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Tips on Preparing Your Business Exit

Tips on Preparing Your Business Exit

By: Eyes Wide Open

The term 'exit strategy' is often used in relation to business. Typically it refers to succession planning and the legal and financial aspects of the transition. Addressing these aspects takes care of the skeleton on which the business operates. But how do you instill the heart and soul of the business, that keeps it alive and thriving?

Keeping the lifeblood flowing is essential to providing you with an ongoing income ensuring the business is a highly valuable and saleable asset.

In the beginning, your business relies on you for everything, you literally breathe life into it. As your business matures, and as your own interests and needs change, it is vital your relationship with your business also evolves. You need to shift from being an integral part of the day-to-day operations of the business, to spending the vast majority of your time working 'on' your business in a leadership role. This is in preparation for the day when you can eventually walk away. The business needs to be weaned off you and you need to be weaned off the business.

Weaning
It's a nice principle but can be a significant stumbling block. As business owners, so much of our personal identity can become tied up in our business. It can give us a sense of purpose in our working lives, it provides the opportunity for intellectual stimulation and personal growth. The comparison with weaning a child is a strong one and "cutting the apron strings" can be an enormous personal challenge. Therefore, slow, transitional change is often the preferred route.

The first step is to remove the direct dependence of the business ("weaning"). Do you get the feeling that if you went away for a few weeks the level of activity in your business would drop off significantly or even come to a halt? Then it's likely you need to work at removing the direct dependence of the business on you. We would think it strange if we saw a mother maternally feeding a 10-year-old child. Yet we frequently see the same behaviour in business where, even after a number of years, the basic capabilities for autonomy haven't been put into play.

Make sure you've documented your business processes, policies and quality standards and your team has received appropriate training. This enables your team to act with some degree of autonomy. Then look at your own skills and attitude. It's likely your leadership skills need to evolve.

At this stage you need to be a skillful communicator, giving instruction and giving and receiving feedback. These are the basic elements which will enable you to impart your wisdom in a way that gives your team the confidence to think and act independently. Unless this happens you won't be able to walk away from your business because you don't have a business to walk away from - you have a job.

Adolescence
The next challenge is when the adolescent starts to emerge. In business terms, this is when your team has enough knowledge and capability to begin acting independently and that's proving both a strength and weakness. A strong indicator that you've reached this stage is when there is a lot of 'busy-ness' but not a lot of business, that is, cash in the bank. Basic systems are in place, people understand the job they need to do and the overall confidence of the team is increasing. Then people start thinking their way is the best way, or they become complacent, or go off doing their own thing. Once this phase starts, it calls on a vastly different level of leadership skill from the business owner.

The business owner needs to be able to instill direction, confidence, values and useful parameters, while also empowering individual thought and action. The business owner needs to resist the temptation to "take control", clamp down on the team, suppress free thought and regress the business back to a state of dependence. It's the equivalent of deciding to lock your teenage child away until they're 25 and it will firmly ensure you, as the business owner, will never be able to satisfactorily walk away.

Alternatively, you can closely examine your skills, beliefs and assumptions and expand your capabilities and resources as a business leader. The business gains the opportunity to take on a life of it's own and so do you.

Business owners can learn a lot from the evolution of parent-child relationships. But how do we actually use this to get on with getting out of the business?

Use the parent-child analogy to closely examine your own attitude. Do you relate to your business like it is a newborn infant? A toddler? An adolescent? Or a fully functioning adult? Think about it carefully and be honest with yourself.

The fact is the business will move through the stages of autonomy as fast as you enable and empower it to. The better your leadership skills become, the more autonomous your business can become. Then you will have more time (just like empty nesters) and money to play golf, float around the Caribbean on a yacht, go shopping etc.

Stepping Up to Step Out
Ask yourself; What are you willing and not willing to do to move yourself up the leadership scale?

There are a lot of books available if you want to start broadening your understanding of leadership and what it means for your business. One we would recommend is:

"Leaders: Strategies for Taking Charge" by Warren Bennis & Bert Nanus, Harvard Business, Harvard Collins, 1985

Often one of the most effective actions is to just start noticing. Notice your own behaviour, notice the reactions of the people around you, notice the beliefs that are informing what you do. Then allow your creative resources, that got you the business in the first place, to generate more useful ways of interacting with your business. After all, you deserve what you want and you get what you expect. Good luck! 

 
 

Eyes Wide Open provides consulting support in marketing, business management, strategy and exit planning for small business in Australia.  They are based in Sydney and specialise in companies with up to 50 people. View their smallbusiness[HQ] listing here.

Important - Read This: This information is intended to provide general information only which may not be applicable to your particular circumstances.  You agree to access this information at your own risk and that First Point Media is not liable to you for the content of the information or any reliance by you on this information.