Planning! – Performance! – Parachute!
…a quick recap.
Thank you for returning for part 3 of 3 of “Business Vital Signs”. The 3 parts are:
- What is your business plan before you open?
- What are you doing to maximize profits while you operate?
- What is your exit plan?
Well, what IS your exit plan? Don’t feel bad nor be surprised if you have not put much thought into your “exit plan”. A quick scan of Google reveals the majority of businesses do not have an exit strategy at the time they desire to sell and that number is much higher when they open the doors.
Why would it be important to have an exit planning strategy / plan before you even open your doors or accept your first dollar? First and foremost, this puts you in the frame of mind that you should be working “on” your business and not just “in” your business. Yes, we completely understand many small business entrepreneurs ARE the face of there company or an integral component for the success of the day-to-day operations BUT at some point, you should have a growth plan that includes your migration from working as much “in” your business to a larger role of working “on” your business.
Below are several key factors to keep in mind when developing your “exit planning strategy” for your business:
- Planning – As Dr. Stephen Covey famously stated; “Begin with the end in mind”. This is where the planning of your business takes on its most important roles. Business planning before you open and forecasting your year-over-year accomplishments is key. Do NOT be afraid to put your finger on the calendar 5, 7 or 10 years in the future and write down that date. If it isn’t written down – it does not exist!
- Your Health & Your People – After your best laid plans are laid; one of the most important things to consider will be your overall health and to what extent you are involved along the way regarding your business and the day-to-day activities. IF you are an integral part of the day-to-day activities then you had better invest in your wellness early and be sure you are fit to not quit! Long days today should be the building blocks to working smarter versus harder. Building value within your business always begins and ends with your people and you are one of your people. Be sure to have an adequate succession plan in place that helps guide you through the people parts of growing your company year over year because if you don’t have your people in place at the time of your exit planning then your business will lack serious marketability.
- Building and Maintaining Value – All fiscal decisions carry consequences. Driving top-line sales while managing expenses may help your bottom-line BUT this isn’t the ONLY way to build and maintain value. A few other things to consider:
- Your Online Presence – YES! Your digital online presence is an appreciating asset. Businesses “today” must have an effective digital online presence. Your brand, reputation and exposure are all reflective here. A business with an incredibly well-built and maintained online presence is worth more comparatively to a similar business at the time of sale that does not have an effective online presence!
- Reputation – Believe it or not another intangible is your business reputation. It cannot be measured like a bank account or real estate BUT it can be a deal killer in a New York minute! Be ever mindful of your reputation on the ground as well as online.
- Acquisitions – There’s an old saying that comes to mind; “finance appreciating assets and pay cash for depreciating assets”. There are times when it is cheaper to use other people’s money “financing” to better manage cash flow and then there will be times when it is best to buy outright that “thing” needed within your business at some particular time. When it is time to sell you will want a good balance between assets and cash.
- Product and Service Development – Staying current with your product / service offerings will be crucial to your viability within the marketplace you serve. Outdated products or services that don’t solve problems for the consumer will affect your value not just along the way but certainly when you are ready to sell. Be sure to revisit your product offerings and your services at least once per quarter.
- Strategic Alliances – There will come opportunities over time to develop strategic alliances with vendors and even others within your market space. For example, you may not serve a particular market segment as well as a competitor, so you must weight out your barrier to entry versus a potential collaboration effort. Often times this is where M&A seeds are planted which develop over time. Retaining a good business law attorney will be essential to protecting your interests.
- Focus and Flexibility – It is hard to walk and chew gum at the same time! The successful entrepreneur will master maintaining incredible focus on the target down-field 5,7 or 10 years AND demonstrate incredible flexibility to make minor and sometime major course-adjustments that are keeping you on course toward your exit planning strategy. Combining focus, with energy and the ability to “govern your passions” to think first and be flexible will pay many dividends down the road.
ShaBro Alternative Office Solutions loves to put plan to paper and then into ACTION! Budding entrepreneurs need planning and an exit planning strategy and so does the seasoned-business veteran wanting to sail off into the sunset someday. Do not wait until you “have” to sell or worse! Call us today to learn more about how we can help you develop an effective Business Exit Planning Strategy.