Find the Exit

When you're in a bind, what will save you is paying attention before you start.
We all know the drill when taking a flight and most, if not all of us fail to pay attention to the flight attendant indicating safety precautions, identifying the lights down the aisle that lead to the exits.  All of this, being pointed out to passengers often as the plane is still on the tarmac and leaving the gate. 

Why plan for an emergency exit before the plane has taken off? 

Do I really need to ask?  Well, for those that come up with your own answer, allow me to elaborate why I choose this particular example.  Before you leave on that flight you are told: in the event of an emergency.  An emergency just might happen when you have your own company.  It is therefore prudent to know how to get out.  There are benefits to paying attention to what exits are available to you.

The start of your business is most likely when you have the most enthusiasm.  It's your idea, you are emotionally and financially invested.  You have dedicated your time.  Like anything new, the last thing you are going to be thinking about is what's next.  Will you be handing the keys to the next owner, or closing down either foreclosing on property you owned, or returning leased property and all your leasehold improvements over to the landlord?

As you establish your business and enthusiasm wanes, you want your business to demonstrate reasonable growth.  Your motivation is to either pay down start-up debt, or yourself for that matter.  What you might not be considering is positioning it for sale.  You may indeed run your business for the remainder of your working life, or life may take that unanticipated twist and you will choose instead to close or sell.  Obviously, selling it would be a more lucrative exit.  However you end your time in what is either a new or on-going venture, having it ready for sale is just a wise business model. 

Typically, one of the things I often hear when discussing a business with its owner is pride.  Just like selling your house, there are things you can do to improve its saleability.  All too often, what's a source of pride and accomplishment to you, detracts from the value for a would-be purchaser.  The interjection of a business owner leaves a stamp on a business, and is actually a detraction.  So, just as you might get rid of that chartreuse room and paint it beige when putting your house up for sale, so too might you provide a business that a prospective buyer is more likely to envision themself at the helm.  Business procedures and systems rely too heavily on you, the one wishing to walk away.  What you want, in a sustainable business is one where you are expendable.  If you think like this at the start, it is far more likely that your business will run well for you, and therefore be appealing to a buyer who wants to insert him/herself in receiving the bounties of your successful enterprise.

Expendiblity of the owner and chief executive can be dodgy.  If starting a business from scratch, often with limited or no capital, pretty much every aspect  of the business is you.  You do everything for the business, and it becomes an extension of you.  However, you are likely better at some things than others.  As such, as your company grows, you will bring on staff with strengths where your weaknesses lie.  What's important when you add employees is to put procedures in place such that they are less dependent on you, and yet held accountable.  If it is your face on the marketing materials, website, signing all the deals, writing the company blog, be careful.  Your customers, vendors and team will be more attached to you than the product or service your company provides.  As such, you devalue your business.

Furthermore, what you make for what you put into your business is more than what shows on your Profit & Loss statement.  If you turn a nice profit, don't carry aged receivables, but are working 80 hours a week, your company is worth much less than someone in similar circumstances working only 30 hours/week.  What is easiest for you while owning the business will also make it easier for you to walk away and someone fill your shoes, and enjoy the same cash returns.

Part of what makes entrepreneurs start their business is their passion.  An entrepreneur, in order to weather the beating, kind of has to buy their own hype.  A start-up is your baby and you want to get credit for making the sacrifices that bring about desired success.  It's the right strategy for you, in the short term.  That kind of enthusiasm will burn out, and even if you choose not to sell your business, creating a business that doesn't require your input on every aspect will not only make it easier to sell and more valuable, but also make owning your business more rewarding. 

So, if you need help drafting policies for your company, or need someone to review your business plan, that's what I'm here for!  For more information, contact me here or http://nancymoisehaws.com/
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