Sellers Remorse - The Greatest Exit Ever Told

This diagram summarizes many Exit Planning strategies. We've all experienced the fact that nothing goes on forever. There are limits to growth. This is due to the effect of Balancing loops as explained in System Dynamics. The diagram shows business growth leveling off as some limit to a resource is ultimately reached.

The optimal time for a business owner to move to their next challenge is before that happens. It's the "X" on the chart marked "Time to Exit." From this earlier position a Potential Growth possibility exits. A new ownership will change parameters and frequently delay the Balancing forces that result in the Actual Growth curve. The big issue at this point in time is that it feels like selling now is too soon. This is strange; but that's the wrong feeling you may get at the right time.

We can never know the future and can never know the exact time selling our business will yield the optimal result. What we can know is when it's time to move on to the next thing in our life, in spite of financially-based feelings.

The timing of the Easter story is striking when seen as an Exit. The crucifixion Christians celebrate on Easter is preceded by Palm Sunday. This day celebrates the triumphant entry of Jesus into Jerusalem, by all political and social standards the peak of His ministry to date.

Imagine the feelings that might have been experienced by Jesus and His followers as He Exits at this point. Everything seems to be going so well! Yet His mission is completing and He knows this is the right time. Unlike every other Jewish Prophet or King before Him, death will not limit the growth of His ministry. Defeating death will enable the greatest growth cycle of all history.

In the Garden of Gethsemane it may have felt to everyone like leaving too soon. That's not always a bad thing; it can be what the right timing feels like.

Related articles by Zemanta

• Infinity--they keep making more of it (myventurepad.com)

1+1+1=4 Emergent Properties and Exit Planning

Carbon, Hydrogen, and Oxygen all have their own characteristics. A certain atomic number, atomic weight, isotopes, etc. Put 12 Carbons, 22 Hydrogens, and 11 Oxygens together in a certain way and there is a sugar molecule. Sugar has a dominate characteristic that creates economic value; it's sweet. None of the elements have a taste. This is an emergent property and it is the most sought-out component of any business. 

Other business elements like inventory, equipment, and brand names are generally quickly available for the right price. But the magic of what happens when an active investor combines those takes time and insight. Business relationships and deals emerge out of combinations of capabilities and experience.

When a business is sold, it's owner wants its worth to be more than just the components on the Balance Sheet. On the date of purchase, accountants record that additional dollar amount as Goodwill. A business plan is all about how the Goodwill emerges from the investor's dollars and management's plans. The asking price of the business on the exit side of that plan will be a multiple of it's historical cash flow. The multiple represents the risk and difficulty a new investor will have in maintaining or even increasing the cash flow. The easier it is to keep the emergent properties growing, the more the business is worth. 

Business owner are unique kinds of artists. Not only do they creatively combine markets, facilities, and services to create economic value; they do so in a way the "canvas" can be passed to another artist (new business owner). No other art form makes this demand on its practitioners. 

It's hard enough for an owner to manage the business successfully. This second art is frequently ignored until the last moment. However, business owners who recognize they are not just operators, they are active investors, take stock of their progress periodically with an exit plan update. It's time to look at what happened and see the emergent properties of your work, understand their value, and find a way to codify what happened as a business process.  

A sense of satisfaction and a well earned retirement will both emerge.