Today we are talking about business leaders' exit from their businesses. They are often so busy working on the here and now that they haven't sufficiently planned for their future. There is no one definition of how to exit, but how can you plan for the next generation of leadership and replace the sense of purpose in your own life?
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Today I'm going to talk about exit; people's exit from their businesses. Business owners will often talk about the exit in global terms, in very loose terms, in my experience, and very often they haven't properly thought it through - it's just some vague concept of the future as they're so busy working hard and they've got so many problems on their plate. This is something to worry about. At some point down the line and then one, they wake up and that future's arrived, and whether that's through illness or someone's made an acquisition approach, or they've decided they really do want to go and do something else, whatever that is, the moment will arrive where the exit is appropriate.
The problem with an exit is that there's no real definition of it in a private company; in a business privately owned. The factors that come into play are really quite unique to the individual or the individuals who own that business.
So, let's assume it's a business that's owned by one person. He or she's probably the founder and has taken something from nothing and created a business that has provided them with both an income and a personal sense of purpose. Often, it's the most important thing other than their family in their life, so when it comes to exit, trying to help as a coach, what you're really trying to do is to help that person think through what exit really means, what is their definition of exit. It's not as though it's on a scale between nought and a hundred, but it equally isn't one black and white answer.
Exit could mean that you sell your shares, you don't stay around and you go off and do something else. It could be that you sell some of the shares and you stay in the business. It could be that you're passing it on to the younger generation. It could be that you're going to be bought out and you're only going to be required for a set period of time for a transition. It could be that exit looks like an acquisition. You are going to buy somebody that brings in new management. That's going to be the next generation for you, and you're going to step back and be a non-exec chairman or something else.
One of the very first sets of questions as a coach, you would have for someone who's kicking around the concept of exiting their business is when it's gone, what do you want it to be? What do you want your life to be? Do you still want to be working? If you do, do you want to be working part-time? Do you want to be working in this business or somewhere else? Do you literally want to be retired and doing all those hobbies you promised that you would do and never had the time for? Do you want to still own the business, but have someone else manage it? Kicking through all of these thoughts often enables people to work out what it is they really do want, because it's not often that they already know, because they've never really given it that thought. As I said, in the beginning, they've been putting this dreaded day off. Helping them come to terms with what their own personal priorities will be, they can then shape the exit that they want.
Now, this kind of timetable is very long. The coaching period to just get someone to really grasp exit could be three to six months. And that sounds ridiculous. But do you know what? There are a lot of people to talk to – partners, spouses, friends, professional advisors – and certainly, things like taxation come up here. Financing has to come up here and actually coming to a conclusion about which you are confident to make decisions does take quite a lot of time in this context.
Then if you decide to sell, that can easily be 6 to 12 months before you've actually done the deal, so if you are a business owner and you are thinking about your exit at some point, it'll be a really good idea to be a couple of years ahead of that before you arrive at the point where you want to have exited so that you can have planned it managed it, executed it to be the exit that you want it to be.
Part of the coach's role is to help the person considering their exit to have fully thought through exactly the personal ramifications of all this. Are they sure that when it's gone and they're fully retired, they're going to be as fulfilled as they want to be, and if they're not, what's that going to do to the people around them? How are they going to feel?
Let's take a situation where someone's in his mid-forties, married with young, relatively young children, he's close to burnout and he wants to sell. How is his wife going to feel when he is at home cutting the grass and working in the greenhouse? That might be okay for a period, but it's probably got very short legs on it. So, the realism of what life looks like in a personal sense needs challenging, by the coach as well. They need to be very clear about what they're going to do when they're finished.
Sometimes it's important to remind them that if they're selling for a significant amount of money, that money will also need managing. It's not, it's not simply a matter of having gained financial security. You need to manage that financial security and that can be - if not a full-time job - a fairly heavy part-time job, because whilst you can delegate it to advisors and fund managers, and so on, in the end, you're going to want to keep your eye it on it, and then, in the end, you're going to still be involved in fundamental decisions about where that money is placed. If it's more actively managed - you're going to buy another business or another two or three businesses or be it run by other people - Then how much time are you going to give to them? What involvement do you really want to have? What does that look like?
Actually, role modelling, role-playing life after exit is pretty key to helping people work through exactly what it is that they're going to achieve and how they're going to live their life after exit, which then brings you right back to what's the exit that I really want?
So, there you have it helping business owners, exit their business. It's never as easy as it should be. It's much more complicated than they expect. They normally leave it too late, and it always benefits from plenty of long-term planning.
That was the latest edition of The Coaching Conversation. I hope you found it interesting. I hope you found it useful. You can find out more about our coaching programmes at theexecutivemindset.co.uk
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