We’ve said repeatedly that Exit Planning is just a good business strategy (nod to Chris Snider). But here are 4 specific freedoms that Exit Planning gives you that can actually grow your business.
Benefit 1 – Freedom of Time.
No buyer wants a business that relies on an outgoing seller.
So, one of the first things you’ll do in Exit Planning is to help the business rely less on your active participation in it. You’ll make sure sales, marketing, finance, operations, and every other component are running smoothly and have capable and creative leaders. With this increased freedom of time, you will be able to show a buyer how you’ve created what Michael Gerber calls a “turn-key business”, or one that delivers predictably awesome outcomes as you run it according to its design.
But if you decide to grow, you now have the time to do so.
Benefit 2 – Freedom of Money.
No buyer wants a business with sloppy books, poor cash flow, or low profit margins.
So, as you begin Exit Planning, you’ll make sure your accounting gives you a clear picture of where your business is at any given moment. You’ll streamline your sales process so that you can predict revenue before it arrives. You’ll work with sales and operations to see where your margins can be improved and how to capture any money you’re leaving on the table. This will improve your profit margins and make you a more attractive acquisition target. This preparation can also make it easier for an investment banker to see the value in the business, potentially opening up more cash for the buyer to use to grow the business.
But if you decide to grow, you now have the cash to do so.
Benefit 3 – Freedom of Relationship.
No spouse wants a life partner consumed in their business. Same goes for kids with their parents. Same goes for friends.
So, as you begin Exit Planning, you will work on your Personal Readiness Scorecard. This will help you bring relevant family members into the discussion about your next chapter. You’ll write out your personal plan. You’ll share it with your spouse, kids, best friends and key relationships.
But if you decide to grow the business, you now see how to do so in a way that prioritizes your key relationships, not sacrificing them.
Benefit 4 – Freedom of Purpose.
No business owner wants to walk away from their business if it means they must walk away from their purpose.
So, as you engage in Exit Planning, you’ll spend some time re-evaluating what has been and what will continue to be your greatest contributions to the world around you. You’ll gather feedback from others close to you about the ways in which you can be a hero to them, and this will inform how you invest yourself going forward.
But if you decide to grow the business, it will increasingly serve your purpose, not detract from it.
Final Thoughts.
When I first heard about these Four Freedoms, it was from Dan Sullivan through Strategic Coach, who we’ve quoted on here before. But working with business owners who have engaged these well (and some who haven’t), we are increasingly convinced that they must be front and center in your exit planning work. Thankfully, they also fuel growth. You just get to pick which path to take.
And now you’re ready for both!
Any opinions are those of Timothy Weddle and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation.
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