Planning for Growth or Exit my Business?

Jorg Borgwardt's picture

Conversations with private business owners often finish with this question: “Which of these two options should I pursue?”. Managers that invested an overwhelming part of their life in building and running a business, often at the expense of family or personal hobbies, will eventually reach a point where this question is paramount in their minds. The only problem is that this is the wrong question: these are not two options or two alternatives. Actually, one depends on the other.

Owners that contemplate an exit strategy often do so at a time which is not truly opportune. Perhaps they lost the one person who had been groomed for succession? Perhaps the are failing to attract the best talent in the market? Perhaps technological developments are threatening to side line their operation? Perhaps their clients are finding other service providers more attractive and plan to move?

Life is full of these and other examples that cause key executives to ask whether it is still worth sacrificing personal and family interests for the benefit of an enterprise.

When an individual reaches this point it can be too late to generate a maximum return on his or her sweat capital. Selling a business is indeed completely opposite to selling stock. Investors unload stocks when they believe a share high has been reached. This formula does not work when selling a business. The simple and most overlooked rule of what constitutes the best moment to plan for an exit is this: planning the future and underpinning it with a robust growth plan. Indeed, the best exit moment is when a medium or long-term growth plan is in hand and steps are clear on how this will be achieved. Planning for this has to start at least 3 years prior to any serious going-to-market attempt.

Buyers in the creative business sector never pay for past performance; they only pay for future accomplishments. A solid growth plan will ensure your company’s attractiveness and also gold-plate your price.