Your mindset going in to exit planning is the most critical determinant of your successful outcome. There are a number of mindset factors that you must recognize and consider. Your mindset will determine your ability to set and achieve your hopes and dreams. You have to be able to recognize and adhere to the process to achieve them. Most CEOs have dreams and goals of the outcome they want from their business. Many fewer CEOs reverse engineer their goals into a timeline, process, and a sequence to get to that exit.
Challenges will occur that could derail your exit plan, guaranteed. Fighting or resisting those challenges is an unproductive waste of time and energy. Instead, install and master a mindset to address, overcome, resolve, and circumvent each challenge as it arises.
Attitudes/mindset are often ignored or minimized when exploring what we need to learn to achieve our goals and get to an exit.
Most CEOs trained to emphasize the strengths of left-brain thinking, resist addressing or developing the right-brain skill of mindset readiness. Mindset readiness requires the most time to develop and is not easily measured or demonstrated. But your mental and emotional attitudes are the most important of all learning components because your attitude/your mindset is the gatekeeper that determines how well you acquire, master and apply any other skill set and knowledge.
Entrepreneurs stubbornly adhere to tired outdated thinking which in turn sets up their business to continually struggle, not achieve its full potential and settle for selling their business for only a fraction of its worth. That downfall is totally preventable.
In the area of mindset, attitudes and beliefs, do you experience any of these? Make note of the ones that apply to you.
- Have no exit goals
- Can’t set exit goals
- Don’t know how to set exit goals
- No consensus on exit goals
- Can’t delegate/afraid to delegate
- Prisoner of the entrepreneur’s trap – Trying to wear all the hats
- Scared to grow – because of past experience, old belief systems, systems or staff that slow or prevent your growth
- Scared to share control, responsibility, ownership or profits
- Scared to lose control
- Easily distracted – by environment, people, events, equipment
- Minimal goals/easy goals/short-term goals that don’t stretch individuals or the organization – to play it safe
- No personal accountability of the leadership team/ of you
- Still running the business as an opportunist
- Resist building a strong business foundation for growth or increased value
- Ignore or deny the need for exit planning
- Ignore or deny the need for contingency planning
- Ignore or deny the need for continuity planning
- Ignore or deny the need for succession planning
- Ignore or deny the need to plan for your transition
- Ignore or deny the need to plan for your reinvention
You’ve heard the phrase:
Your attitude determines your altitude.
Your mindset is the key to everything you will achieve to exit your business when you want to. When you decide each of these elements is important enough to the business and to your future beyond the business, only then will you take action and:
- Develop the skill sets
- Acquire the necessary knowledge (direct learning or surround yourself with experts)
- Develop plans, strategies, and tactics to achieve everything you want for your business and from your business when you exit.
- Apply the discipline and leadership to accelerate growth and maximize value on your timeline.
“It’s a mindset – you’re only limited in scope by your own imagination and your ability to see through problems, challenges and roadblocks to the opportunities.”
When you decide to exit your business, walk away from the business you built that you’ve owned from inception, you need three pillars to your foundation to make a successful exit.
They are your:
- Skill Set
At Bates College I caught the value of the college motto “Amore Ac Studio” [with ardor and devotion] which I internalized as a love of learning. The most successful business owners, who indeed maximize the value of their business, are perpetual students. They are voracious readers, students, and learners.
You choose what you can learn and what you can be taught. Specific to exit planning success, every business owner must become a student of:
- Skill Set
to successfully sell, scale or install a successor in their business.
What you do with what you learn is key. That takes self-reflection, a “willingness to learn more about their own fundamental nature, purpose and essence”.
How about you?
Accountability is one of the hardest things for owners/entrepreneurs to commit to. You deserve the rewards of building a prosperous business. To get to your ideal exit, to get goals done to be able to get out, be accountable to them.
These 8 rules are not new, but they are essential to achieve the goals that will produce the results you desire. Embrace them to achieve your wealth producing exit goals.
- Postpone, De-emphasize Or Quantify Less Tangible Goals such as ‘create a great work environment’. Focus on those goals that will create wealth.
- Communicate Each Goal clearly to every single employee/contractor/team member. This is not a one-time task. Communication must be reinforced frequently and consistently.
- Measure Progress Weekly If you don’t want the accountability of measuring, then you might as well skip the goal setting and a profitable exit too. Measuring monthly is not enough pressure to get results for you or your team.
- Responsibility Identify a Single Point of Responsibility for each goal. Lousy employees avoid responsibility. Good employees accept responsibility. Great employees seek responsibility. As the leader, which category do you exemplify? The more you can delegate to great employees, the more effectively the organization can operate without your day-to-day presence.
