Kerri, Author at This Way Out Group - Page 9 of 25

How to Set Goals That Ensure a Successful Exit Strategy

It takes a big commitment to start and grow a business.

You need to be clear on your mission and vision, business model, market research, marketing and sales strategy, and operations to implement your business plan.

You take risks and set goals.

You can be consumed by the day-to-day responsibilities and urgent demands.

All of this eats up time.

There’s another critical piece that gets put off but is as essential to achieving your long-term goals. That is your exit strategy. If you include your exit strategy as part of your initial goal setting, then all of your goal achievements will line up and lead toward your ideal exit strategy and you will have a much greater likelihood of monetizing the business you built. Here are a few guidelines to start:

  1. Choose the right exit strategy for your goals
    You have monthly and annual goals for your business. Commit to these intermediate goals only if they are aligned with your long-term goals and the ultimate goal achievement of your ideal exit strategy. Otherwise, they take you down rat holes or dead end tangents.
  2. Set business growth goals aligned with your exit strategy
    Your growth goals are essential to the health, strength and survival of your business. Look at your growth goals in the context of the exit strategy you want to implement. Be sure your growth goals are taking you in the same direction. Growth that is in conflict with your exit plan or competes with your long-term goals will hurt the business and limit your ability to achieve your exit strategy.
  3. Identify goals to increase value
    The value of the business is not just in terms of assets or cash flow. It’s also in your intellectual property. A lot of your intellectual property is stuck in your head. Your intellectual property could also be in your team, your processes, and in the relationships you cultivate and maintain with clients and vendors, etc. So your objective to increase value before your exit could be to capture the intangible value in these less quantifiable areas. This will translate into a much higher valuation of the firm.
  4. Plan your exit strategy by intention rather than by default
    This sounds like a lot of work. In fact, it is. Nevertheless, if you don’t do the work to plan your exit – your dream of achieving an ideal lifestyle, living your legacy and leaving a dynasty – then you are abdicating both the responsibility and the reward. If you don’t plan your exit by design, then you will settle for what you get by default.
  5. Systematize your exit strategy to maximize value
    The more you can systematize your business so someone else can run it equally well without you, the more a buyer will be willing to pay you to keep it going.

    The better you are at systematizing everything, the easier it is for a broker to pitch and leverage that value for a higher price. This step takes discipline and consistency that starts long before you intend to exit.

That’s how you ensure your own successful exit strategy.

Pain of External Factors Discourages Business Owners Preparing to Cash Out

Are you uncertain about the future for you, your family, or your business? If so, your instincts and intuition are on target – you can’t afford to ignore the facts. There’s an unavoidable confluence of factors that require your immediate planning and action.

  1. Sellers’ Competition Increasing – 8.1M Baby-Boomer Business Owners think they will sell/scale or in some way cash out of their business by 2018. It takes 2-5 years to prepare the business so you can achieve the maximum returns. Another 8.1M Baby-Boomer Business Owners intend to sell in 5-10 years. Anyone in the first group who was slow to market will now compete with an added group of 8.1M peers – likely even more desperate to get out quickly and seeing how difficult it was for the first group of Baby-Boomer Business Owners to transition.
  2. Seller’s Window in the Market is Shrinking – 2013-2018 is a seller’s window (sellers have the advantage in a transaction, buyers have the liquidity, and this is the leading edge of a huge selloff/transition of ownership across industries). If you wait too long, you’ll miss this window. In 2018, the market itself flips and becomes a buyer’s market until 2022 (buyers will have the dominant advantage in a transaction, there will be even more sellers than buyers, and buyers will have more choice and can drive prices down).
  3. Inflation Will Wipe Out Any Leverage – Quantitative easing will not solve the US debt problem. The only option the government has is to allow inflation to rise – some say up to 50% – in order to wipe out the debt. Inflation, which is being held down artificially, will rise to heights we have not seen since the 1980s within the next five years. After that, inflation will wipe out any leverage or advantage that sellers have in a transaction.
  4. Longevity – In your retirement and investment planning, your business will likely be a dominant source of the cash to fund those plans. Do your reinvention plans assume you’ll live three years beyond your exit? Until age +/- 85 as some of the newer data suggest? Or do you want to be on the other end of the curve suggested in a recent TV commercial by Prudential and live to 100 or 110? The bigger question then becomes, have you indeed made adequate plans for your resources to provide for the lifestyle you want for another three or four decades? Or to leave a legacy that will last another 100 years?

