Dream Big
I think there's nothing more exciting then imagining what the future holds or what your life might be like 5, 10, 15 years from now.
Some of us daydream about the trips we'll take or where we'll retire.
Those dreams might also be about what our business looks like, how much money its making or how many people it employs. Maybe its the number of cities or states where it operates or about being recognized as an industry leader.
Recently, I've met several business owners who want to exit their business in the next 5 years.
Some want to sell.
Others want to step out of day-to-day operations while retaining ownership.
Five years seems like plenty of time to make that happen.
It would be if they had been organizing and building their businesses with that end result in mind.
Don't get me wrong. These are what most of us would consider successful business owners.
They create jobs, offer award winning products and services, deliver superior results compared to their competitors, and have been around for a while. They have good bones.
But being able to exit requires more than revenue and profit.
For this dream to become a reality they need to get super clear about the current state of their business and then identify what shifts need to occur in their thinking, operations, org chart, compensation structure, and revenue model that will enable one of two things:
1. The business can run without them and generate enough net income to
pay the owner enough to live the life they want,
competitively pay the executive(s) needed replace the owner, and
create sufficient profit and cash flow to support continued growth.
2. The business can be sold and
run without the current owner without losing value,
have sufficient resources to support long-term growth, and
adds immediate value to the new owner's portfolio with a clear path to continued/increased profitability.
This means that any owner who wants out of day-to-day operations in the next five years needs to
Pay themselves competitively and consistently - i.e. what they would pay someone to replace them
Create the process documentation and invest in the technology needed to make work replicable and as error free as possible
Invest in hiring, training, managing, coaching and advancing talented people who can execute and achieve business goals
Work with reliable suppliers, distributors, professional service providers, and vendors
Create a portfolio of differentiated products and services that are competitively priced
Generate sustainable reoccurring revenue
Diversify revenue so its not dependent on one customer or business line
Maintain accurate and up-to-date financial records including forecasts and KPIs
Demonstrate consistent profitability and positive cash flow
The business has to be able to run without the owner and the brand needs to be distinct, reputable, and recognizable in the industry.
Your business is only as healthy, and potentially saleable, if its customers, employees, market position, financial position, and assets are strong and reliable in ways that can be tested and evaluated. There can't be any skeletons in its closet, discrepancies in its documents, or questions about ownership or legal/regulatory compliance.
A potential buyer will also want to know about your personal financial position. They are evaluating whether or not they want to become you - the owner. It only makes sense that they would want to be confident that the business will consistently contribute to their personal wealth and not be a financial drain. Similarly, if you want to step out of day-to-day operations and retain a regular income from the business you have to replace yourself at market rate.
This last part usually means the business has to start doing what it has not yet done or probably isn't doing on a regular basis - provide you with a consistent, competitive, market rate income and generate enough profit so you have money to invest in a new senior level hire.
So if you're wondering where to start, this is the place. Make sure you're paying yourself what your job is worth. Then
Look at what people are making to run companies like yours. How does it compare with your monthly salary and/or draws?
If someone had to step in and run your business without you tomorrow, how hard would it be for them to keep things going?
How profitable is the company? Specific clients or products?
What story do your monthly financial statements tell?
Asking and answering these questions will help you get in touch with the reality of your current state of operations. No judgement. No shame. No shoulda/woulda/couldas.
You run your business. You are not your business. So anything that you find that you want to do better or differently isn't a reflection of some personal shortcoming. It just is what it is.
And it can be different if you want it to be.
Remember, no one builds a successful business alone and no one prepares for an exit by themselves.
So if exiting the day-to-day operations of your business or possibly selling it to someone else is something you might want to do, start looking at your business through that lens.
Be curious about what you learn.
Ask for help.
Forgive yourself.
Dream.
