Why You Need an Exit Strategy for Your Business
What are your long-term and short-term goals for your business?
Veteran entrepreneur Celeste Hilling, CEO and founder of 10-year-old lifestyle company Skin Authority, stumped me with this question a few weeks ago, but she definitely left me with something to think about. When I started Deborah Mitchell Media Associates a few years ago, I was primarily concerned about getting it up and running, but Hilling explained that an exit strategy should be a part of every business plan.
"At the start of your venture, have a plan for how you want to exit or transition from the business. This will help you be clear in your focus, share a clear vision for your staff and navigate times when you are confused," Hilling says. "You can use the end game as your compass. Does this decision put you within reach of your end goal? Do you want to sell the business to a public company, use it to produce cash for your lifestyle or create a legacy for your children’s future? This decision will help direct your path in channels, distribution, brand profile, partnerships, media, etc."
It turns out, without a detailed exit strategy, I have been working harder, not smarter, with no real plan for the end. Over the years, I have made several changes in terms of the vision for my business, an evolution that is not uncommon.
"This is very normal. Laura and I started DigitalFlash about five years ago and have narrowed the focus many times over the years," says Sara Walker-Santana, co-founder of the digital agency DigitalFlash. "In the beginning, you want to say 'yes' to everything, but over time you realize this can hurt your business more than help it."
Saying yes to everything is often tempting, especially when you are trying to grow a business. But saying no and offering a defined set of services could be a better route to go.
Walker-Santana says that "finding the one or two things your company excels at and that you enjoy doing, most of the time, is the way to go. You and your clients will be happier."
Need help refocusing your business? Consider hiring a business coach and explain that you are interested in also developing an exit strategy for both the short and long term. In the meantime, Hilling shared a few tips for any business person planning an exit strategy:
1. Reassess your business.
Have a six-month plan. Again, what is the end goal for your business? Do you want to sell it or go public? With your exit strategy in mind, reassess your business every six months.
2. Is your goal still relevant?
As social media and technology make data available in real time, the business landscape is quickly changing. Are all of the indicators driving toward your end goal? What has changed? Is your goal still relevant to the competitive landscape?
3. How is your brand appeal?
Test your customers, suppliers and partners for their perceptions of your brand and standing. Use the data you collect as input, but factor in your gut perceptions and perspective for the final decision.
"There’s nothing quick about being an overnight sensation. However long you think it will take, double it. Whatever cost you think, double it," Hilling says. "Don’t be surprised that it will take you at least five years, eight to 10 years on the average, to get to the end game. Make sure you have staying power in both cash and positive motivation."