There’s no denying these trends are happening. As much as business owners are taking a beating from all these factors, a wait and see approach is about as effective as hiding your head in the sand like an ostrich. Rather, look at these external factors as a warning bell to plan now so you get to cash out and move on to your transition on your terms and your timeline.

It’s never too early or too late to plan your exit. At Exit This Way, we can help you through this minefield with strategy, tactics, and much more, the sooner you call.

Successful Entrepreneurs as CEOs

If you really own the CEO role and responsibilities, you always have an eye out for the bigger picture of what you want your business to become with a purpose much bigger than yourself. Successful entrepreneurs know their strengths and build on those strengths to successfully achieve their vision. The most successful CEOs are very disciplined strategists who stay focused on their own goals, their own “blue sky strategy” and are not easily distracted by “new shiny object syndrome.”

If this were the only secret to being a CEO who launches a business that explodes in the marketplace, then indeed we would see the 95% failure rate dip a bit. But that’s not the only secret you need to know to make a dent in that statistic.

The problem for the majority of CEOs is that they never grasp the elements that are central to their long-term success. They unintentionally and unconsciously set themselves up to never achieve their goals and never realize the wealth and freedom their businesses could provide.

Ninety-five percent of all entrepreneurs are locked into running a business that perpetuates the three fatal flaws compounded by the three biggest oversights.

By bringing each flaw and oversight out into the open and identifying each one, entrepreneurs wearing their CEO hats can take the first steps to reverse course. Instead of murdering their business, they can lay a foundation for success, prosperity, achieving goals and transitioning out of the business on their own terms.

Obstacles to Achieving Success in Your Business

To achieve your ultimate goals, to join the 5% of businesses that achieve their goals in business and beyond, you must focus on building a real business and be aware of a few of the barriers that can set you up for failure.

There are two often contradicting approaches to building business.

The most common approach, the Idea/Opportunity approach, takes no training, no lead-time and requires minimal cost. If you are an opportunity seeker (a term coined by Rich Schefren), you may leap in and try to take advantage of an idea ahead of the curve, hoping to catch the wave as it hits the market. Often this approach is about the product or service itself, not the need it may/may not fill in the marketplace. I’ve seen this with many software companies and restaurants. Just look at all the iPhone apps these days. Or look at how short-lived most restaurants are (measured in months not years).

This is a hit-or-miss approach because the market window can be very short or even fizzle before you get to market. And while you’re focused on creating your offering for that niche, another better opportunity can come along. If you’re always looking for the brass ring, you’ll always be tempted by the next “new shiny object” and not finish what you start. This is the trap most entrepreneurs succumb to, leading them down a path that ends in failure.

There’s another approach to starting and building your business. It’s a more disciplined and strategic approach that addresses a problem and provides a solution. If you are a strategist like me, you start with your end goal and your vision of what you are building toward.

Across the board, the most successful entrepreneurs take the time to be thoughtful upfront and prepare options, offerings, alternative approaches, competitive research, market opportunity and team requirements to achieve their goals, short-term, long-term and exit goals. They do their homework; they research and plan first.

They take the time to continually and consistently ask the question:

“What are the best opportunities to achieve my vision of
where I want to take my business and what it will become
?”

They know they must continually “sharpen the saw,” as Stephen Covey tells us, and raise the bar all the time.

So the primary obstacles to achieving your business success are not in your experience, education, expertise, funding or financing.

