Building a successful SME is a dream for so many of us today, and the journey to success, no matter how long, stressful or difficult, is most definitely a satisfying one. But how many of us think about what comes after, how we deal with long term success and the ultimate need to slow down? Our dreams may be of that successful.
l business, but it always includes us in the picture running things, we often forget that at some point, through desire or nature, that is not always going to be the case.
In fact, a recent survey suggests that less than half of New Zealand’s SME’s have thought about that very scenario, as they have made no plans for any kind of exit strategy at all. Now some may be thinking that is not such a big deal, but really it is concerning that so many ignore this aspect of business, and there are several good reasons for that.
The first is practicality, we all slow down over time, no one is immune, and at some point, every entrepreneur has to face the fact that it is time to stop. Having a complete exit strategy ready well before that point arrives is crucial if the business is to survive afterwards with new appointed principals or the sale value maximized effectively, whichever the ultimate solution is.
For many SME owners this is doubly important, as the eventual sale of the business is often seen as a retirement fund. This means that failing to plan effectively here and not obtaining the best value will hurt retirement prospects as well as devaluing the business.
Likewise, with many hoping to turn their SME into a family business, not planning the succession effectively, who takes over, how and when, and of course, ensuring they get the experience required at some point beforehand, can all lead to disaster.
Of course, sometimes, the choice to hand over the reins or even sell may be taken out of our hands. It is not something any of us like to think about, but accident or illness can strike anyone, leaving them unable to fulfil their obligations longer term. As with all aspects of business, it is simply good practice to have a plan in place.
Those are the practical reasons that a structured exit strategy should be part of any long-term planning by all SME, but there are a couple of other benefits too. The process of creating that strategy gives a very clear, objective view of the business as a whole, and can help identify areas where system changes can add efficiency and increase sustainability.
It can also help you identify the key staff in your business that can take on new responsibilities and allow you to ensure you make the most of their skills and drive. It may always seem like something to put off until later, but for all SMEs, a planned exit strategy really is worthwhile at any time.