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Business Succession Planning. Developing an Exit Strategy

Very few soloists think about business succession and exit strategies, but one of the main ingredients to running a profitable enterprise is knowing what your role is going to be. 

Rather than the commonly used term "exit strategy" to describe terminating your business involvement, I like to say ‘succession strategy,’ since you should be hoping the business will prosper even after you leave. 

It's an accepted truth, even, that different personality types are best as businesses reach different points in their lives. 

It is usually beneficial to employ an effective manager who is concerned with growing and developing money making plans. 

Then, what should we think about when mapping out our own business succession? 

First, think about when and how you'd hand over the business, if you wanted to. Does it happen when you reach 10 employees? When it outgrows your home-based office? When we've accumulated enough financial resources to retire comfortably? 

Is it good to have an exit strategy, or a business succession plan? 

What distinguishes an exit strategy from a business succession strategy is the former implies you will leave and be done with the business, while the latter implies to you be actively involved in the future of the business, even if that means merely selecting who is going to purchase it. 

The concern with soloists. 

A couple of problems exist, as a matter of fact. 

First, when we are the only employee of the business, we are vital to its survival and without building in some extra (i.e. passive) revenue, then we must continue to work or the business will fail. For example, I have completed a book that is about to be published, which I anticipate being so popular that I will be able to receive large royalties for many years. 

In order to make a solo business attractive to buyers, it must have its own personality (or "brand") so that it does not depend solely upon us for survival; this makes it more valuable to buyers. Another issue is that, despite the fact that we have hired personnel, it is still our business and we don't necessarily like to relinquish responsibility, nor do we like to develop and document business rules, something that adds structure to the business structure and makes it more valuable to buyers. 

If you stay too heavily involved, even if your staff is small, then buyers may perceive the business as being dependent on your involvement and it becomes unattractive to them. 

The Solution: As you are developing a business plan and setting your goals and objectives, never lose sight of the need to create equity, i.e. value the things that others pay for. 

You should also establish procedures and systems that will allow your business to continue running and serving its clients even in your absence. Yes, your clients rely on you, but think about places where even physicians are encouraged to take vacations.  

A business organized to run without your presence means that in the worst case scenario, you'll be able to take vacations without having to bring your cell phone along and constantly check your email. 

Best case scenario, you'll be able to retire well with the reassurance that your "baby" has a new other who will take care of it carefully and lovingly! 

If you're considering shutting your business down, I'd ask you to reconsider. You were able to turn your dream into something that matters to other people. It would be a shame, both to you, and to them, just to close the business you worked so hard for.