- Follow Through On Each Goal Not every goal will focus on the cool stuff (new software, creative presentation, etc). It’s not hot or glamorous to balance the budget, resolve all website bugs within 48 hours, or take customer complaints but these tasks are essential to make the business a wealth-producing machine.
- Reward Achievers including you. This sends a message to everyone. Achievers will get reenergized about doing their jobs. Everyone else gets the message that you are building a company that values execution and results, and takes them seriously.
- A Culture of Execution It’s not a one shot deal. It’s a way of life, part of the corporate culture, the fabric of the company that adds measurable value. To establish a culture of goal execution, set an example by meeting your own operational and strategic goals, responding to clients effectively, and measuring the progress of each team member.
- Morpheus in The Matrix, gave Neo a choice between the red pill and the blue pill. That cold, brutal reality Morpheus offered Neo is your ally for execution of your goals to achieve your exit move on to your reinvention. Find your Morpheus to distribute the red pills and enable your team to see things as they really are to get optimum results.
Start with your freedom number and only set goals you can focus on and want to be accountable for achieving, to produce the wealth you desire.
UR Business Network Radio Welcomes Exit Strategy Program
UR Business Network announced today that Exit Strategist Kerri Salls is joining URBN to host a pro-active program on exit strategies for business owners who are planning how to get out of their business on their terms, on their timeline.
Show Host Kerri Salls www.urbusinessnetwork.com
PRLog (Press Release) – Sep 06, 2012 –
This Way Out™ Group LLC, the break-out boutique services firm providing comprehensive business exit planning services is pleased to announce today that CEO Kerri Salls, Expert Exit Strategist, has joined UR Business Network as the host of the new program,Exit Strategies with Kerri Salls.
Exit Strategies with Kerri Salls will provide interviews and discussion with expert advisors who can become part of a business owner’s exit team. In addition, business owners with the experience and hindsight of their own exit, will be invited to share their experience and insights with the audience.
“[Exiting small business] owners are preparing for the deal of a lifetime with possibly zero experience.”
They think they’ll be able to sell when they want for what they want with no lead-time or preparation of the business, the team or the business owner. That’s a diet of hope and promises that will satisfy no one. Because of a lack of pre-planning, 95% of all business owners are leaving up to 50% of the value of their business on the table when they exit. Salls explains that “This situation is totally preventable.”
The programming content for Exit Strategies with Kerri Salls [http://www.kerrisalls.com] will be a resource for business owners aspiring to sell, scale or pass on their business to a successor.
The UR Business Network (URBN/) [http://www.urbusinessnetwork.com] is a multimedia platform integrating online radio, terrestrial radio, print, video, web, social media, mobile devices and live events. URBN is a new 24/7 business network which will launch September 22, 2012. In addition to its global reach via the internet and other media, URBN will also be syndicating blocks of programming on terrestrial radio initially in the Boston and Providence Markets.
The UR Business Network utilizes the platform, website and social media penetration of UNregular Radio. 80% of their market is composed of listeners in the New England/ New York area. UNregular Radio enables URBN to reach a large market very quickly with their established rankings of being in the top 50,000 websites in the US and 700,000 worldwide with over eight million hits per month.
In addition to the Exit Strategies with Kerri Salls program serving business owners who want to get out, to be hosted by Kerri Salls, the current schedule of programs to air on UR Business Network include MYOB the radio show for entrepreneurs by entrepreneurs, Stu Taylor on Business, a nationally syndicated show in over 100 markets, as well as a variety of shows focused on specific vertical markets.
URBN is an aggregator of the latest technologies and most innovative modes of communication to capture, share, store and transfer data to maximize profits for the investor, the company, and the end user.
Kerri Salls, CEO of This Way Out Group LLC, and author of Exit Essentials – How to Get Out is an award winning exit strategist, goal achievement authority, acclaimed speaker, and mentor who prepares business owners and entrepreneurs to achieve their optimum exit strategy. She helps owners establish a strong foundation to catapult their business into accelerated growth, and maximize value to deliver an exit strategy that creates wealth. Salls says “It’s never too early or too late to plan how to get out. Most business owners leave it until too late because no one gave them a better option.” She provides the resources, tools and insight to ensure entrepreneurs and business owners can, as she says, “Plan their exit from the outset”.
This Way Out™ [http://kerrisalls.com] has been refining and applying a holistic system to assist business owners since 1999 specifically to transform an income generating business into a wealth-producing machine so they can sell or scale the business on their terms on their timeline. Partnering with the business owner 2-5 years before their expected exit, This Way Out helps established and hyper-growth companies prepare for and achieve their optimum exit strategy; and helps owners to accelerate growth, maximize value and make their business both buyer ready and buyer attractive so they can get out and move on to the next venture, adventure or avocation.
What’s the rule about how to drive out of a skid or a spin in that situation?
