Some time ago, I explained the importance of planning for the end of ownership. This was important advice, but never let it take time away from constantly honing your success strategy. Planning the best way to exit is of little value unless the business has significant value. Even when your long-term mindset includes ways to turn over ownership of the business, your primary attention today must pertain to the business success at hand and constantly looking for new ways to achieve it.
Here are some ways to keep your eyes on the prize.
Always Focus on the Reasons Why You Started Your Business
Whether you want to add new products/services, or if you want to change your business process in a big way, a glance back at your original vision can help you remain on the path to satisfaction that comes from success. You can certainly modify your big vision over time, but success comes when you remain true to your inner-most concept.
How might this work? Let’s say that you started your business to follow your passion of making and selling the furniture that you create with your own hands. You now have more orders than you can handle, but you don’t want to introduce automation into the building process. Think again. You can still make hand-made furniture, even if you use power equipment to quickly fasten the parts or make pre-set tongue-and-groove connections. Since your products are likely to be stronger, you protect your ideals while meeting demand and providing higher-quality offerings to your customers.
This kind of thinking can help you achieve your dream of success while making it attractive to future buyers of your business. Knowing that your business could live on forever is a vision worth having.
Your Exit Plan May Have a Symbiotic Relationship With Your Success Plan
Success fits into your long-term exit plans as neatly as tongue-and-groove connections. You’re in business to make money, and grooming your company for acquisition can certainly accomplish this goal.
If you want to remain active in daily operations, consider transferring a portion of ownership to shareholders through stock offerings. There’s nothing wrong with exchanging the title of owner with the CEO designation. Or, if you enjoy building a business but not running it, prepare for an outright sale so you can move on to your next project.
Either way, you need to make your business attractive to buyers or potential shareholders. Your exit strategy might vary based on your long-term goals, but you still need to follow a plan for success. In other words, exit and success strategies go hand-in-hand
Even Liquidations Should be Pre-Planned
Hopefully, your business will not need to end unexpectedly, but you can fare better if you always include an exit plan, which may well be a vital part of your success strategy. Here are two not-so-pleasant scenarios of how that might work without an advance strategy:
- Using your business as a personal piggy bank: Yes, it’s an extreme idea, but some people actually go into business purely to provide short-term personal financial support. They just shut the doors when the money runs out. Don’t think that you can do this easily without planning. Without doing proper research, unexpected tax, debt and liability concerns can wreak havoc on your personal and legal life.
- Selling the business “for parts:”: I’m not sure that anyone starts a business with asset liquidation as a goal, but it can become a necessity if things don’t work out. Don’t expect to get rich this way. You’ll have to repay debts from the liquidation proceeds, and you might well have to include bankruptcy costs among those debts. In many cases, you’ll be lucky to break even.
Keeping a close eye on your assets is vital to today’s success AND your company’s future, even if you want to shut it down one day. Make sure that you always know the value of purchased assets, and don’t buy big-ticket items when it makes more sense to rent them. This kind of attention helps ensure that you always know a significant part of your business’ value. Such knowledge can provide valuable guidance if you want to partially liquidate to get debt under control, while helping you predict the results if you decide to liquidate the business entirely.
Lesson: Jeff Bezos Has an Exit Plan, But He Operates For Long-Term Success
Considering that Amazon is probably nowhere near its peak, it’s hard to imagine that Jeff Bezos would ever want to say “goodbye” to his company. Yet, he has indicated the possibility of selling the business when the market falls. Probably more important, he bases new ideas on a long-term vision that winnows out most of his competition. This practice is a major reason for the company’s unparalleled success.
As a small business owner, it is challenging to think beyond next week, much less seven years or more into the future. Who has time to focus ahead when you’re busy putting out today’s fires? However, if you don’t, you may be left with nothing to protect.
The fact is that long-term planning is essential to achieve success, so find time to decide where you want your business to be in 3, 5 or even 10 years — and massage your vision regularly as conditions change. Whether you want to end your company or become the next Amazon within that time frame, you’ll be in better position to meet your goals.