You made it grow, now its time to go! Howard Bassuk How vividly you remember it. To you, the memories of when you started your business seem as they happened only yesterday. You can remember the day that decided to go into business, and the day that you signed your franchise agreement, and then your first lease. You remember that after feeling as you had waited forever, your businesses’ equipment was finally delivered. You remember so well, your first grand opening, and the combination of pride, excitement, anticipation and joy that you felt at that moment. You remember the worries too. You smile to yourself as you remember the first time you had a bad day, when just about everything seemed to go wrong. You laugh aloud as you remember wondering whether things would ever get better, and whether you had done the right thing by going into business. And then you remember the day you realized your business was going to be successful. You still remember the feeling of exhilaration that swept over you when you realized that you had succeeded. It seemed that almost magically the question that you had to answer had shifted from “will I make it,” to “how big do I want this business to become?” You remember it all, and so much more! Phew! Time flies by. The days, months and years blend together until they coalesce into a singular fabric whose threads are indistinguishable one from another. You realize that you have had to run so fast, and so hard for so long, that you forgot that you started this race to reach a finish line. It’s so easy to lose focus on the finish line. Life today has taken on such a “hurried” tone that time to reflect and measure results can disappear. In the frantic and frenetic world that we live in, its often difficult to stop, take a deep breath, and reflect on where we are, and what we’ve done. Yet that moment of reflection that allows you to analyze where you are, and where you are going, is critical. It allows you to take stock your goals and how to achieve them. After all, without knowing where your destination is, it's impossible to know whether you’ve arrived. So, you just keep right on running! You run and run until you realize that you have forgotten where you were trying to go. Perhaps its time for you to take it a little easier, or perhaps its time to turn the business over to the kids. Maybe its time for you to exit your business completely… to cash in your chips and go home! Could this really be what’s happening to you? Is it possible that you have been going so fast that you have sped by the exit you wanted on the business highway? It often happens to people. I knew a manager whose daily schedule included 30 minutes labeled “time to think”. He told me that without this daily half hour, he often forgot the big picture goals of what he was trying to accomplish, and what options he had that would give him the best chance of reaching his objectives. If you don’t have 30 minutes, at least take a minute or two. It doesn’t matter whether you are just starting your business, or whether you have been in business for many years. Maybe you haven’t had the chance before, but take that time now. Look back to where you started, look at where you are, and once again ask yourself “where do I want to be, and how do I want my business to end up”? Think! You may realize that you’ve already built the business you set out to build, in those early years. You are a success! Your business has grown. You and those around you have prospered. You find yourself asking yourself, “what should I do now”? Suddenly, it comes to you as clearly as any vision you’ve ever had. You see the future in front of you, and you know what you want to do next. You realize, almost anti-climatically…. The business is a success, I made it grow, now its time to go! For many successful entrepreneurs, it’s very hard for them to know when to let go, cash in their chips, and leave the table. After all, our businesses are a huge part of our lives. Our identities, egos, dreams, hopes and even fears, are interwoven into our businesses. Our businesses are not just what we do for a living, they’re a big part of who we are. So, how do we know when to leave? How do we know when the party is over? It's not easy, but you need a strategy. Like the entry strategy that helped you identify the business that you wanted to start, and the success strategy that showed you how to grow to reach your dreams, there is a third strategy that is necessary for every successful entrepreneur ….an exit strategy. An exit strategy? What is that? Just as the name implies, an exit strategy is a plan that you develop identify when, and how, to leave your business. Don’t have one? OOOPS! Stop now and think about it. You should have one. Ha!…”Not for me” you say. “I’m just starting my business and I need to stay focused on the here and now.” You assure yourself you’ll worry about what’s going to happen later….later! Stop, and reconsider. You should think about what your real goals are, and how best to achieve them. When is the best time to think about an exit strategy? As early as you possibly can! The best time is actually before you buy the business you eventually choose to be your vehicle that will get you to your goal. Even though your goals can, and likely will, change over time, you should still create a list of things that you want your business to easily facilitate when it is time for you to exit. If your goal is to someday sell your business, there are things you need to think about right now! Here are some of the questions you should answer to successfully create your exit strategy, whenever you choose