Sep 5, 201901:29 PMExit Stage Right
with Martha Sullivan
Entrepreneurs, how are you going to get out of this one?
(page 1 of 2)
Much of this blog is devoted to the later phases of business ownership, when an owner considers transitioning into another adventure in his or her life. Accordingly, with one door closing, another inevitably opens. Today is about looking forward.
Take for instance a couple I know, Mike and Susan. They are experienced professionals, having worked their respective careers successfully, including running their own business together years ago. They are now embarking on starting a new business. Their new-business concept sprung from an interest that was purely recreational. Mike liked puttering with and learning about making a certain product. As he experimented and developed his knowledge, the idea for the business gelled. Eventually, Susan quit her job and joined Mike in launching the business.
Their enthusiasm and excitement around the new venture lights up the room when they talk about it. They’re passionate about developing their product and bringing it to market. It will be a labor of love, and hopefully one that is fruitful.
Listening to Susan as she talked about their new adventure, one thought kept coming to mind — what does success look like for you when you want to exit the business?
I don’t mean this in a negative way. Stephen Covey’s “begin with the end in mind” drives this thought. The timing wasn’t right to ask Susan and Mike this question, yet it’s an important one to consider. It gets to the heart of their “why” for taking the risk and making the investment in the first place. If they fast forward to the end of their ownership of this new business, what are their expectations? Do they have a plan that will meet those expectations, particularly in two key areas?
Return on investment (ROI)
Return on investment comes in many forms — personal satisfaction, benefit to your customers and community, and, of course, financial. Every entrepreneur seeks a return on investment from the business. The difference between those who achieve what they are looking for and those who don’t has a lot to do with how clear the ROI goals are from the outset.
Take Mike and Susan, for example. What is it they want out of this venture? Is the goal to build income, wealth, and a nest egg for retirement, or are the goals less financially motivated? In their case, this venture comes at a later point in their working lives, so the priorities are different than when they started their first business together decades ago.
Path to exit
As you start a business, you should simultaneously envision how you hope to get out of it. For instance:
- How long do I think I want to do this?
- Do I envision someone else continuing the business when I’m “done”?
- What does my ideal buyer look like (family, colleague, third party)?
- Is this business purely for my lifestyle or do I want to be able to sell it to someone else for more value?
This critical thinking is often given little or fleeting thought when starting a business. It’s understandable why it’s pushed to the back burner. There are so many other pressing decisions to be made when launching the business. But budding entrepreneurs need to pause and devote attention to these two areas. Your answers should form your business plan and decisions from Day One on — intentionally.