There are two types of exits family business owners can experience – good ones or bad ones. The good thing is there is a lot you can do to ensure that when the time comes to transition out of your family business, your business exit strategy will lead to a good outcome.
Thinking ahead and creating plans for years in the future can be difficult. Especially when you know that those coming years may involve a sale of your family business.
But this years-long stage of strategizing and exploring all of your options thoroughly is exactly what you need to be doing as a business owner – even if a business transition (scale, sale, or succession) isn’t coming around the corner.
It’s helpful to know that business owners who have had successful exits have seven things in common. These seven traits can be developed over time. If you take the time to improve and develop them, it can help ensure that your business transition will be successful for you and your business.
The 7 Essential Elements to Good Exits
In his book Finish Big, author Bo Burlingham identifies seven key elements that business owners who have had good exits had in common. These owners…
1. Knew Who They Were: Owners knew who they were, what they wanted from the exit, and why. Because of this, they were able to make good choices. To find success in this transition, you need to know what you want to get out of it. To know that you must know yourself.
2. Built Sellable Companies: Successful owners also built companies they were able to sell when they wanted, to whom they wanted, and at a price they considered fair. This is easier said than done. But a big part of fostering a successful and sellable company is creating a strategic vision and planning out years in advance.
3. Gave Themselves Time: Owners gave themselves enough time, measured in years, to do the work they needed to do on the business and themselves to ensure a good exit. This was even more essential for owners who needed a successor.
4. Peer Group Support: Successful owners had help from people who had been through exits themselves, typically in the form of peer groups and advisors. An outside perspective is essential to making the right decisions at every step of the way.
5. Took Care of Their People: They took care of the people that had been on the journey with them. It was important that after they exited, they were able to feel good about what happened to these people.
6. Understood the Buyer: Owners understood why the buyer wanted their business before selling it to them.
7. Transitioned to the Next Phase of Their Lives: Successful owners were able to transition to doing something else that was as meaningful to them as running the business had been. They were able to move on and still have a happy, productive life.
How to Start Developing These Traits
The first step to establishing these elements when faced with the prospect of an exit begins with a robust exploration process. The purpose of exploration is to determine what matters to the owner regarding the business, their family, and personally.
These elements are wide in scope, and they take a while to fully develop. One of the most effective, fast-tracking methods to begin that exploration with the right guide is a family business retreat built around the M3 model.
The M3 framework developed by Orange Kiwi helps owners engage effectively in this exploration process. It consists of three domains – My Business, My Money, and My Self, and 22 variables in those domains.
At a top-level the M3 Framework emphasizes that business transitions (scale, sale or succession) are multi-faceted events that most often take years. Many related solutions involve linear plans that don’t adapt well to the dynamics of a small to mid-market business. These solutions often overlook completely the hidden needs and wiring of the most important person – the business owner. The M3 Framework provides a unique, wholistic, and flexible alternative to business transitions.
Good Exits – The Bottom Line
If you want to learn more about the M3 Framework, the full white paper can be downloaded here. To find out more about our family business retreats, get in touch with Orange Kiwi today.