Pilot Fish Personal & Professional Development, LLC
Prosper on Purpose
Treasures & Focus!!
An interesting new book addresses the power of commitment. Commitment is the strategy utilized to match your aims. Consequently, it may be raised or lowered accordingly. In her book, Commit to Win, author Heidi Reeder, PhD (©2014, Hudson Street Press) draws upon decades of research to create an equation for commitment made up of four variables. Dr. Reeder expresses commitment as follows:
Have a set of core principles for your business, and be mindful of when you step away from them.
Core principles are like the soul of your company. These are the foundational truths by which you perform your work and conduct yourself as an entrepreneur. Even if you are a lonely soul, sitting in the basement in your boxer shorts, clicking away on a computer keyboard, you have a company culture, if only by default. The reasons for having core principles, a culture of choice, are legion. When you peek at the writings of entrepreneurial thought leaders on this topic, you often see discussions of ethics and morality. While no one doubts the necessity to conduct a business, much less a life, as a responsible citizen, human being, and spiritual entity, with this final mutable law, I instead submit three nuts and bolts reasons why core principles matter.
One of the snares that catches some entrepreneurs is overemphasizing revenue. Yes, revenue is important. Without dollars coming in, there can’t be anything coming out. Sometimes, however, our definition of growth for our business values gross more than net.
My team and I have worked with entrepreneurs of all shapes and sizes. There have been those enterprises that grew to $1 million plus in annual gross, thereafter kicking out several hundred thousand a year to a founder. There were also smaller concerns that despite less impressive sales, were able to return an even higher percentage of dollars to the owner.
But we have also seen businesses that gross $1 million per year, and pay out $90,000 of that to the top dog. Then there are the boutique firms that pull in $100 grand and manage to net $90,000.
Of the latter two examples, which entrepreneur do you think might have less headaches and more satisfaction from his or her business?
The day you start to plan your business is the day you start to plan your exit strategy.
What if the time has now come for you to leave your business behind permanently? You may be selling your business, retiring from your business, moving on to another business that you want to create, or moving on to a time that you may relax and enjoy the fruits of your labors. Consider the following hypothetical situation: Joe was a great financial planner. He attracted and retained a nice mix of middle-class and wealthy clientele.
Joe made a good living from his business. But his business employed only himself. It made it difficult for him to take time away from his office. Moreover, he was very good at what he did. His clients were extremely loyal to him, and as he grew older, he heard more and more nervous jokes about how he had better never retire because they could never find another like him.
But the day did arrive when Joe decided he needed to exit. He thought about selling his financial practice. When he analyzed what he might receive from a sale with a business consultant, he found that because he was such an integral part of his firm, that the price he might receive from the sale was shockingly low. So instead, he decided he would retire.
Joe discovered that if selling a business is a difficult thing to do, retiring and shutting down a business can sometimes be almost uncharted waters. He soon found himself mulling over how to handle this transition. He had a licensing authority and a regulatory group who had guidelines for how to handle retirement issues. Moreover, he felt a certain sense of loyalty to his stable of clients. He wanted to afford them the opportunity to transition gently and over a reasonable period of time. Joe decided to do a six-month transition from active practice to retirement. He contacted his clients, posted notices on his website, and made referral sources and others in the community aware of his decision.
The next six months were extremely difficult ones. Some of Joe’s clients were resentful that he was leaving. Some still wanted him to continue to manage their funds even after retirement (“can’t you just take care of me?”). People who called the office who were referred to him didn’t understand that he was no longer taking on new matters. Some clients were very proactive, and understood they needed to obtain a new financial planner, and did so in a very methodical fashion. Others decided to wait until the transition was almost at its end and then scrambled, causing Joe himself to scramble. There was a lot of confusion over how the relationship of an advisor to clients’ accounts could be transitioned to a new person. There was confusion over records that Joe would be required to maintain that he could not give to the new planner. Finally, as clients knew Joe would no longer service them, they felt less obligated to pay for his services.Receivables, which were never a problem for Joe before in his business, started to mount.
In short, Joe’s decision to transition gradually, feeling it was the best for him and for his clients, wound up being a logistical nightmare.
When you decide it’s time to exit from your business, whether you would be shutting it down and retiring, or whether you have a business that you can sell, you can expect that the transition to ex-entrepreneur may be a rocky one. Even a sale would not necessarily alleviate all the concerns that our friend Joe faced in his choice to retire. Most of the time when someone purchases a business, they expect and in fact will require the seller to work side-by-side with them for a period of time. No matter which direction you choose for your exit strategy, it will likely not be a quick nor peaceful transition.
Contrast this with our corporate cubicle curmudgeon. If he decides that work sucks, an e-mail that gives the requisite two weeks usually does the trick. Okay, if you’re a higher-level employee — an executive, or such — you may give a longer notice. Nevertheless, the bottom line is that if you truly want out, it’s a lot simpler to leave a job than to shut down or sell a business. If you’re really frustrated with your employer, you could even walk out the front door, never to return. This option rarely exists with a business you have created and operate.
What if the reason you need to close down or sell your business is due to health? Most often when we think exit strategy, we think sale or retirement. Another element that should be factored into the entrepreneur’s plans is disability, health concerns or other calamities. With a business you often have a complex web of contracts, leases, and obligations to suppliers, customers and clients. Simply because you want to retire, sell, or get sick, or even die, doesn’t mean that web disappears.
The bottom line is that the exit is part of the entrance. If you’re going to create a business, how will you one day leave it behind? If you want to sell it, are you creating something that’s salable? With rapid changes in the marketplace, an enterprise that exists for decades is becoming a rare bird. You may need to take into account technological obsolescence or other factors in determining the “shelf life” of your entrepreneurial baby. And what if you get sick or pass away? Sobering thoughts, but nonetheless ones that may enter into your business plan.
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