You know how the experts say that the very first task of an incoming CEO is to identify his or her successor.
Well, guess what: the very first action the founder of a newly-minted business should take, is to create their Exit Plan – actually two Exit Plans – one for a successful exit driven by themselves – another one for an exit forced upon them by adverse circumstance.
Several founders of businesses that have become our clients entered the freeway of business success without ever determining which exit ramp they were aiming to use to optimize the value of the business they created, or to protect that value should circumstances conspire against them. To paraphrase one of Mark’s comments – if you don’t know where you are planning to go, or might have to go, GPS isn’t going to help you get there!
In a more positive sense, having a thoughtful Exit Plan helps inform every strategic decision you will need to make en route, and keeps the Value of the business, rather than just a scoresheet of the top and bottom lines, be your perpetual driver.
Few founders succeed alone – so having and sharing that exit narrative provides a consistent message of progress for your employees, and No Surprises when the transition comes into near-view.
Likely you will need to flex a bit, and adapt a bit on the journey, because that is real life, but True North and Exit 134 (or, in less ideal circumstances, Exit 98) will always remain in sight.
What is your time-frame? The founders of an organization that I am associated with left their Corporate jobs and imported all that accumulated experience and expertise into their own firm. But on the very first day of Year One, they were totally clear that they were “Outta here” on the last day of Year Ten – or before, depending on how things played out.
And who is your exit “partner” – are you going to look to sell your business to a strategic buyer, a financial buyer, explore an MBO, or seek out a HNW individual that loves what you do and has time on their hands and cash in their bank account?
And what is your target on Value on exit – do you want to be better off (likely a life-style business), able to make some interesting personal choices for the future (a business that has been solidly built and offers additional capability to an acquirer), or have no boundaries left (a true innovator cashing out)?
And remember – also be sure to have your strategy within a strategy thought out for when you get the email that starts – “Have you ever considered selling your business?”