I’ve always loved this photo.
I came across it courtesy of an article by a hero of mine, David Hieutt of Hiut Denim Co and The Do Organisation. Talk about a picture speaking a thousand words.
It displays the basic truth about a plan for any enterprise. If you don’t know your destination, how do you know when you’ve arrived; or how long it will take; or what the route is. Any business plan that doesn’t work towards the desired exit is just an interim growth (or survival) plan.
For many that might be enough. But bear in mind that the growth you achieve without the exit plan being considered could well be disadvantageous to your exit in the long run. We’ll discuss that further later.
We firmly believe that whatever the stage that your organisation is at, your business plan/strategy should be conceived with a view to achieving the ultimate planned exit. In our experience of with working hundreds of clients, this is rarely the case. We’d like to make the case for its importance and what the benefits will be.
Most businesses in the UK live in the moment. You’ll be concentrating on the day-to-day operations, marketing, sales, cash flow, HR etc. You’re likely to have a 1-year strategy and a 3-year vision, because these days with change so prevalent and the economy so volatile, it’s impossible to accurately know what is likely to happen in the markets and society in any longer time-period. In such a scenario, why should you consider your preferred exit plan, particularly if any sort of exit seems so remote?
This ‘living in the moment’ is even more prevalent given the disruption we’ve all faced over the last 6 years or so. So many momentous events have impacted our lives – Brexit, Trump, Pandemic, Russia / Ukraine, not to mention Prime Ministers being ousted, climate change, hybrid working, etc. etc. This has meant that, for many, survival is the top priority. Not exit – unless it’s forced.
We ought to define what we mean by exit.
Our definition involves some sort of transition for your business. That might be,
- A merger
- An acquisition
- An IPO – offering shares to the public
- A sale to a competitor
- A sale internally – an MBO
- Retirement but without selling – keeping your shares
Note that all of those, except for liquidation, might mean you don’t actually leave the business. They are still exit from one state to another, but you’re still very much involved. So, exit is not necessarily goodbye, but it is definitely a new beginning. You want that new beginning to be worthwhile.
Furthermore, consider that there are 2 types of business owner.
- Those that must exit.
- Those who plan their exit
It is obviously far better to be the latter. The earlier you conceive your ideal exit strategy, the clearer the focus and vision for you and your company is. By exiting with forethought and control, you maximise financial return for yourself and all other stakeholders and should leave your venture in the hands of trusted successors. You also should then be able to financially move on to the next planned phase of your life with less stress.
In the next blog on this subject we’ll give you 5 reasons why your exit plan should always be part of your business strategy.