One of the first pieces of advice you will receive when you start in business is how to end it. Thank heavens we don’t get that advice when we are born, right? Why on earth would you want to be thinking about ending something when you are just starting out?
Well the honest truth is, most don’t. It’s all so exciting at the beginning, we are a nation of shop-keepers which these days equals your own virtual shop for your business and there’s so much to do at inception, it’s just like playing post offices. Weighing scales, stamps, stationery supplies, telephone lines, desk and chair, laptop, business cards, logo, marketing plans, business plans, getting clients, getting paid.
It’s wonderful, its creative, there’s so much to learn and its so much better than going out to work, why on earth would I want to think about the end and what is an exit strategy anyway?
OK, let’s peel this back to basics.
Working for yourself can fall into two main categories: being self-employed and/or owning a business. The first is not a wealth creation strategy and you will be stuck there forever, exchanging time for money, unless you do something about it. All too soon, the novelty wears off, you realise that working for yourself can be harder than having a job in many respects and you go entirely without the perks of holiday pay, sick pay, healthcare, pension and so on.
So if you are to be able to stop work at all, ever, you need to think about what will happen later in your business career. And if you are anything like me, your first business will definitely not be your last as you learn to do it better each time. So even if you don’t believe me now, soon you will want to start thinking about how your business will look a bit further down the road, when perhaps you might have an employee or two.
You might also want to take holidays, or not work such long hours or have weekends off or at least your birthday! You might want to plan to be older when you cant or dont want to work so hard, or retired even – heaven forbid! Speaking as a 54 year-old entrepreneur who has worked for herself for 32 years now, trust me… it just creeps up on you when you are not looking, so you might as well plan for it anyway.
And one of the best ways of providing for time off, whether it be a day, a weekend, a holiday or the rest of your life, is to have an exit strategy, whereby you build your business where it can do one or all of three things:
- Work without you
- Create a recurring revenue for you without you lifting a finger
- Be sold for a large lump of cash for a pension (later) or to start something new (sooner)
If you are new at this self-employment lark you may need to take it on trust for now, from one who knows, that these three things are all ultimately desirable at different times and in different ways and depending on your business model, all are infinitely possible.
For now, if you can just get the difference between being self-employed where you do all the work and owning a business where other people do most of the work and you just direct them, you will see that it is possible to create something which is independent of you – think of it as a baby who eventually becomes a teenager who can function independently of you, grow up and leave home.
And that’s all people mean by having an Exit Strategy. They mean how will you create wealth to support you when you are not working and what form will that wealth take – a lump sum when you sell it or a recurring revenue when you keep it?
Now look – you can talk business jargon with the best of them!
Leave me a comment below about your exit strategy or lack thereof and I can help you create one.
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