ENLISTED TO ENTREPRENEUR By Vicki Garcia
Your Exit Strategy It may seem strange to think about an exit strategy when you’re just a startup or in the early stage of building your business. But that is the exact right time to think of your exit. An exit plan can determine many decisions you might make for years before you sail off to Tahiti.
The Stage of Your Business Think of the stage of a business as if it is on a clock. • From midnight to 3am, you’re laying down the framework, inventing new products or ideas, building a brand, establishing a customer base. It’s all new and exciting full of promise.
How Do You Calculate the Value of a Business?
• From 3am to 6am, you’ve established your model, developed a successful marketing effort, hired your employees, and you’re humming along. At this point you figure you’ve got a lock on it and have stopped asked yourself “what the hell am I doing?”
Take a step back and look at the business you plan to sell from a buyer’s point of view. The simple answer to this question is, how much is the right buyer willing to pay?
• From 6am to 9am, you’re growing, you know what you’re doing, you’re starting to understand your place on the planet and feeling pretty confident. You’ve also attracted competition and copycats because nothing attracts copycats like success.
The answer can be complicated with a ton of different answers, depending on the context. 1. What stage is your business in? 2. Why would a buyer want your business? 3. Does your business have Strategic Value? 4. Does your business have an Asset Value? 5. What is the Revenue Value of your business? 6. What is the People Value of your business?
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• From 9am to 12noon, you’re government. You’re restrained by “we’ve always done it that way.” You’re rigid. You have policies. And you’ve developed internal issues like carrying a high debt load and overpaid employees. Strategic Value Your buyer wants to know what you bring to the deal. They’re not looking simply at your financials. They may be looking inside of their own organization and what they might need to spend to deliver what you’ve already created.
