As I plan the future of my business there is one thing I have been trying to include. In recent years I am looking for how my business can service me instead of me servicing my business. What do I mean by this? Well for the early years, I wanted a business so I could do my own thing, have flexibility and be as creative as I wanted.
This was great early on when my business was more of a job. It gave me money doing what I love to do and all was good. Today however I am planning my future. I am planning on how I will be able to retire, travel the world and live the life I want when I decide I no longer want to run a business anymore. So I need to define what does this life look like, how much money will I need to live this life? So let's say I retire today what would I need to make in order to live this lifestyle now? $50K, $100K, $150K, more? Then you figure how soon do I want this lifestyle? Let's say 15 years. Then you need to figure what will the increase be in the cost of living this life in 15 years so you need to estimate inflation obviously we want to err on the larger size in order to be conservative.
So as an example lets say we need $5,000,000 in investments in 15 years in order for use to self fund an annual retirement of $500K through a 10% annual growth of our $5 mill. investment. If we only use $250K annually for our lifestyle, this means we are able to invest roughly $250K annually. Obviously there will be taxes on the growth and whatnot, but these are just rough numbers to make things easy.
So the next question has to be how are we going to get $5 million in your hands for investments? One way could be sell like crazy and grow the business to take the lump fund retirement check in 15 years. Another way could be to create a sales process for your business. One that is documented and easy to train people to do. One that is highly successful even when you hire and train an unskilled sales person.
This will do two things: The first, it will help you create a profitable and highly successful business over the next 15 years (or whatever your time frame is). The second thing it will do is allow you to add huge value to your company. When you are looking for an exit strategy, it is important to know what it will take to sell your business. If you create a business that delivers profits and creates $3 million in revenues continually year after year and this is done by your easy to follow, understand and be trained on sales process, then this is something others will be excited to buy. It is very important to find ways to get out of the business and keep it running and profitable without you. If you bring the value to the table and try to sell, no one wants your business and their is no value there to others because once you leave the business is worthless. On that same note if you have a top dog sales guy who is the rainmaker and brings in 75% of the business and the other sales people split the last 25%, you are still in trouble. What if this sales guy leaves? The business is worth nothing again if you leave and the sales guy leaves.
This is why making a sales process part of the exit strategy is very, very important! When do you want to retire? Are you going to be able to live the life you want? Are you going to count on Social Security to save you or are you going to self fund you way into the great life you dream about? What have you done to create this life now even if it is only 5, 10 or 15 years away. Now is the time to take action and plan the exit strategy that is going to create the life you want.
If you would like to have a conversation about this and learn how we can help you deliver a powerful exit strategy then you might want to look into our new business development (sales and marketing) training program.
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