit?
c) What financial deliverables has your company achieved?
Step 4: Building your Strategic E-Date Plan
a) Reverse engineer a Strategic Plan for the milestones your company needs to achieve to make steps happen.
With this exit date in mind, you can start making strategic decisions to get to this position on or before E-Date.
Warning: Simplify Before You Multiply
There is a rule for mathematical fractions called “simplify before you multiply”.
This concept applies really well to business growth, and I want to include this little reminder because when we plan for exit strategies, we are often looking at growth and what can be multiplied effectively in the business.
If your business is not profitable and enjoyable and running smoothly while small, multiplying these challenges is obviously not wise. If you 10X your business you will 10X its problems too. So take the time to perfect and simplify the portions of your business that you plan to scale.
Reading Lists and Inspiration
Built to Sell: Creating a Business That Can Thrive Without You. Book by John Warrillow
Making Money is Killing Your Business, How to Build a Business You’ll Love and have a Life, Too. Book by Chuck Blakeman
Rich Dad’s Cashflow Quadrant. Book by Robert Kiyosaki