Depending on the goals of your business, crafting your exit strategy can take on a varied of shapes and forms however there are some key things that every strategy should include. The first step is to identify your goal in your exit strategy.
- Are you the ultra creative type that just loves creating innovative business ideas that you have no problem having someone else manage and run for you?
- Are you seeking to create a business that you can pass on to your children or heirs to run and manage?
- Are you seeking to amass a large amount of wealth as fast as you can for your idea sell it and run off to your private island?
- Do you want to build your business up just enough to make it wealthy and attractive enough so your top competitor would want to purchase it?
Regardless of your goal, there are many things one should consider when crafting your exit strategy. Below are just 5 to get your brain ticking to have you begin thinking and planning your glorious exit.
- DOCUMENT PROCESSES. Make sure your processes and systems are well documented. When I say documented I mean written down on paper in some sort of manual. Not a series of accounts and programs that you log into that help you MANAGE your processes. But an actual procedures manual that is independent of the actual tools and technology you use. Think of it as your “for dummies” guide for your business. Could someone pick up your manual and know exactly how to run your business? I mean everything? If not…among the first steps in planning your exit strategy is planning on how you plan to create this.
- ORGANIZATIONAL CHART. Who are the key players in your business? Sure you business may now just be a single solo-enterprise where you are everything. But as your business grows or as you plan to grow your business, be proactive and create a simple organizational chart of the key players in your management structure. What are their roles, what type of background should they have? Yes I know, this is SO not the fun part, but again, if your goal is to build a business that can have wealth that can grow without you and not just streams of income that will eventually run dry then you gotta put in the work.
- BRANDING THE BUSINESS (NOT YOU).Ok this is a tricky one especially for many coaching and consultants. I recall when I started my consulting business in 2008 the name of it was Harrell Financial Solution. I did well with my name on the business but eventually I and my name (even with systems) couldn’t really seem to catch a break! Eventually I needed to have a huge mind shift change. I separated my consulting business from my bookkeeping business and created Your Simple Bookkeeper. It put me in a different mindset on how I viewed my business and therefore how I talked about it and thought about growing it. When planning your exit strategy, consider the psychology of how the name of your business effects how you run it! Selling “Kates yummy cupcakes” is more difficult to brand (though not impossible) than “Delectable Cupcakes” .
- FINANCIAL MANAGEMENT. In other words your bookkeeping and accounting records. I know this is a sore one for many but taking the idea of “beginning with the end in mind” if you plan grow any business, how you keep the money you earn is just as important if not moreso than earning it. If you are thinking exit, then how you manage your books today as well as how well you watch your numbers is very key. For the sake of either your heirs or to potential buyers or investors, ensure you establish a system today for managing your numbers.
- REDEFINING YOUR ROLE. Similar to #2 &3, your role in your business needs to be well-defined when crafting your exit strategy. Sure you will mostly wear all the hats in the beginning, but it’s important to plan out how you expect to take off those hats over-time. Will it be outsourcing? Will you hire physical staff? If so, how much in revenue do you need to ensure you’re earning before you can hire? Eventually what do you want your role to be? When crafting YSB, my initial “title” is CEO and founder. Over the course of almost 2 years, I’m gradually changing my title to reflect the team I’m building and my goals. My current title is Founding CEO (I know BIG change lol) but again for me it’s the psychology of it all. I know that eventually I’ll have a CEO or COO who will be taking on duties.
This is just the beginning of your process and yes it’s VERY unglamorous but (again) if your goal is to not just own your job then this is a process that is necessary to secure your future. In this “economic climate”we’re all charged with creating our own jobs these days. Regardless if you never, ever, ever plan to sell your business or pass it on and you plan to make your cupcakes or diaper cakes or build websites or coach until the sun sets you’ll need to still consider these steps in order to ensure you are able to do just that.
Katrina M. Harrell is President of the KM Harrell Group, LLC a Strategic Business Development & Management firm supporting minority and women-owned businesses. Her firm’s consulting services have helped many minority and women owned businesses establish foundational structures and exit strategies within their businesses that have aided them in selling for profit or obtaining investor funding. Passionate about entrepreneurship education, Katrina’s insight and expertise is highly sought after both online and off. She is also founding CEO for Your Simple Bookkeeper, outsourced national bookkeeping company for micro and small business. Katrina is also author of “Embrace.Your.Journey.: 180 Day Journey to Unlocking Your Wisdom, Redefining Your Success and Discovering Your Abundant Wealth” (The Sum of Her Publishing, 2011)