Focus on where you want to go,
not where the car appears to be going.
It’s the same with working on your goals to realize your dreams. You have to stay focused on the goals and not get discouraged or distracted.
The biggest danger for any business owner is the allure of the new shiny object. That new shiny object could be a new tool, a new marketing strategy, an affiliate offer, or a new revenue stream. The danger is that by pursuing the new shiny object, you get pulled off your path, off your timeline, away from your exit goals.
Instead, with your exit goals clearly set and your milestones keeping you on track, you are in a position to evaluate each new shiny object more objectively, as it relates to your priorities. By focusing on your goals with tenacity and almost tunnel vision, you can put those new shiny objects on the shelf, on a list, on the backburner, to consider only if they will accelerate your path to turn your business into the wealth-producing machine you deserve.
Stay Focused In Spite of Temptation
How do you do that?
- Before you set your task list for the day, review your long-term goal, your timeline to get there and the one-year goals you are actively working on.
- Identify your short-term goal priorities that are tied to your long-term goals and your exit.
- Build your daily tasks based on what must be done today and must be done by you to achieve those short-term goals.
- Finish tasks that lead to your exit goals first. Only then, and if time allows, can you consider those new shiny objects.
If you don’t focus on where you want to go with your business, and prioritize it daily; you can’t get the results that will deliver the outcome you desire.
With your specific criteria in mind, the right exit goals are better than SMART Goals. The right exit goals for you and your business are:
Every goal must be quantifiable. If you can’t measure it, it can’t be a goal.
To maximize the value of the business to make it more appealing for buyers, you want to show numbers, forecasts and momentum. To help your sales team achieve new heights at the same time as you are taking a less active operational role, you can break down each goal into increments of the larger goal. Focus on achieving 10% of the new bigger goals. Then achieve it 10 times over. It’s easy to repeat what you’ve already done. The accumulation of these smaller goals will build momentum and confidence to surpass the original goal because all action is aligned with achieving the smaller goal.
Use relevant numbers. In e-commerce for example, which will drive revenues more: your search engine rank or the click-throughs to the sales page? The answer depends on your business. Focus on what is relevant to your business. Relevance also ensures the exit goal is tied to your purpose and values from your criteria above. Be sure the Key Performance Indicators (KPI) you use are meaningful to potential buyers, not just you.
This is the checks and balances piece. Make sure each of your exit goals enhances all the factors that will make your business/organization a viable option for buyers. If you have a goal of monetizing the revenue potential in a new target market as part of your exit price, but you can’t prove it will generate sales, that’s a rathole. Test each goal to be rathole-resistent before you commit to achieve it. It will make your exit smoother and your negotiations stronger.
When you validate that you have the right exit goals to get out on your terms and on your timeline, and each of those goals meets your goal setting criteria, you become unstoppable. Skip this step and you risk everything you have been working for. That loss is totally preventable.
Once you know what you need to aim for, you can set better goals to get to your freedom number. (See yesterday’s post) There are two parts to any goal setting.
1. The biggest secret to goal achievement is to be sure you pursue the right goals. Therefore, start by assessing your criteria for each exit goal to validate that you are working towards the right goals.
2. Then think through your goal setting criteria to ensure success.
Before you take any action, before you even set your great goals for your exit from the business and beyond; there are four criteria you must establish to put each goal on a sound footing.
1. Be Invaluable
To be invaluable to your business and to your clients, you must always deliver your best. You must always be working on those tasks that make you most valuable to the organization and your clients. So before you launch into an ambitious project or campaign, get clear on what makes you invaluable, what’s important and maximizes your worth.
When you apply this criteria to your exit goals, it means that no one else can ensure your exit on your terms. You can’t delegate your strategic role in selling the business to anyone inside the company or to your advisors. You are central to the success of that transaction and to ensuring your ideal life beyond the business.
2. Your Purpose Must Be Bigger
Your purpose for your chosen exit option must be greater than just the ‘cash-out’ number it brings in. Your purpose could be as transparent as to ensure your family’s future, to pay for college, to pay off the mortgage, or walk away with the financial freedom for a secure retirement. Your purpose could be to fund a non-profit, or build a school around what you love. Your purpose could be to eliminate cancer or wipe out malaria from your research. Your purpose must be more important to you than the money. It should be so big, it pulls you forward, with no regrets about the business you are leaving.
3. Your WHY
Why is it important to you to work so hard this year, now, towards your exit? Because you are supposed to? Because you need to? Because people count on you? When your WHY is really really BIG, it WILL pull you forward; it will compel you. You can’t help but work harder and get more done; you will be more strategic in your decision-making to maximize the value of the business, making the business more buyer ready. Even if you think your WHY is the money – say you really want to walk away with $5M cash – go deeper. Dig for the emotion that drives you. Dig for the need that will fulfill. Without that deeper personal WHY you want this exit, it’s easy to waiver and get distracted by day-to-day operational issues.
