Why do I Need an Exit-Ready Business?
People often ask, “Stacy, I’m years away from selling my business, why do I need to be exit ready now?”
Let’s get the ugly fact out of the way first. Fifty percent (50%) of business owners leave their business unexpectantly because of one of the 5 Ds (Death, Divorce, Disability, Disagreement, or Distress). If one of these were to strike you today, are you ready? Most are not. As a business owner, you need to remove risk and button up some details so your spouse, family, business partners, clients, and staff aren’t left with a mess if something should happen to you.
12 Steps Every Exit Plan Should Address
Being exit ready doesn’t mean leaving your business tomorrow, or even ten years from now. It just means you’re ready when you decide it’s time, and in being ready, you benefit from a stronger, self-sustaining, and more valuable and profitable business.
Once business owners work with us on an exit plan and understand what being “exit ready” means, the question shifts from, “Why do I need to be exit ready now?” to “Why did I wait so long to become exit ready?” What most discover while becoming exit ready is that their company can get many levels higher than they ever imagined. And it is actually fun once you finally let go and move into the process!
Being Exit-Ready Equates to Having Options
I was so glad I had options when I decided to sell one of my businesses several years ago. I hadn’t planned to leave the business for another 15 years, but luckily, like I am advising you, I was exit-ready much earlier than I “needed” to be. Then life happened. We had a family medical situation arise, and my husband and I decided we needed to be closer to family.
This decision to go where we were needed was much easier because I knew the business would be easy to sell. Although the selling process is usually stressful, it couldn’t have gone smoother and happened in just a few months (which is unusual). That would not have been the case without an exit-ready business. We were able to make the right decision for our family without feeling like we were stuck. Options are important.
The process of becoming exit ready is learning how the business can perform at its best, how to create a strong foundation for scaling, and what creates a sellable business.
Now the Top 5 Most Exciting Reasons to be Exit Ready!
#1: When you have an exit-ready business, it is less reliant on you.
An exit-ready business gives you the ability to travel, spend time on hobbies, dream up another business, or whatever it is you love to do. You see, when we first start out in business, most of us become rugged individuals. We do most everything ourselves, figure it out, do the work, find the money, do the sales, and create the thing. Over time, we start to bring in others to help us, but typically there are still some things we hold on to. We maintain a piece of that rugged individual. Whatever that piece is that you are holding on to, it is now holding your company back.
Confidently letting go of the need to be in the day-to-day is a benefit of being exit ready. An exit plan prepares the business to run on its own and you gain confidence that it will run just as it should without you. Imagine that? You can feel the weight of the world lift off your shoulders.
#2: When you become exit ready, growth occurs.
If you want your company to get to the level that you know it can, it will require different skills and roles for each member of the team, including you. This is a perfect time to provide leadership and management training to create a self-sustaining team and business. When you have a strong, cohesive team invested in your business (because you invested in them), they will come together to see that it’s a success, even when you’re not there.
In a recent study, more than half of employees claim they would be “significantly more engaged” at work if their company has a succession plan.
#3: Exit-readiness helps you strengthen the foundation so you can scale your business.
If you are interested in scaling your business, becoming exit ready makes scaling smoother. As IGX helps you create an exit-ready business, we work on the foundation: the people, processes, systems, and strategy. Strengthening the foundation makes scaling possible.
If you’ve ever tried to scale and had the knee-jerk reaction most of us have to growing (just sell more!) then find you can’t produce the product or service well, most likely the foundation is not able to support the added income or sales. It’s like trying to add several levels to a building without shoring up the foundation first.
The same holds true for our businesses. Shoring up the foundation is a primary reason owners love becoming exit ready. It makes the business run smoother, typically at a higher profit margin, and creates scalability and a more valuable business for later. What’s not to love about that?
#4: When you become exit ready, you solve perpetual nagging business issues.
Most business owners have one or more nagging issues they just can’t resolve on their own. This is normal! We owners wear so many hats that frankly, it’s hard to be great at them all. In fact, according to TSheets (now QuickBooks Time), 32% of business owners have only taken a few business classes, while 46% don’t have a business degree.
Most of us get into business for some other reason than the love of running a business, so when issues come up, there’s a lot of frustration trying to solve them. When the owner finally reaches out for professional business growth and exit planning help, they are often surprised at how easy it is to “fix” the issue.
Professional exit planning advisors have seen most issues before. We understand the underlying causes and can put a plan in place to execute a solution, and just like that – it’s fixed. Okay, maybe it isn’t quite that easy, but you get the idea. Curious about this magical fix? Then you’re ready to take a deeper dive into the current state of your business. You can take a quiz here to start the process.
When we dive into your business together, it helps determine how your business stacks up against others and where there is room for improvement. Most of the time this leads to an ongoing relationship to improve the overall business and grow the value. It’s just a natural progression. It’s a bit like a home makeover. Once you start in one room, it’s hard to leave the rest of the house untouched. Can you relate?
#5: Exit-readiness helps you naturally shift to seeing your business as a legacy.
During the exit planning process, you’ll start to see your business differently, a shift happens. For most, this shift doesn’t happen overnight, but over time you’ll understand that the business needs to be its own entity. It doesn’t exist anymore just to provide a paycheck or prevent you from having to work for the man. You’ll begin to see how your business creates something good in the world. It provides jobs for your community. It is an asset to hand down to your family or maybe it’s a legacy that can outlive your lifetime.
When you see what your business is capable of, you will truly want to take on the responsibility of growing the business so it can support itself and all the good it does. You see, some businesses stay in infancy forever, but just like our kids, it is important to develop them so they can live and function on their own as an adult. It’s time to see your business differently, for the good it creates and the legacy you and it are leaving.
How do You Start Becoming Exit Ready?
Regardless of when you want to exit your business, it’s likely you want a growing business, one that takes less of your time and adds more personal income, all while becoming more valuable. This is possible but developing an exit-ready business doesn’t just happen overnight. That’s why it’s important to start the process now to find out your current state and get a baseline, so you have a better understanding of where you think you want to go – professionally, personally, and financially – and then discuss becoming exit ready.
To do this, you will need an expert’s help. Honestly, it’s too difficult, if not impossible, to do this on your own. When you work one-on-one with an IGX advisor, we start with a series of attainable steps that make it easy and achievable. We can go as fast or slow as you wish to go. The rate of becoming exit ready isn’t as important as having the roadmap to get there. However, if you’re like most business owners who get a glimpse of what’s possible, you’ll want to speed up the process.
Don’t hesitate to reach out today for a no-obligation conversation to learn more about our exit planning process or get help determining your current state so you can make an informed decision on how to move forward in your business. IGX specializes in privately-owned and family-owned, service-based businesses across the USA.