The hardest part about starting a business is starting. We have talked a lot about how to make the leap into entrepreneurship but we rarely talk about the end game. If you haven’t also planned your end game, you may be building a trap from which you find difficult to escape. The reality is, you must not only plan your startup strategy but also your exit strategy.
Whether you plan on selling your business or not, it is important to plan your exit with your personal goals in mind. In this article, we will go over why it’s crucial to have a plan as well as the flexibility to change the plan, and the multiple ways you can say adios to your business and make a graceful exit.
Figure Out Your Goals
Let’s first be clear about your goals and what kind of business you are trying to build. Is this going to be a lifestyle business? Will you want to pass it down to your children? Is this a small side hustle that you will run alongside your day job? Or is this going to be something of value that you would like to sell to a new owner one day? Being clear on your goals will help guide you in the decision making process.
Team Makes the Dream
By understanding what kind of business you want to build and your exit strategy, you will be able to form the right team around you that meets the needs and goals of your business. You may want to surround yourself with employees who share the same long term vision. For example, if your ultimate goal is to sell your business, your future buyer might be one of your current employees… that just may determine the conversation and direction you have today in planning for tomorrow.
Who’s Going to Replace You?
You may have anxiety about who is going to run your company when you decide to transition. Having a plan will relieve some of the stress and potential pitfalls that may come when dealing with customers and your employee team both now and in the future during a sale.
Be thinking now. Do not make yourself irreplaceable. Ensure you delegate as much as you possibly can. If you can’t delegate a task, train someone.
Don’t make your company your name. It’s very hard for someone other than Kim to own and operate “Kim’s Accounting Business”. Make it something easily transferable.
Make sure you are not the only point of contact for your customers. Get managers in place that can have those conversations for you. Get yourself out of the “operation”….ultimately as an owner you want to work on your business, not in your business. Everything you do during the startup phase should be pointing you in this direction.
Even if you are a “one-person-show” owner/operator, there are things that you can do to position your business for a sale. Build strong, tight workflows that are easily taught to a new owner. Document everything; how the work is managed, who you serve, absolutely everything should have a system in place that you can explain to another individual.
Just because you set a goal of building a lifestyle business and moving steady eddy doesn’t mean you should not take the opportunity someone wants to buy your company. You should be ready! You may have had a vision of building up your lifestyle company slowly only to realize you are solving a bigger problem than you anticipate and are growing rapidly. The opposite may be true if you are planning on building a large, rapidly growing business and you experience slow growth. Being flexible and rolling with the punches is all part of the startup game.
The act of creating this plan should include the experts that know how to do such things: a business coach, an accountant, a business broker, and perhaps an attorney to guide you through the entire process both during startup and when approaching your exit. By putting together all these strategies in a robust plan for the duration of your business, you will be better prepared when it comes time to move on to your next venture. Having a plan will give you peace of mind when the day to day stresses creep up on you.
At Singletrack Accounting, we are with you every step of the way throughout your business lifecycle. It’s sometimes hard to plan for the long run when you are day to day building the start of a business, however having your paperwork and books in order will make the endgame a smooth transition regardless of the way you plan to exit. We offer full service accounting and business consulting. No entrepreneur should go at it alone and we are here to help you with expert advice while you plan the future. Reach out for a free consultation.