Entrepreneur's Exit Strategy Tip of the Week

Entrepreneur's Exit Strategy Tip of the Week

Posted by Vicki Donlan on Thu, Jul 15, 2010 @ 05:55 AM


Every small business owner and/or entrepreneur must be thinking in the terms of an exit plan when making business decisions. Every decision you make in your business will affect how you may eventually exit the business. Remember, the majority of business owners DO NOT exit their businesses by plan. Too often an exit is forced on the owner, heirs and the business. Why is this true? Very simply because business owners/entrepreneurs believe that they are invincible. They do not plan for having a major disability or, more seriously, their own death. Does that scare you? It should. Founding or buying a business means taking responsibility for its success and failure. I can't stress strongly enough the importance of separating yourself from the business. As the CEO of the business, it is your task to make sure that the chief executive officer (YOU) are in condition for the job at all times and if not have a alternate plan ready to go. Yes, business owners do get sick. They can become disabled. And, business owners, like all other human beings, can and will die. The successful entrepreneur has a plan in place for each of these situations and every decision made for the business takes these serious potential scenarios into consideration. For example, when an entrepreneur decides that the timing for an acquisition is appropriate for the business, (s)he must also be sure that the timing is appropriate for the CEO (the entrepreneur) and have a backup plan ready to roll if the timing for either entity should change. The story of the entrepreneur who waited for the right recruitment firm to come along so she could acquire it and expand the geographic reach of her firm is an example of how timing for the business is right yet timing for the CEO wasn't. Once the acquisition was complete the CEO had a sudden death in the family and was temporarily taken away from the business. With no alternate plan for a temporary CEO to guide the transition, the newly merged businesses did not mesh during the critical first stage and the business lost strategic employees to a competitor. Within six months after the acquisition it became clear the two businesses were not compatible and the deal actually hurt rather than helped a potential exit strategy for the future. This story is just one of many that demonstrates the importance of planning for every potential scenario for your business. As the bumper sticker says S __ __ __ Happens! As CEO it is your job to plan for it.