Run Your Business As If You Were Going to Sell it Tomorrow
Whatever the state of your business – whether it’s a start-up, fast-growth company or has been operating for years – your most effective strategy should include a plan as to how you will exit the business. Savvy CEOs and business owners are always looking ahead, always asking themselves these questions:
- How will I ultimately leave the business?
- Do I intend to sell to family members, employees or an outside buyer?
- How can I continue to make the business attractive to potential sellers?
Business owners who consciously build or maintain their companies with the goal of eventually exiting – rather than those who are too immersed in day-to-day operations to look that far ahead – tend to put people and processes in place that keep the business running smoothly and successfully. This approach generally increases business value both in the short- and long-term. (You can take this approach even if you aren’t planning to sell.) The objective is to operate an enterprise that doesn’t depend solely upon you, the CEO or owner, for its ongoing value and revenue streams.
The better a business can function without needing the owner there all the time, the more valuable it is to potential buyers. To get to this stage, keep these strategies in mind:
- Evaluate the effectiveness of your current operations. Where are you losing money along the way?
- How dependent are the company’s revenue streams on your day-to-day presence?
- Can you take a week or a month off without the business falling apart? Even more to the point, can you take time off and have the business actually move forward? (If your answers are no, you’re probably too focused on operational tactics, rather than fulfilling the strategic role CEOs are best suited for.)
If you uncover significant deficiencies, look next to your method of delegation. Whose job within the organization are you presently doing, in addition to your own? Either you have the wrong people in place or you’re not making the best use of the talented people who work for you. In my experience, when a business depends entirely on the owner for its success or long-range health, it has become dysfunctional. Growth is constrained. Fewer risks are taken. The business is no longer moving forward, sometimes barely treading water.
These situations aren’t necessarily anyone’s fault. It’s often difficult for an talented, ambitious entrepreneur to successfully transition to becoming an effective manager. The relative freedom and lack of structure that gets things off the ground sooner or later must lead to established systems and other people in order to succeed – the same elements, incidentally, that lead toward your eventual exit.
Members of Catapult Groups are CEOs and business owners who help one develop effective exit strategies. If this is your goal, and you’re simply too swamped with daily operations to give this the thought you deserve, find out more about how membership in a CEO coaching group can help you work on your business, rather than in it.