The views expressed by Entrepreneur contributors are their very own.
I used to be in my twenties, the richest I had ever been on my very own, and I used to be devastated.
I needs to be quite pleased. The landscaping and snow/ice management company I began when I used to be 16 had just been acquired by a strategic buyer – a competitor who liked our people, process, customers and equipment so much that they bought my business. I built a successful company with over 20 employees as a teenager.
But there, before my eyes, my name was scratched off the side of one of the seven trucks included in the sale of my business.
Let the way you sit define you
The problem was clear: my stool was wobbly.
Imagine owning a business as a stool with three legs: personal, financial, and solid. When you’re adding value—not only dollar value, but intangible capital like people, systems, and ideas—to your small business, you wish that stool to be solid and comfortable. That means all three legs fitting together.
I sold the company and eight months later it became clear that one of the things I took with me was a shaky stool. I didn’t have a personal plan before I left. Like many young entrepreneurs, I made the mistake of considering that owning a company was just a business. So when I left I had no personal plan and no idea what to do next. For years I had been so focused on the company that I wasn’t excited about the vision of my next step.
This time, in the company I own now, I’m focused on building a business of meaning—one that, when I exit, will align with my business, personal, and financial goals. My business isn’t just what I get up and do every morning. It’s a financial asset that aligns with my personal and financial plans. Instead of struggling through a marketing strategy, I let my personal plan drive all the pieces I do. Owning a business is part of that private plan—but only part. It helps me build a business that I’m comfortable with and ready to exit.
Get out of the way
The fact is that an exit is coming for you and your small business. Half of all exits in this country are caused by 5D: death, divorce, disability, misunderstanding or suffering. If you meet a serious illness or sudden death, what is going to occur to your small business? And since most of the entrepreneur’s wealth is tied up in his business, what assets will you have the option to pass on to your loved ones?
Fruitful exits occur to significant firms—not necessarily just successful ones. To have a significant company, it has to be highly beneficial, transferable, attractive at all times, and consistent with all three legs of the stool. The value can’t be about you and your ideas. It has to be value that survives you. And to build value, you’re going to have to get out of the way.
Tip #1 for getting off the road: Decentralization
My current company has 35 employees. As an owner, I know that two of my biggest strengths are people and culture. Because I take advantage of the Value (*3*) Methodology—a strategic framework for executing exit planning that focuses on what I can do now to add value to my company—I run continuous 90-day sprints to reduce risk through business improvements. One of the risks I’m focusing on now is decentralization, because I know that when I exit, the business can’t be about me.
I recently took a month off work to get married. When I returned, every goal we set for ourselves while I used to be gone had been met. But I noticed that the culture wasn’t the same. Without me shaping the culture every day, the company wasn’t the same. That tells me we’d like to work on building teams and processes that can start to embed the culture in the company.
Tip #2: Get Out of the Way
Great firms are ready to transition at any time. To be ready to transition, you wish to know that your organization has value to each an external and internal buyer.
It is crucial to participate in a formal value-adding process prior to the transformation. This is not a one-time experience because as you build your exit, your goal is to be ready to exit at any time, regardless of the specific exit options. It is crucial to educate yourself about your small business by conducting annual business valuations, assessing your personal, financial and business goals, and putting what you learn into a prioritized motion plan.
Tip #3 for Getting Off the Road: Get Help
You don’t have to do it alone. Seeking out a Certified Exit Planning Advisor, or CEPA®, can assist you develop plans—based on a proven framework—that align with your small business, personal, and financial goals.
Exit planners uncover risks in the owner’s business, help build significant value before the transition, and align the owner’s business, personal, and financial goals. And because you’re looking at all three legs of the stool, it’s possible you’ll need greater than one. They may specialize in financial advice, legal assistance, accounting, or leadership, and can connect you with other planners to assist you build an advisory team.
Getting out of the way doesn’t suggest sitting on the sidelines
While it’s essential to build a meaningful business that has value after the owner leaves, getting out of the way doesn’t mean you’re leading in absentia. In fact, the work of building a meaningful business is intense. As entrepreneurs, we regularly feel like the lines between who we are and who our business is are blurred. For the people working in your small business—and the value a potential owner might see in your small business—it’s crucial that the business becomes greater than just you.