The 3 Exit Framework
I talk to well meaning business owners all the time who flirt with the idea of selling their businesses down the road. To them I say, you will need to exit 3 times before you’re sipping pina coladas on the beach.
The Mental Exit
You first need to come to terms with the fact that one day you won’t be behind the wheel. Understanding this intellectually is one thing, but fully internalizing it is another level altogether. Once you own this information you can then start the process of planning the great escape. But you’ll never get there if you don’t come to terms with the fact that the business must either outlast you or meet its demise alongside you.
The Role Exit
By far, the most challenging exit is exiting your role. It requires not only time, meticulous planning, and unwavering commitment from the business owner but also a willingness to trust in others. While many excel at wearing multiple hats, the thought of passing on the baton can be daunting and seemingly impossible. Business owners often find it difficult to believe that one person could step in and do their job as well or better than them. But it must be so, if an exit is to occur. Think of it like this, you can’t sell your car if it requires you behind the wheel to drive the vehicle.
The Final Exit
If the business is well optimized with strong operating procedures, well trained talent, a strong culture, lots of open market share, healthy EBITDA, a great customer base, clean financials and so forth, then a final exit becomes a viable option.
Remember, every drop of sweat and every late night you invest is aimed at boosting the enterprise value for some future event. Whether it's succession or a complete exit, you want to position the successor or buyer for success, ensuring they're willing to pay a premium while continuing to reap the rewards.
Poll Results: The results are in from last week’s survey:
63% of voters said they are ready to sell their business to the highest bidder
Tim Martinez
“The Inside Man”
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