I think it’s one of Stephen Covey’s famous habits, but I’ve heard it in so many places now that I’m not sure where it originated from – starting with the end in mind.
It’s a bit strange to think of the end of your freelance writing business, especially when you’re just starting out. But it’s actually a very worthwhile exercise, and something I’ve been thinking about a lot lately as I plan for the future and expansion of my business.
This process is called exit strategy planning.
It doesn’t matter if you own a McDonalds, invest in real estate, play the stock market, or any other type of business, you are supposed to have an exit strategy. It is your plan of how it all ends, how it turns out. The strategy you choose has a lot to do with how you build your business in the first place and it also shapes day-to-day activities.
Basically, there are a few different strategies that people observe:
Sale
Going passive
Passing it
Dirty fire
Disappearing
The jewel in the crown is the put option. Think of a small business that grows and prospers, and then an investor buys it for a lot of money. Part of making this happen is implementing effective systems that make your business run profitably with minimal reliance on your personal attention. They want to see financial statements and other evidence that what they buy will survive after you are gone. Think of a McDonalds franchise and you get the basic idea. The recipes in one are the same as any other McDonalds anywhere (although there was a mysterious mix at a McD’s I visited in the Philippines several years ago).
The passive route requires much of the same preparatory work as the sale, except that basically, you are the investor and you are not paying yourself for your business. Just put the system in motion and back up. You guide a bit, you are correct and direct here and there, but you are not directly involved in day-to-day operations. Just collect the winnings. Nice!
Streaming it doesn’t seem to work very well. Having seen that plan in action in different organizations, I have doubts that it will ever work without a hitch. It usually looks like this: Smith is successful and wants to put his kids in business. The tile changes to read “Smith and Sons”, until Smith croaks, and then just says “Sons”. That’s when employees freak out because kids are idiots and everything they touch turns to poop. They rebel because they can’t take it anymore. The business disappears in a couple of years.
The auction and its ugly cousin named Disappear, however, are the worst. Basically something bad happens and the business owner wants to sell but never planned the systems that would make the business attractive to a buyer. Time is running out and some crazy shopper picks it up for a pittance or doors close without warning.
So which one sounds better?
Well, that’s a trick question. I would take either of the first two, myself.
We will talk more soon about what this looks like. Meanwhile, the best resource I have found for building a business with the end in mind is Michael Gerber’s book, “The E-Myth Revisited.” Check it out!