Your primary obstacles to the business success you desire and the outcome you want to achieve are the mindset and skill set you bring to the game.

Which raises the question …

QUESTION: If the strategy for ensuring a successful exit strategy is that simple and clear,  why do only 5% of all businesses get it done?

ANSWER: The other 95% know what to do. They know they should do it. However, they don’t follow through. They lack the mindset and skill set of a CEO who truly wants to build a wealth-producing business.

Which one are you?

Time Is Running Out

I love entrepreneurs. I’m addicted to entrepreneurship. But the days of building a business from scratch with just a prototype widget, without a plan or a proven concept that delivers results for clients, are behind us.

Your clients don’t care what you are selling. They want to buy the results that your product or service WILL (not CAN) deliver.

The burden is on you. Your business must look like a business and act like a business that should be taken seriously. Because you are indeed competing for customers and clients with the big names in your industry. If you don’t think you have competition, you are in denial.

If you don’t have a strategic business plan and if you resist systematizing your business, the big guys won’t just eat your lunch, they’ll eat you for lunch.

In my experience working for dozens of high-tech startups for 10 years on the technical side, I saw this repeatedly. I had numerous clients who developed brilliant, clever and innovative products, but didn’t build the business itself in parallel. These companies did not survive. Just months after first product launch, they were sold or bought out by direct competitors.

You want to build a business that works so well, where you have such a full menu of product and service offerings to serve your niche, that your enterprise empire itself discourages competition. That same approach will also increase the value of your business, positioning you for an exit on your terms.

Intellectually, this is a straightforward solution documented from many angles in numerous best-selling books.

So if this is what it takes to catapult your business to the next level, and join the 5% of all businesses that thrive and grow to achieve their goals; why don’t more CEOs build their enterprise empire to outperform their competition? Why do they murder their businesses instead?

95% of all CEOs murder their business because
they hold fast to three fundamental flaws
and succumb to three underlying defects
(or oversights) in their business.

Time In Business and Beyond

As Rich Schefren says:

Big business always ‘beats up’ and steals the lunch money of the small independent operators.
And if you know anything about business or have witnessed the birth or growth of an industry you have already seen the pattern play out
time and time again.”

When you know the value of your time, when you know your worth in the market, it changes how you think about time. It changes how you think about free time, family time, vacation time, and beyond.

  • Do you know what your time is worth?
  • Do you know what your time needs to be worth to achieve your income goals?

These two are starting points. You need these two answers before you can make effective decisions about what activities you should spend your time on and what activities to delegate, outsource and automate.

It also takes discipline, learning new habits, and teaching those around you to value and respect your time. If you don’t value your time, no one else will. Therefore, your time management and concentration on your most valuable activities – or lack of either one – may be the reasons your business is not generating the desired income or growing.  Yet you still might be working harder and longer than you want, with no end in sight.

This should be a wakeup call to use your time more wisely: eliminate switch-tasking, stop multi-tasking and hone in on what you do best. Your most important skills add value to the business every minute you are working. You must discipline yourself to focus on your most valuable activities, schedule everything you do, and delegate everything else. This will continually increase the worth of your time and add value to the business, enabling you to achieve your ultimate goal – cash out on your terms on your timeline.

Prevention IS Better Than Cure

To grow a valuable business – one you can sell – you need to set up your company so that it is no longer reliant on you. This can be easier said than done, especially when, like a PR consultant or plumber, what you are selling is your expertise.

To scale up a knowledge-based business, you first have to figure out how to impart your knowledge to your employees, so that they can deliver the goods. However it can be difficult to condense years of school and on-the-job learning into a few weeks of employee training. The more specialized your knowledge, the harder it is to hand off work to juniors.

The key to scaling up a service business can often be found by offering the service that prevents customers from having to call you in the first place. You have to shift from selling the cure to selling the prevention.

Fixing what is broken is typically a hard task to teach; however, preventing things from breaking in the first place can be easier to train others to do.

