You’re not just an entrepreneur; you’re a fighter. A soldier. A competitor.
You love what you do and you’re proud of what you’ve built. While others long for retirement, you loathe it. You’re going to keep your foot on the gas until there’s nothing left in the tank.
Running your business indefinitely is absolutely an acceptable approach. The only problem is that doing so puts you more on track for a Viking funeral than it does a business sale. Owner readiness is only one part of exit readiness. There’s also business readiness, market readiness and many other moving parts. If you expect to sell your business down the road, the work starts now.
Build It to Sell It
One seminar set Navy veteran and San Diego business owner Lars Herman on the path to sell his company, Herman Construction Group. The message was simple—build your business to sell it from the start. You can read Lars’ story and many others in the newly released Exit & Answers V2.0, but for now, just know that not every business is salable. In fact, most aren’t.
It takes strategy and execution to grow out of a lifestyle business, meaning one that primarily fuels your personal finances, and build a professional business that a buyer can take over and run without you. If you’re looking to cash out from a lifestyle business, liquidation may be the more viable (and possibly the only available) option.
Always Be Evolving
It’s tough to stay on top in any profession. That’s what makes entrepreneurship so addicting. Every day, you push yourself to peak performance—but determination alone will only take you so far. Humans can’t do the same things and live the same way at age 50 as they do at age 40 or 30. The wear and tear get even more noticeable from there. Meanwhile, your industry is growing, technology is accelerating, and your competitors are becoming more imposing. Evolution is essential. You cannot sit and wait under the assumption that you’ll be able to sell when you’re ready. What will your next trick be to keep your competitive edge and maintain a salable business?
Plan for Life
There are a lot of things that we don’t want to think about. Some of them we hope will never happen. Others we know will. Even the most successful lifestyle business leaves little to no room for the facts of life, including the truly inevitable exit that every owner (and every human) eventually makes. For family and small businesses especially, exit planning is a crucial piece in estate planning. Without an exit strategy, the business you’ve worked so hard to build might not provide financial security for your family when they need it most. And if you wait until tragedy strikes, you’re no longer planning, but rather, reacting.
Achieve the Win
Entrepreneurs have a lot of similarities to athletes. The competitive spirit. The insatiable craving for success. The endless motor. And the will to WIN. However, athletes enjoy the luxury of staying in the game until they start declining. As an entrepreneur, you’ll need to exit while you’re winning. You can’t wait until you’re losing—whether that means losing customers, employees, physical ability, market share or simply personal motivation—to sell your business. At that point, you lose your leverage and reduce the likelihood of finding a buyer, much less choosing between multiple offers.
Remember, an outside sale isn’t the only route you can go. There are inside sales and employee stock ownership plans (ESOPs). You can turn your business into an annuity or liquidate it. The decision to sell is negotiable. However, the work that it takes to do so is not.
By John Ovrom, President & CEO, Exit Consulting Group