4. Be Passionate
The more passionate you are about what you will do and how you will help more people:
a. it will be easier to let go of the business with something more exciting/ enriching/ rewarding to move on to;
b. your timeline will be clear and laid out; c. buyers will know you are committed to this close, that the deal will go through.
In your exit, it’s not all about the financial transaction. To let go and move on, you must also be passionate about your reinvention, what you are moving toward, looking forward to doing/having/experiencing. Be clear on what makes you so passionate about your reinvention before you get to the exit transaction.
Only after you know these four goal setting criteria, only then can you proceed to your exit plan and take responsibility for what you will do and where you are going. At this point, you can effortlessly lay out a roadmap to achieve the exit goals that pull you to achieve that long-term wealth.
Ideas, inspiration and insights on goals and goal setting abound. That’s a good place to start, but it’s not enough to get you to the finish line of achieving your goals on your terms, on your timeline.
Goal achievement starts with good goals, goal setting criteria, and a timeline. To get you there, you also need to identify your criteria, and what will keep you focused and accountable to ensure you realize wealth from your efforts.
Any big hairy audacious goal you set must lead to long-term freedom and satisfaction. In business, that translates to driving your business to achieve those long-term goals that will produce wealth, not just an income. A paycheck and profits are not the same thing. One is immediate; the other is a longer focus and strategy.
What’s Your Freedom Number?
Do you know what your freedom number is? Is it a minimum income/year? Is it a net worth of $$$? How much would it take for you to feel you have achieved your goal?
Your freedom number is essential to every decision you make in goal setting and goal achievement. You must know your freedom number to make better decisions and continue to move forward toward your goal.
Each person has a set point for wealth, based on your life experiences. For some people it’s all about cash flow. For most of us looking ahead to financial freedom, that freedom number ranges in the $Millions.
Your own definition of financial freedom will be key to your plans to get there. An arbitrary number is not useful. Instead, you need to back into your freedom number. It could include such criteria as:
- Own your home – mortgage-free
- Be completely debt-free
- Assets under management produce an unearned income stream that equals or exceeds your after-tax lifestyle expenses
- Legacy building trusts that preserve principal, minimize taxes or provide perpetual income for families, gifting or other philanthropic purposes
- Insurance policies to provide annuities
- Insurance policies to protect your estate in the case of a disability or long-term illness
Your freedom number is only a starting point, a compass heading for you and your advisors to work towards. Indeed, your freedom number will drive your determination to achieve those goals to produce wealth.
Ideally, your exit strategy should be part of your business plan from the outset, not just for businesses with outside funding. Every business needs an exit plan, even if you never got outside funding. If it wasn’t part of your business plan or your strategic plan, add it to your agenda for your next annual planning retreat to ensure that starting this year, you will lay out your exit strategy tied to your operational goals.
Here are four steps to ensure your successful exit strategy:
1. Take a holistic approach to planning your exit. That requires systematizing your whole business: not just finances, and cleaning up the books; but also:
• extracting value for you and your family
• maximizing value before you exit or sell
• the structure – what’s easiest to sell, or what can be monetized most easily
• systems ,strategies, process – get them out of your head
• team impact – organizational dynamics, contracts, continuity
• client/sales impact.
2. Consider and evaluate all the possible exit scenarios that might work for you and your business, e.g., sell a practice or sell your list; buyout by employees or partners, be acquired, appoint a successor or family member to continue the business, IPO. With each option, explore all the variations that might suit you.
Remember, your choices are greater the sooner you start planning your exit and the clearer you are on the goal you want to achieve and when.
3. Include your exit strategy in your annual goal setting. Align your short-list of chosen exit strategies with every goal they set so that each goal achievement moves you closer to your exit every year.
4. Make your exit strategy one of the criteria of every decision you make, every goal you set, so every goal you achieve is tied to and focused on that ideal exit strategy.
Goal achievers begin with the end in mind and an absolute conviction and commitment to achieve their big bold audacious goals. If you have an exit strategy for your business, you are already setting your business up for success, achieving outrageous goals and on track to realize your exit strategy. If you don’t have an exit strategy, you are not alone. Most businesses (of all sizes) never plan their exit strategy.
That’s not to say this is a good thing; just that the majority of businesses skip this step and then wonder why they can’t exit when they want and the way they want.
When Is The Right Time To Plan Your Exit Strategy?
There is no wrong time to plan your exit, unless you never do it.
The right time is the moment you realize that you don’t have one. That could be while you are starting your business; it could be when you launch and go live; it could be part of your annual planning retreat or your long-term planning strategy. The wrong time to plan your exit is the last 12 months before you want to move on.