For example, it takes years for a dentist to acquire the education and experience to successfully complete a root canal, but it’s relatively easy to train a hygienist to perform a regularly scheduled cleaning.

It’s almost effortless for a real estate manager to hire someone to clean the eaves trough once a month, but repairing the flooded basement caused by the clogged gutters can be quite complex.

For a master car mechanic, overhauling an engine that has seized up takes years of training, but preventing the problem by regularly changing a customer’s oil is something a high school student can be taught to do.

For an IT services company, restoring a customer’s network after a virus has invaded often takes the know-how of the boss, but preventing the virus by installing and monitoring the latest software patches is something a junior can easily be trained to do.

When you’re selling your expertise, it can be tough to hire a team to do the work for you. As ironic as it sounds, sometimes the key to getting out of doing the work is to offer a preventive service, which not only maintains your business income, but also eliminates the need for someone to call you in the first place.

Obstacles to Achieving the Ultimate Success of Your Business

To achieve your ultimate goals, to join the 5% of businesses that get to cash out on their terms and on their timeline, you must focus on building a real business and be aware of a few of the barriers that can set you up for failure.

There are two often contradicting approaches to building business.

The most common approach, the Idea/Opportunity approach, takes no training, no lead-time and requires minimal cost. If you are an opportunity seeker (a term coined by Rich Schefren), you may leap in and try to take advantage of an idea ahead of the curve, hoping to catch the wave as it hits the market. Often this approach is about the product or service itself, not the need it may/may not fill in the marketplace. I’ve seen this with many software companies and restaurants. Just look at all the iPhone apps these days. Or look at how short-lived most restaurants are (measured in months not years).

This is a hit-or-miss approach because the market window can be very short or even fizzle before you get to market. And while you’re focused on creating your offering for that niche, another better opportunity can come along. If you’re always looking for the brass ring, you’ll always be tempted by the next “new shiny object” and not finish what you start. This is the trap most entrepreneurs succumb to, leading them down a path that ends in failure.

There’s another approach to starting and building your business. It’s a more disciplined and Strategic Approach that addresses a problem and provides a solution. If you are a strategist like me, you start with your end goal and your vision of what you are building toward.

Across the board, the most successful entrepreneurs take the time to be thoughtful upfront and prepare options, offerings, alternative approaches, competitive research, market opportunity and team requirements to achieve their goals. They do their homework; they research and plan first.

They take the time to continually and consistently ask the question:

“What are the best opportunities to achieve my vision of
where I want to take my business and what it will become
?”

They know they must continually “sharpen the saw,” as Stephen Covey tells us, and raise the bar all the time.

So the primary obstacles to achieving your business success are not in your experience, education, expertise, funding or financing.

Your primary obstacles to the business success you desire and the outcome you want to achieve are the mindset and skill set you bring to the game.

QUESTION: If the strategy for ensuring a successful exit transition is that simple and clear,  why do only 5% of all businesses get it done?

ANSWER: The other 95% know what to do. They know they should do it. However, they don’t follow through. They lack the mindset and skill set of a strategic CEO who truly wants to build a wealth-producing business.

Which one are you?

Time Is Running Out

Big business always ‘beats up’ and steals the lunch money of the small independent operators.
And if you know anything about business or have witnessed the birth or growth of an industry you have already seen the pattern play out time and time again
. “
-Rich Schefren

When you know the value of your time, when you know your worth in the market, it changes how you think about time. It changes how you think about free time, family time, even vacation time.

  •  Do you know what your time is worth?
  •  Do you know what your time needs to be worth to achieve your income
    goals?

These two are starting points. You need these two answers before you can make effective decisions about what activities you should spend your time on and what activities to delegate, outsource and automate.

It also takes discipline, learning new habits, and teaching those around you to value and respect your time. If you don’t value your time, no one else will. Therefore, your time management and concentration on your most valuable activities – or lack of either one – may be the reasons your business is not generating the desired income.  Yet you still might be working harder and longer than you want, with no end in sight.

