If you google “how to start a business” your search will return over a billion answers!
However, if you do a similar search on “how to exit a business” it will return approximately 250 million answers – less than 25% — of the total number found in the start a business a search.
Ironically, not everyone will start a business but EVERYONE who starts a business will leave their business at some point. So shouldn’t we have more information available to us for the exit process? As Bo Burlingham, author of Finish Big: How Great Entrepreneurs Exit on Top says, all business owners will leave their businesses – either by choice (sell or transition) or by default (liquidate or forced sell – or “leave with their boots on at their desk”). Similarly, there are more books on planning a wedding and having children than how we plan our end-of-life decisions. Clearly, we are more interested in the beginning of our journeys than the end!
What is so fascinating to me is that most founders and entrepreneurs I know have vision with a capital V. And yet, somehow, these same visionaries have blinders on this topic ignoring the requirements for an orderly and planned sale or transition of the business. According to exit planning research, business owners initiate the exploratory phase to sell their business with the expectation that they can sell their business within six to twelve months of starting the exploration.
The reality is that the average time for an owner to prepare their business, engage an acquirer and process the sale (including the transition period where the owner no longer owns the business but is working with the new owners) is three to five years. In essence, it is approximately five to ten times longer than the business owner expected when she initiated the process.
Most of us become entrepreneurs so that we don’t have to work for anyone else. Imagine the shock when an owner discovers that a significant portion of his compensation is tied to how long he chooses to work with the new ownership team to ensure his former company’s success. It’s no surprise that many in that situation rarely make it to the final terms of their agreements, often forfeiting some of their proceeds in the process.
Recently, a thoughtful (and probably worried) parent posted a request on social media. In short, she asked that well-meaning friends and family kindly refrain from asking her teenager what he would be doing after graduation. While there were many exciting and meaningful options on the table, the anxiety level was increasing daily for everyone in her household as the final decisions loomed large in their minds. And the joy of a reaching a senior year was losing its luster.
Obviously, no two stories are exactly alike. But knowing how much of our identities are tied to our work and our businesses, losing that identity or really, not planning for that loss creates all kinds of issues for the business owner. Because, often, without our businesses, who are we and what do we do? Like the impending graduation decisions for the teenager above, no wonder no one wants to talk about it.
As I work with business owners at all stages to grow their businesses, I often find myself coming back to the Stephen Covey’s enduring tenet – “Begin with the end in mind.”
Because of this thinking, we often discuss a far “future” vision that includes a time when they are no longer running or actively involved in their business. What I’ve found is that for most, it isn’t necessary to have worked out every small detail in advance. But by simply acknowledging and being aware that the exit process is simply another phase of the business, it opens the door to possibilities we couldn’t imagine doing while running our businesses.
And isn’t that the ultimate freedom?