Remember the campfire story of ‘going on a bear hunt’ It’s told as a round with everyone slapping their knees and pounding their feet to the rhythm. The refrain at each obstacle encountered is a version of: ‘Can’t go over it, can’t go under it, can’t go around it, gotta go through it.’
For every challenge and adventure the hunters face, they overcome it and find the bear.
The lesson applies to your business as well. Instead of settling, you need to equip yourself for your bear hunt, to maximize the value of your business so you can transition to your reinvention.
Your exit skill set must include mastery of the following:
- Emotional Intelligence (EQ) skill set
- Time Management
- Planning and Strategy
If your goal is to get through the day, meet payroll, go home at night and enjoy the perks of ownership as business deductions , you could continue on with business as usual.
But if you want to accelerate growth, maximize the value and make your business extremely buyer attractive and buyer ready, there are other skill sets you must master starting now. Your exit skill set takes 2-5 years to learn, evolve, refine, implement and master.
You might say these are soft skills, that these skill sets are not essential to how you run your business now, and conclude that they are not essential. That may be. However, unless you are content to walk away with only 50-70% of the value you know is in your business (the value you are planning on liquidating to fund your reinvention plans); you need to apply each of these skill sets across every department, product line and your entire team.
Consider how each skill set once learned will benefit the business, your team, the buyer, your own exit and your reinvention.
“The Strongest Businesses Around The World
Reach For Big Goals And Achieve Them“
Would You Like That For Your Business?
Would You Like To Achieve Every Goal You Set?
You know that goal setting and goal achievement are two different things. Everyone can get to the starting line and set goals for their business if they choose to.
But the latest statistics prove that 95% of all businesses NEVER achieve their goals, business owners never get to exit and are leaving 30-50% of the value of their business on the table. You see only 5% of all business owners ever follow-through to get to the finish line of an exit transaction so they can transition to their reinvention.
I’m not alone in broadcasting these shocking results. According to Jay Abraham there are three reasons for that very low success rate:
- Entrepreneurs don’t start by having any goals, never mind an exit plan. They only have hopes and dreams.
- They never take action.
- They don’t have a step by step plan to achieve their goals, get out, and move on.
95% of all businesses are stuck at a point where the owner takes home enough to pay the bills – $35-40K. They are so busy in the business just meeting their expenses and covering payroll; that they never take time to look at what it would take to make their business into a multi-million dollar enterprise.
For some businesses, it could be as simple as finding ways to increase volume or to increase prices. But for other businesses, it may mean exploring how to leverage strengths, exploring how to expand into new markets or even pursuing new revenue streams or new business models.
Reports at the Exit Planning Exchange Summit 2010 substantiated this lack o f planning saying:
75% of the businesses who seek out exit industry experts (attorneys, brokers, M&A, investment bankers, wealth advisors):
- have no plan and
- don’t know what to do with the business when they do want to exit.
Settling for where you are because you don’t know how to take the next step, or you don’t have time to research your options, or you don’t have the cash flow to hire the team to achieve your dreams and goals – these are all excuses we feed ourselves.
Ask for help. Make a plan. Take one step closer to your exit goals.
To streamline and optimize your business for maximum value, you need to think strategically and keep an eye on every facet of the business, the team and your personal goals and objectives. No one can do all that alone. It’s never too early to build your team of exit advisors.
The best advisors are proactive, open-minded and client focused. Before you commit to any advisor being on your exit team, specifically focused on your exit objectives and timeline, it’s up to you to qualify them to be part of this specific initiative. You need a full complement of advisors, not just your accountant and attorney when you prepare to get out of your business and move on to your own reinvention.
You need the full team of experts on board now to:
- Build a strong deep foundation to strategically grow the business.
- Accelerate growth to achieve your specified goals and objectives for the business.
- Protect all intellectual property – to have all patents, trademarks and copyrights secure and complete well before you want to get out, making them easy to identify and monetize.
- Get all governance up to date and compliant – That includes minutes, resolutions, and annual meetings being recorded, complete and up to date.
- Get the financial books meticulously clean – This goes far beyond balancing the books and paying taxes. It can take 2-3 years to achieve clean books ready for review or audit.
- Maximize valuation – your advisors will help keep this goal in mind at every milestone and strategic decision to ensure goals and investments are always tied to increasing the value of the business.
- Expand exit options – the earlier you start and with a full complement of advisors, you have more exit options to choose from because you have the lead-time to explore them before you decide how and when to get out.
- Ensure the business is buyer ready – your advisors will help you become a strategic CEO with the team in place to run operations independent of your daily presence. This is the easiest way to be buyer ready and buyer attractive, and demonstrate that the value of the business is in the business, not in your head.
- Get your accountants, tax advisor, estate attorney and wealth advisor on the same page. Do this early to expand your wealth preservation options to serve your reinvention goals, objectives and legacy. They can do a better job of achieving your goals when they are on board early and can implement tactics pro-actively for your future plans.
