Marathons and Exit Planning – A Different Approach
While you read the above, you were probably thinking “that’s fine, but a marathon is over after 26 miles and 385 yards, but a business doesn’t have a finish line.” A common reaction, but it’s wrong.
That’s what exit strategy planning is all about; it’s creating a finish line for your business. If you are raising venture capital for a start-up, you know the investors are going to want to know how and when they are going to cash out, whether by merger or IPO. Every owner should have an exit strategy, if simply for their own sanity. “I’ll do this for five years, then evaluate”…”I’ll prepare my business to be sold to a competitor in seven years”…”I’ll pass it on to my children after they get out of college”…”I’ll sell to my management team”…by developing a plan you will aim your business in that very direction.
Of course, these days many owners are just looking to survive. Their banks are more demanding, their customers are paying more slowly, their suppliers are hounding them for payments. It is hard to focus on the future, the finish line, when you can’t see past this week. But without an exit plan in place, the decisions you make today may actually be pulling you further away from your goals.
So, if you do not have an exit plan, make it your personal goal to create one or get an advisor to help. Your plan will help you align your resources to get the business where you want it to be, ensure you have the right management team, and that you are targeting the correct market segments. Your company’s technology, brand, customer base, systems, processes, business model, and other intangible capital will all be affected by the exit plan. Your personal exit plan will cover your personal finances as well as transitions in your lifestyle (”What are the tax implications of your exit options?” ”What will I do when I am no longer running my business?”) – even more reason to think through and plan for your exit.
Remember, to get to the finish line successfully, you’ll need a plan.
