What is the Exit Goal?

Monday, August 24 2020

Many businesses are born from what Michael E. Gerber calls The Entrepreneurial Seizure[1]. These are the moments of inspiration or desperation that drive a person to start a business or that cause the owner of an established business to dive in with renewed vigor. If you have ever started a business, or if you own a business then you have probably experienced entrepreneurial seizures throughout your business life.

No matter the age of the business or the owner, when entrepreneurial seizures hit they can fuel bursts of business growth and development that make the business more attractive for succession or sale when the time is right. The trick is to focus these bursts of entrepreneurial energy into successful, strategic, and deeply rooted outcomes that contribute long-term value to the organization rather than activities that only bloom for a season.

Regardless of whether you have a start-up or a mature business it is important to ask, “What is the exit goal for my business?” According to a 2017 BDC study[2] of business owners over 50 years of age (which represents 60% of business ownership In Canada):

  • 52% intend to sell or transfer business ownership outside the family
  • 26% intend to transfer the business to family members
  • 22% intend to wind down the business and sell the assets

Each of these is a valid business succession goal and each of these outcomes requires separate defined strategies and processes to be successful. Each requires sufficient time to maximize the financial potential of the business succession strategy and to minimize the tax implications.

Clarifying business succession goals is an obvious and urgent concern for older business owners who are starting to contemplate retirement, but what about younger entrepreneurs and start-up owners? “Beginning with the end in mind”[3] is always a wise strategy. So, define your exit strategy goals even if you are just beginning your business.

It is important to know your succession goals for your business because they will help guide your business strategies and decision making so that you will continue to build value into your business. The process of building value in a business over its lifetime is an integral part of the process of achieving a successful succession or sale.

[1] Gerber, Michael E. The E Myth Revisited, Harper Business, 1995, p11.

[2]//www.bdc.ca/EN/Documents/analysis_research/bdc-etude-transition-seller-resume.pdf?utm_campaign=Business-Transition-Study-2017–download–EN&utm_medium=email&utm_source=Eloqua viewed Aug 20, 2020

[3] Habit #2 from: Covey, Stephen R. The 7 Habits of Highly Effective People, Fireside, 1989