- Document and codify every system, strategy, process and procedure in the business. This one simple discipline adds value every day. It’s also one of the biggest ways that owners lose value in negotiations with buyers because they ‘never get around to it’.
- Give you greater leverage in negotiations with potential buyers. When your team of exit advisors has been working together building your business into a wealth-producing machine over time, you are in a stronger negotiating position with potential buyers.
When you surround yourself with a range of experts to support the exit process over the next 2-5 years, your business will be stronger, demonstrate appealing growth projections, will have a higher valuation than otherwise possible, and become buyer attractive. As a result, you can and will be able to exit your business by intention on your terms instead of closing the doors with no monetary gain by default.
In the area of skill sets struggling strategic CEOs lack, do you experience any of these?
- No time to plan
- Can’t stick to the plan
- Can’t delegate/afraid to delegate
- Stuck in systems and tools that hold you back
- Still using systems and structures you have long outgrown
- Trying to wear all the hats
- No control of financials
- Trying to be the technician and the visionary
- Never enough time for your most important activities
- No time for strategy and planning
- No tracking/monitoring/measuring
- No accountability in the organization
- Poor time management skills
- Mismatch between market needs and company capacity to serve and respond
- Use/misuse/lack of automation or relevant technologies
- Too much operational responsibility to focus on CEO oversight role
- No development of management or grooming of successors
If any of these is a challenge, then you are still working too much in your business. Instead, you need to prioritize working on your business. You need to build up your strategic skill set. These are the core responsibilities you will be responsible for in exit planning.
To take on more strategic responsibilities and help the organization morph into a structure and business model that can grow to fulfill its true potential, you must delegate operational roles, responsibilities, tasks and control. This does not happen overnight. This transition goes hand-in-glove with your exploring your exit goals and exit options.
Most CEOs go into business because they are very good at something and/or they love it very much. They put heart and soul and an overabundance of sweat equity into the business they are passionate about. Over time, the business can and often does consume them, their life, and their identity. They become one with the business.
This emersion in the business is essential for the business to survive and become a thriving enterprise. So to an extent, it’s very very good. Up to a point.
This commitment is essential to building the business, establishing the culture, building out the team to run with and establishing a clear value for the business. But this oneness with the business can cause damage as you start to consider when and how to get out of the business.
CEOs put on blinders that can actually set them up to sabotage or murder their business. In fact, over 95% of all business owners still do this. One of the biggest blind spots for CEOs is how emotionally attached they are to the business which can make it very difficult to exit or sell the business.
You are emotionally stuck in the business when:
- You can’t let go enough to take a vacation never mind ‘retire’
- You have no identity, social life, purpose outside of the business
- You can’t delegate day to day operations because no one can run the business the way you do
These are just a few of the red flags that you might be emotionally stuck in your business, not prepared to move on, never mind exit the business. First recognize how you are emotionally attached to the business, then identify why. Only then will you be ready to make the changes to reposition your role so you can get out of your business. It takes conscientious, diligent hard work to make the transition to actually get out of your business.
The easiest way to start is with a plan for what’s next. Brainstorm on ideas/possibilities/opportunities of what’s next for you when you do exit the business. Do they include a new venture? an adventure (solo or with family)? an avocation, service or hobby? Then explore what has to change in the business to free you up so you can get out of your business and pursue/fulfill these latent possibilities and opportunities.
To get out of your business, you need to get emotionally unstuck from the business and emotionally charged up about your next reinvention.
If I were to ask you, as the CEO/owner of a thriving enterprise, ‘Are you expendable?’, what would your answer be? The automatic knee-jerk reaction is ‘Of course not. I’m the CEO. I’m indispensible to the organization.’
But, in fact, in business, that’s the wrong answer! Indeed, you, wearing your CEO hat, want to become expendable. You want to be planning for your exit from the outset, from the very beginning.
To achieve your goal of being an ultra-successful entrepreneur, becoming expendable must be part of your exit strategy.
Your big payday, when you get to cash out on your business, is when you exit (e.g., when someone else buys your business). If you are still indispensible to running the business; if all the intellectual property, goodwill and value of the business is tied up in you; the business is not buyer ready. If the business is not buyer ready, your big payday is still just a hope and a dream.
Once you decide to exit the business, one of your primary tasks is to transition day-to-day operations and transfer that responsibility to your team. To increase the value in the business, to ensure that value can be monetized you, as a successful entrepreneur, must make yourself replaceable therefore expendable.
Failure to shift responsibilities and remove yourself from any operational role is a big mistake that exiting CEOs struggle with. It’s emotional, it’s strategic, and it’s tactical.
Just as you didn’t build the company or grow the company overnight, you can’t disengage from daily operations overnight. You can’t go from being indispensible working long hours, to being expendable overnight. These pieces of your exit strategy take time. They take time to plan and implement – likely years before you exit successfully.
