Small Business Owners, What's Your Exit Strategy?

When I ask small business owners or professionals the question, "What's your exit strategy from your business at retirement?," they rarely have an answer. The most common response is that they haven't given it much thought. That's a big mistake.

As a small business CEO, your job is to develop your business into an asset that can be sold in the future for top dollar. In order to do that you need to look at the big picture and begin with the end in mind.

For your business to be truly saleable, it needs to function without you. Too many small business owners make the mistake of not scaling their business to a size that allows them to virtually delegate every task so that the hands-on, day-to-day workload is performed completely by employees rather than themselves. That ultimately includes hiring a general manager to manage the business.

I'm regularly told by business owners, "I don't want to grow my business any larger."  What it comes down to for those people is this - they are already over-worked and they believe that growth means more hours, more risk, more people headaches, and for what? More gross revenue with little or no more profit? If you are a small business owner or professional and your business won't run without you for more than a couple of weeks, let me challenge you. At this point you don't own a business, you own a job. You don't have to know how to take your business to the next level, you just have to want to grow and then start assembling the team to help you do it. Beyond making the decision to grow your business, the first step in the process is to become a small business CEO rather than a small business owner/manager. In truth, you need to become both.

None of this happens overnight. It's a process of developing a vision, strategic planning and recruiting and developing people. This will likely take years. The payoff is big if you get it right. It's not easy, as a matter of fact it can be very difficult. That's why most business owners and professionals don't do it. I'll let you in on the secret, "don't try to do it alone." Assemble a team of service providers and professionals to come along side of you and to work with you in the areas of your business that you need or want help with.   

There are lots of business owners and professionals who are doing exactly what I've laid out before you in this article.  That general manager that I spoke of earlier is typically developed from within as part of a strategic transition plan and served under the business owner as the assistant manager until they proved themselves by personally driving business growth to a predetermined objective at which point they were promoted to the position of general manager. As general manager the next step is for them to purchase the business at the owners retirement. How will they pay for it? It's all part of the plan.

What role do you want your business to play in your retirement plan? Are you willing to make an investment of time and resources over the next several years in order to develop your business into an asset that can be sold through a transition plan for a significant sum of money? You can't coast your way to success, you have to put your foot on the gas and push the pedal... Enjoy the ride!

People

There is one common denominator that all companies have.  Whether they’re large or small, no matter if they are super successful or struggling for survival, they all have one thing in common - people.

As a business owner, unless you’re working by yourself from home, your company depends on people.  Employees, customers, vendors and service providers, they are all people.

Understanding how people think, what they want and need, what they like and don’t like, what motivates or demotivates them, and what challenges and obstacles they are dealing with, that’s your business.  As a hands-on small business owner, first and foremost, you’re in the people business.  Your company’s success or failure will be determined by how well you do at mastering the people business.

Believe it or not, the most commonly overlooked area inside most small companies is the people side of the business.  Larger companies have a human resource manager whose job is to focus just on the people within the business, but in a smaller company, it’s not cost justifiable to have a HR manager.  Since the duties then fall back to the business owner, who is already wearing multiple hats, often the administrative side of people management gets delegated to a clerical assistant or an office manager.  The day-to-day motivation, development, and performance management often gets overlooked by owners and managers because they just don’t have the time in their day.

If you had just spent $150,000 for a new piece of equipment, would you invest additional money on performing regular maintenance on the machine?  For most, the answer is yes, of course!  By maintaining the equipment, it operates at peak efficiency. On top of that you have fewer breakdowns and the machine will have a longer lifespan.  People are not that different from machines.  They have needs and desires and need regular attention or they are not going to last long or operate at peak performance. Over time, without development and motivation, people get stagnant or burned out. They may develop issues such as tardiness or absenteeism, or they may just quit altogether.

As a small business CEO, be careful not to make the mistake of overlooking the importance of investing time and resources into developing the people side of your company.  A well designed and executed people attraction, selection, compensation, administration, training, development, motivation and retention process is the key to successfully managing the employees that your company depends on for your very survival.

In closing, let me leave you with this:  Successful people do the things that unsuccessful people are unwilling to do. The most critical component of any business is the people that make it run.  Successful CEO’s invest time and resources in developing people
 
By Todd W. Meyer, President/CEO of MMI Financial Group, Inc.

August 11, 2014