As a fit biz owner, your business is your baby. So when someone asks you what your end goal is, it’s perfectly normal to side-eye and say, “Nothing. I’m going to be a business owner forever!”
And while that may be true, have you ever thought about retiring? Growing into a partnership? Acquiring new facilities and equipment? … Selling the business?
This is where an exit strategy comes into play. But before you run off, know it’s not as scary as it sounds. If I can wrap my head around it and get comfortable with creating my own, I know you can too!
Investopedia defines exit strategy as “a contingency plan executed by an investor, trader, venture capitalist, or business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria for either has been met or exceeded.”
I don’t know about you, but that doesn’t really make a whole lot of sense to me.
I get asked this question a lot as a business owner, and though I’ve learned a thing or two in the decade+ I’ve been in business, I still get tripped up about what this means for my business.
But we can break it down into a much simpler definition. Basically, do you plan on selling your company one day — or stepping out of a full ownership role? And if you do want to sell it, what’s your game plan to make that happen?
Most people don’t go into business thinking they’ll sell one day. But entrepreneurs love to try new things, so many of you might be itching to shift to something else within the next 3-5 years. Or maybe want to retire one day. There are a lot of possibilities here.
According to entrepreneur.com, there are 5 ways you can effectively execute an exit strategy.
Maybe you remember Working Girl back in the day? Or Richard Gere’s character in Pretty Woman? They were in M&A. (Yes, totally dating myself with these references.)
This usually means merging with companies or, on the flip side, being bought by a larger company. For those larger companies, it’s a fast way to increase their revenue. For small businesses, it may help them get out of debt or benefit them financially by partnering with a bigger business for growth.
This is where a business offers shares of their private corporation to the public with new stock issuance. Basically, you go “public” and people can buy stock in your business. This helps the business increase equity capital from their public investors which is great if you want to invest in the business.
However, shareholder pay tends to be more demanding here (you’ll be expected to pay dividends to shareholders!) and the liability risk is higher.
This is different from an M&A because you’re not combining two companies through a purchase — you’re straight up selling it. It’s used as a way to cash out so people can pay investors and have a chunk of change laying around for their next big idea.
If the marketplace is stable and your business has a steady revenue stream, you could hire someone else to run it for you while you develop a new idea or just go on sabbatical (that’s the dream, right?).
You’re closing the doors — plain and simple. No more operations. No more sales. Nada. You’re just liquidating your assets (i.e. reformers, computers, mats, PT equipment, etc.) to receive a payout from it.
Exit strategies are a common term in the business world, but honestly? I don’t think it applies to women like us. At least not in the traditional sense.
When you think about real-life examples of an exit strategy, you think about companies like Instagram getting bought by Facebook. It’s seen more with startups who are in constant growth mode and want to scale non-stop because eventually someone is going to come in and buy them.
That’s not us, right? Our businesses are our babies. We’re women with families and lives, who are working day in and day out to make this thing run to provide for them. We pour everything we’ve got into our businesses! And most of us don’t have any interest in having someone else come in and take it.
I used to HATE getting asked about my exit strategy. I had no clue. I was just trying to keep my business afloat.
Now that I know more about business and I’m happy with where I’m at, I can see that it doesn’t just mean I have to formulate a plan to sell one day. It just means that having options is a good thing.
Will there be a day I want to sell my business? Maybe. I’m not sure. And that’s okay (and totally okay if you don’t know either).
But as a business owner, having a plan for those “just-in-cases” can make the difference between sinking or swimming. You never know what could happen (and COVID is a great example of that).
Maybe you don’t want to sell, but have you ever thought about the possibility of acquiring something else?
This could look like merging studios or purchasing an additional one. This happened to me when we opened our second Pilates in the Grove location. I did an asset sale to a business that was going under and ended up purchasing their lease and equipment. I didn’t want to buy the business, just what they had.
This is where exit strategy is great for those looking to expand!
I don’t like to chalk up an exit strategy to an end-of-business plan. It’s just too much to think about! Instead, I like to ask folks what their one-year, or five-year, plan looks like. To the busy entrepreneurial mind, it’s much more tangible.
Speaking of your one-year plan…do you have one for 2023 yet? We’re closing in on the new year fast, and I know there’s a lot of pressure to get things in order.
But I know that it can be pretty overwhelming to try and figure this out on your own, so I wanted to invite you to join me from November 3-4 at The CEO Summit in Palm Beach, FL!
The 2-day retreat will give access to six expert coaches, teaching multiple sessions about content creation, productivity hacks, messaging, financial budgeting and forecasting, and so much more. Come carve out the space you need to find clarity with other fit biz owners who are right where you are…and escape the cold in sunny Palm Beach!