Tracy McGrady Exit

Photo Credit: everyjoe.com

Winning athlete, Tracy McGrady, just retired from a sixteen year NBA career (Washington Post). His simple, smooth exit is the envy of all business owners considering an exit strategy.  McGrady’s got big shoes to fill, but fortunately for him, he doesn’t have to worry about who fills them. While McGrady is free to move on without a care, company owners need to consider long term plans for their business. Entrepreneurs tend to get caught up in the game and success, but forget to consider long term reality. What will happen at “the end of their season,” so to speak?

Why prepare an exit strategy?

Every business eventually has to pass the torch on. Here are some reasons to consider.

1.       Death

2.       Illness

3.       Disability

4.       Retirement

5.       Shift in market conditions

6.       Loss of key employees

7.       Vital supplier departs

8.       Competition

9.       You receive a better offer

It is easier to be prepared with a plan in the face of those scenarios, rather than taken off guard, which is why exit strategies are typically written into business plans from the beginning. However, it’s never too late to get the ball rolling.

Photo Credit: ideacrossing.org

Exit Strategy Outline:

Here are some considerations for exit strategies…

1.       Define your goals –

This isn’t just about defining business goals, but also defining personal goals. Anyone thinking about an exit strategy needs to know how much money they expect to have after the fact. Business owners need to also set goals in regards to fluidity of operations, so they know everything can continue without them.

2.       Assemble a team –
This is not a solo mission, it is a team operation. A business is like a child to an entrepreneur. Sweat, tears, and hard work have brought what was once a dream, to life. Don’t botch the hard work you’ve put in by being careless in planning your departure. Be sure to recruit financial advisors, succession experts, insurance specialists and business consultants as needed, to help you make the best decisions.

3.       Write a plan –
This will be a process. Don’t expect to meet with advisors on Monday and have this all hashed out by Friday. It doesn’t work that way. Effective exit strategies take time to develop and are extremely unique to each organization. You and those helping you need to have a cohesive vision with goals, as well as clearly defined responsibilities for effective collaboration. Keep in mind that just because a plan is concocted, doesn’t mean it is set in stone. Be flexible to adapting the goals as you go.

4.       Assess company value –

This is absolutely vital and has several components. Tracking value should be an important aspect of your operation anyway, but it’s especially crucial in planning an exit strategy. If you want someone to be interested in taking over your company, it’s got to have appeal.

Components to remember:

* Financial Value: You should know and be able to explain your finances inside and out. Track the flow of revenue and expenses. Incomplete financial information will leave a potential buyer worried about the company as a future investment.

* Operations: A job candidate doesn’t walk into an interview dressed in rags, using a broken pen and handing in a torn resume. Similarly, a business that is kept clean, with well maintained equipment will be more valuable than one that’s barely hanging together. Appearance is important, from employee presentation to atmosphere.

* Effectiveness and Performance: Performance fluctuation happens in business. The key is to be able to understand and articulate changes. Sometimes fluctuations including price increases and losing unprofitable customers are a good thing. 

* Succession Planning: If you’re the only one in charge of all store operations, with no one in training to take over, the store will be at a loss when you depart. As one would imagine, this is not appealing to potential new owners. Hence, Succession Planning is invaluable for your business. Again, seeking a replacement should be a thorough process and begin taking place long before a business owner actually plans to leave.

5.       Make it happen –

You’ve outlined your goals, gathered a team, written a plan and invested in value to position your business for appeal. Now it’s time push for the final score. All the players are ready for the whistle to blow. When the time is right, you’re ready to pass the torch and move on to your next phase in life.

With the outline above and a team to help you from point A to point B, you’re just steps away from the Hall of Fame. Remember above all, to think of the exit strategy as a process, not an event. At the end of the season, you can kick back with Tracy McGrady and exchange success stories. The ball is in your court. 

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