My Dollar Plan asks: “What’s Your Exit Strategy?” giving the example of his father’s business:
My dad has been sick this week, and I’ve been spending a considerable amount of time with him at the hospital. Since he’s a successful small business owner for 30 years, we’ve spent some time discussing his plans for the future.
Since I’m in a very ‘anecdotal’ mood at the moment [AJC: Don’t worry, I’m sure it will wear off soon. Who could possibly be interested in my boring life? ;)], My Dollar Plan’s brief mention of his sick father reminds me of how I started in business:
I think that I’ve mentioned before about my father who started a little finance company in his 60’s after being unceremoniously ‘booted’ by his former partners, and for some unknown reason, we mutually decided that I should join him in that business as a 1/3 partner [whoohoo!].
A couple of years later, just as I realized that the business was in serious financial trouble, my father fell terminally ill. He was also unfortunate in that I wasn’t able to save the business, but I guess by bringing me in – had things not already been so screwed up (initially, well hidden from my view) – my father was creating the classic family business ‘exit plan’: bring in the children …
… bring one, bring all!
You see, my father’s Grand Plan, unbeknown to be when I joined, was to bring in both of my sisters as well … and, we had a wonderful 6 month period where he actually hired my younger sister and I would fire her the same day, then we would repeat the farce a week or two later, until he eventually gave up. Before you judge me too harshly, let me share two small snippets:
1. The business – as I found out all too late – could not afford me, let alone my sister, and
2. I would sit at my desk in the afternoon working at feverish pace trying to catch up on all the paperwork and phone calls (at the same time, naturally; who has time to ‘single task’ in their own business?!) having been ‘on the road’ all morning rushing from appointment to appointment; only to watch my sister working at snail’s pace on some basic task (I wish I could have taken a video of her very slowly and deliberately unstapling some papers sheet by sheet, by sheet, by …. [yawn] …. and, taking a minute’s rest between each sheet!), which drove me absolutely bonkers given the absolutely frenetic pace that I had to work at.
This also reminds me of the country’s richest families; the business empire was started by two brothers who opened a butcher’s shop together and parlayed that into a multi-billion steel and manufacturing conglomerate: realizing the family issues that would eventually be created upon succession (who would get/run what?), they deliberately broke up their huge conglomerate while they were still alive and in-charge and gave one division of the conglomerate to each child to own and run as their own.
Very clever exit plan: exit while still willing and able to handle the ensuing family ‘issues’ …
So, the point 0f all of this is that I am not a fan of family businesses; some run very well, but others don’t run at all.
Oh, and every business needs to have a ‘succession plan’ before you even go into it (i.e. before you either start it or buy it): work out how much you will need to sell it for, and by when, in order to achieve your Number/Date and go out and find that buyer as soon as you reach that predetermined profit/date target.
But Question. What if you don’t plan to leave? I mean, Maybe the plan is to run it till you can’t any longer, then the wife runs it till she is ready to sell, or pass to the kids(if they are even interested in that type business).
My idea is to find Businesses that provide (mostly Passive income) where you don’t need to spend much time at the shop daily. Where your biggest job is probably gonna entail paperwork.
@ Steve – Great question, and one that I will deal specifically with in an upcoming post … don’t do anything rash until you read it 😛
Cool. Not in a hurry. But if ya know anybody interested in helping me achieve my number, I have a business in mind(will need some seed money to get going) but amazing potential.
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