As we’ve shared before, we think the Entrepreneurial Company Lifecycle™ perfectly illustrates the important milestones of both growth companies, as well as growth oriented entrepreneurs who intend to replicate business success over and over (whether within their existing company, by launching new products and services, or by starting new businesses after exiting). When an entrepreneur leads his company through the Hyper-Growth phase and starts to reap the benefits of his efforts through the “initial harvest” of freedom, flexibility and financial rewards, it is appropriate to start to visualize the exit from that business – whether to his employees, to family members or to a third party.
This is exercise is important even if the entrepreneur never intends to exit the business (although we all “exit” one way or the other). By visualizing the exit, entrepreneurs will be prepared when they receive that unsolicited offer from a third-party buyer, or when circumstances outside of the entrepreneur’s control make the sale of the business necessary or appropriate.
Finally, after visualizing what a perfect exit will look like, the entrepreneur should ensure that his company is prepared to sell when the time comes. We always advise our fellow entrepreneurs to run their businesses as though they are never going to sell (even when they are engaged in a process to sell the business), but we also tell them to ensure that the business is built in such a way as to maximize value. Almost always this requires that the entrepreneur has made himself redundant in the business, meaning that he has empowered a management team to effectively and profitably run the business such that a third-party buyer of the business has confidence that it can acquire the company without relying on the founder-entrepreneur to be there to run it. While making oneself redundant in a business that he has built from the ground up is one of the most difficult things for an entrepreneur to do, it is also one of the things that adds the most value at the time of exit.
To hear more of our thoughts on exit planning, please watch the video below and let us know what you think.
If you would like some help preparing to sell your company (even if that event is several years away) please check out one of our upcoming CEO Bootcamps where you can spend time in the Florida Keys with a small group of like-minded entrepreneurs and work on your own exit plan.