This should be a wakeup call to use your time more wisely: eliminate switch-tasking, stop multi-tasking and hone in on what you do best. Your most important skills add value to the business every minute you are working. You must discipline yourself to focus on your most valuable activities, schedule everything you do, and delegate everything else. This will continually increase the worth of your time and add value to the business, enabling you to achieve your ultimate goal.

Time Is Running Out

I love entrepreneurs. I’m addicted to entrepreneurship. But the days of building a business from scratch with just a prototype widget, without a plan or a proven concept that delivers results for clients, are behind us.

Your clients don’t care what you are selling. They want to buy the results that your product or service WILL (not CAN) deliver as a solution to their problem.

The burden is on you. Your business must look like a business and act like a business that should be taken seriously. Because you are indeed competing for customers and clients with the big names in your industry. If you don’t think you have competition, you are in denial.

If you don’t have a strategic business plan and if you resist systematizing your business, the big guys won’t just eat your lunch, they’ll eat you for lunch.

In my experience working for dozens of high-tech startups for 11 years on the technical side, I saw this repeatedly. I had numerous clients who developed brilliant, clever and innovative products, but didn’t build the business itself in parallel. These companies did not survive. Just months after first product launch, they were sold or bought out by direct competitors.

You want to build a business that works so well, where you have such a full menu of product and service offerings to serve your niche, that your enterprise empire itself discourages competition. That same approach will also increase the value of your business, positioning you for an exit on your terms.

Intellectually, this is a straightforward solution documented from many angles in numerous best-selling books.

So if this is what it takes to catapult your business to the next level, and join the 5% of all businesses that thrive and grow to achieve their revenue goals so they can cashout; why don’t more CEOs build their enterprise empire to outperform their competition? Why do they murder their businesses instead?

95% of all CEOS murder their business because
they hold fast to three fundamental flaws
and succumb to three underlying defects
(or oversights) in their business.

Later posts will reveal these flaws and defects.

What You Can’t Do Is Create More Time

Time behaves like money – it’s a scarce resource.
Anything you achieve in life can be valued
by how much time you invested to acquire it.
Do you know the value of your time?

Procrastination vs. Productivity

You can’t hoard time from yesterday to use today. You can’t borrow time from tomorrow to use today either. You need to leverage your time, and how you spend your time, to deliver the maximum value for the business now, not someday.

Your own productivity is the standard for your entire business. Productivity is the time you apply to your most valuable activities – those tasks and responsibilities that generate the most or highest revenues for the business. Staying “busy” with tasks you can hire out at $12/hr. or $25/hr. is not being productive.

Do you know what percentage of the time you are productive? Really productive in your business? To put your answer in context, consider this:

One study of Fortune 500 CEOs estimated they had 28 productive minutes a day. Another one estimated it at 38 productive minutes a day.

You’re thinking, those CEOs put in such long hours, that can’t be right. Only 28 or 38 minutes a day? Now think about what these CEOs of the most successful companies do, how much they get done and how much (little) time they actually get to focus on profit-building activities.

You don’t have nearly the responsibilities of a Fortune 500 CEO. You should be able to carve out a lot more productive time. When you do increase your productivity, consciously using time more wisely:

  •  What will your day look like?
  •  What will get prioritized on your schedule?
  •  What has been siphoning off your valuable time that you can delegate more?
  •  How will this increase in productivity impact your bottom line?
  •  How much more time can you focus on the CEO role of strategy vs.
    management?

You need to stay focused on your priorities and your most valuable activities. Therefore, to scale or sell the business on your terms, you must leverage what you do best to achieve your most ambitious goals.

To leverage what you do best, you must view you and your business in a different way.

  •  You must stop seeing you as the sole resource in your business
  •  You cannot be the hub of every decision
  •  You cannot wear every hat
  •  You must start looking at how to leverage who you are and what you do to
    serve a larger audience and play a bigger game.

To do that, you must build an actual business and a team around what you currently excel at doing.

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