Strategy, Strategy, Strategy
Welcome back to the Mid Market Insider!
Let’s jump in…
This week I want to dive into the importance of having a strategic approach when it comes to exiting your business.
Strategy is an important concept when it comes to business and life.
Take the Chicago Bulls, who infamously won 6 championships behind the brilliant Triangle scheme conceived by Tex Winter and later implemented by Phil Jackson who went on to with another 5 championships in LA.
All great individuals who had a penchant for strategy and were incredibly successful in their pursuits.
But now let’s look at the importance of strategy from a business owner's point of view.
For many business owners, there are commonly three phases of ownership.
Phase One: Pushing the Rope Uphill
In the early days, growing a business often felt like "pushing a rope uphill." It's a period marked by relentless effort, sleepless nights, and the constant challenge of finding ways to generate growth. Every step forward requires significant energy and determination.
Phase Two: Riding the Momentum
After surviving the initial struggles, many businesses enter a phase where growth becomes more organic. The metaphorical rope transforms into a wheel that gains its own momentum. During this period, the business generates its own forward motion, requiring less forceful intervention from the owner. Growth feels more natural, and this will come with new challenges but these are less about surviving and more about thriving.
Phase Three: Preserving the Motion
The final phase presents an interesting paradox. As owners approach the idea of an exit, their primary focus shifts from acceleration to preservation. This conservative approach, while understandable, introduces its own set of risks.
Now, this is where it gets tricky. There’s an age-old adage that I have followed my whole life: If you aren’t growing, you are dying. While your instinct may be to protect what you have built especially when considering an exit, it’s important to realize the negative consequences of stagnation.
The key point I am trying to make here is the importance of strategic timing. The ideal moment to begin exit planning isn't when you're ready to step away – it's before you start taking your foot off the gas. You need to make plans for an exit sooner than you expect it to happen.
As we all know, life tends to break up any set-out plans. Health issues, family circumstances, or market conditions can all hit you out of nowhere and if you don’t have any plans in place then all that hard work will be for nothing.
For business owners, the challenge is to recognize where you are in this cycle and act accordingly.
Exit planning shouldn't wait until you've entered the preservation phase.
Instead, consider developing your exit strategy while you're still in the momentum phase when the business is showing strong growth and you're actively engaged in its development.
Start thinking about exit planning:
Before you feel ready to exit
While you're still actively driving growth
When the business demonstrates strong momentum
Before external factors force your hand
The most successful exits often come from businesses where owners maintained their growth mindset right up until the transition, rather than shifting into pure preservation mode.
Remember, the goal isn't just to protect what you've built, but to ensure it continues to thrive even as you plan your eventual transition out of the business.
The Lessons:
1. Start Exit Planning in Your Prime: You shouldn't wait until you're ready to step away to plan your exit. Begin strategizing while your business is still in its growth phase and you're actively engaged. This gives you the advantage of planning from a position of strength rather than necessity.
2. Keep Growing While Preserving: The instinct to protect what you've built shouldn't mean stopping growth altogether. Your business is like a muscle – it needs regular activity to grow stronger, or it will weaken from disuse.
3. Set Your Exit Trigger Points: Don't wait for external circumstances like health issues or market changes to force your hand. Identify specific business and personal milestones that would signal the right time to exit. This allows you to exit proactively and strategically rather than reactively.
📅 Next Week:
In next week's newsletter, we will discuss the importance of rigorous decision-making.
Keep building,
Nick
P.S.
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