To see if you are ready to develop your exit strategy and/or help you plan your exit on your terms, on your timeline, request a free assessment here.
Emotional issues that business owners struggle with are a major barrier to planning their exit. They are barriers because they are never explored or addressed. I highlighted this in my report, Don’t Murder Your Business. Just to touch on the subject here, the emotional issues business owners struggle with have to do with the fear factor. Here are just a few:
- The fear of letting go. This has been their baby. For most owners, they have identified their lives through their business. Deservedly so. How do they say goodbye to all of that? What is their identify beyond the business?
- The fear of loss of wealth. It took a long time to build the business to what it is today. Once it is gone, owners fear they could lose everything and they need to protect their wealth.
- The fear of loss of control. This is my business. I built it and no one else can run it as well as I have.
- The fear of conflict. For example:
Two of my kids want to be CEO. I don’t want to make a choice and then have to deal with family fights.
My partner doesn’t want to retire yet but needs me to stay in.
My partner wants his kids to succeed us but they don’t have the financial strength to buy me out.
Emotional issues that you could set aside in launching or growing a business need to be identified and resolved in the exit process. Those emotional issues could very well be the actual top reason many business owners do not have a written plan for how to get out and never take action to achieve their reinvention. It is human nature to withdraw from and avoid pain. When left unspecified and in doubt, these subjects compound the difficulty and complexity of exiting your business with maximum wealth for your reinvention.
Exit planning is a whole new job that you never had before and you’ll probably never have again. Your exit mindset will decide if this is a rewarding experience leading to the lifestyle of your dreams or a traumatic experience that wears you out even before close the deal. You need an exit mindset shift.
Transitioning to and maintaining an exit mindset shifts your priorities, focus and goals. With an exit mindset, any strategic decision you make in the business will be driven by a desire to show growth and add value for the buyer, and maximize the liquidity and financial freedom for your reinvention after the exit.
This mindset shift is taking all the strengths, assets, experience and opportunities for your business and applying them to one specific outcome – your exit on your terms on your timeline. They include all your:
Drive Motivation Belief — spiritual
Passion Determination Conviction – emotional
Inspiration Resiliency Clarity
That’s a big shift. It’s a shift that most business owners do not and cannot make. They get stopped right here in their mindset along with their naïve exit criteria.
Your success mindset in the business uses your experience and knowledge from the past combined with your refined skill set growing the business today to get results today.
Your success mindset for growing the business, growing the team, adding capacity and building a stronger business foundation probably has nothing to do with when and how you’ll exit the business.
More than likely you never built an exit plan into your business plan at the outset. Today, entrenched in your success and growth mindset, you don’t have time to focus on the future coming closer every day.
In order to let go of the business, get out and pursue your reinvention, you need to cultivate an exit mindset. It’s not the demise of the business; it’s a new beginning for you in a new direction and a new beginning for the business under new management.
It’s easy to let this slip. We’re all more comfortable with old habits than building new ones. It’s easier to ship standing orders and keep marketing costs down because the market is still soft.
But those habits conflict with your exit objectives. That conflict first takes hold in your thoughts. When you struggle with cultivating an exit mindset to shift your priorities away from day to day operations and start applying effort and time to the strategic side of the business to prepare it for a new owner – that’s when it’s easy to sabotage the whole exit plan. That’s when you see owners who tell their advisors to get things lined up and seek out potential buyers but can’t let go enough to sign the papers.
The exit mindset is a process to work through to ensure you are rewarded for the value you’ve built up in the business and to prepare you for what’s next on your terms and on your timeline.
Mindset is the most critical of the three pillars, the hardest to develop and it’s the pillar you must reset and anchor first.
Your mindset about your exit includes successes, challenges, mistakes, expertise, motivation, confidence, joy, satisfaction about all you have achieved in the business since the beginning when it was a glint in your eye, through the intervening years to the present; as well as the mindset you bring to the exit process over the then next 2-5 years.
Your mindset when you started the business was based on assumptions, enthusiasm, belief, courage and passion. You were invincible and persistent in your devotion and commitment to do whatever it took to make the business thrive. You never let doubts interfere with your goals, ambitions and conviction that you could achieve your most audacious goals. In a young company, your mindset focus is always forward.
Your mindset over the years has settled a bit. You’ve learned a lot of lessons through survival and growth. You have different assumptions now about business, the market, your clients, even your team, based on years of experience. Your attitude could be as happy and confident as when you first opened your doors but your mindset is based on a wide breadth of experience now, not just enthusiasm. Or, time and experience could have taught you to narrow your focus to what you can control and address today; to focus on the orders coming in and what marketing it will take to increase those orders.
Your mindset as you grow the business expands to include wisdom and insight from past experience to contribute to goals and decisions today. That’s where most business owners are flourishing today. The only thought they have of the future is achieving the stretch goals they set for the business for the next 12 months – not 3 years or 5 years, never mind a future any further ahead.