the time to exit. Can I get out, or will they have to carry me out? This question is one that is key to many people’s long term decisions. Ask yourself what types of business will make it easiest for you to exit. Many buyers like the idea of working in small white collar businesses where they can use the expertise they acquired in corporate America. This can be great way to be in business, but can also be terrible if you’re not clear on what your exit strategy should be. Keep in mind that if your business is heavily dependent on your individual personal skills, it may diminish its salability when its time for you to leave. If you’re not there, and the business depends on your special skills, what will the value of your business be? It could be much less than you will actually need. Be careful when it comes to this question. Don’t buy a business that will not allow you to successfully exit at the time that you’ve chosen. Cash out or Cash Flow out? Do you want a business where you will ultimately sell, or would you prefer a business where you can back away from the day to day operations, yet take advantage of the cash flow that the business can create? In some businesses, the cash flow from your business will far outstrip the income you can make by investing the money you get from it when you sell. Under those circumstances, you may prefer to exit your business without actually selling it. This means you will need a business that you can own, but not have to run personally. If so, make sure your business will not need you to be there in order for it to function. Make sure that your business is conducive to hiring managers who can take over the management of your business. Also make sure that the business itself can support such a middle level of management. Franchises are great businesses to have if you have this kind of objective, since many franchises are solid, stable businesses that are easy to learn, and easy to train others to do. Are your kids in your business’s future plans ? Many of us dream of having a business where our kids will someday succeed us. If your kids are very young when you buy your business, it may well be impractical for you to factor them into any exit strategy plan. However, if your kids are more mature, you probably know a lot about the type of business that would suit them as well as the kind of business that would suit you. Be sure that the business you love, can also be a business that they love. What will my business allow me to do in terms of freedom and flexibility? You don’t necessarily need to sell your business in order for you to achieve the kind of freedom you want. Many of the same issues that are part of whether you may want to keep a business for its cash flow, also go into planning for a business that will give you both security and freedom. How much money will I need in order to exit in comfort? Some people are so focused on getting into businesses that they don’t ask themselves "which business is best to get me where I want to go". If you need a substantial amount of money from the sale of your business, make sure that the business you choose will accommodate the growth required to get you to the point where you can sell. For example, if your business will require several locations in order for you to sell it for the amount of money that you want, make sure that you do not get into a business that has limited growth potential. If you also value mature established organizations, with a long and successful track record this can be a difficult thing to do, since mature companies often have limited availability of locations. When will I leave? Wow….You may just be starting, and here you are thinking about when you’ll be leaving! If you think its too early to think about this before you buy, perhaps you’re right. On the other hand, if not now, when? Some businesses take less time to build than others. However, they may not always be as “sexy” or as much “fun” as another business you could also own. However, if your goal is to, get to the point where you have an exit option as quickly as possible, the “glamorous” choice may not be the best one for you! Does my franchise help me when it comes time to get out? Some franchisors do a wonderful job of helping to find you buyers when you are ready to exit. They will actively work to help you find someone to take your place. Generally, franchisors that do this, have been in business for a while, and have both the time and the resources to devote to helping you to find a replacement for yourself. These franchises tend to be more mature than high growth franchises, so while they have successful franchisees that are looking to exit, they may not have a lot of new locations for you if are still looking to build your business, so be careful. In some cases, franchisors are looking to buy back franchises from successful franchisees. If your business has grown to the point where it has a defined and evolved management hierarchy, the franchisor may feel it can run the business well by using the management you already have in place. Consider this possibility when you buy a business, particularly if you are buying an existing chain of locations that you may want to have a ready buyer for. I have heard it said that all businesses are cyclical, and that all businesses have their ups and downs. If you prescribe to this notion, it is all the more important for you to have a plan about how you should exit. However, irrespective of why you plan to exit your business, remember that if you don’t have a plan that will help you recognize the finish line, you should plan on a very long race.