If you’ve been reading along in this 30 Days to ETA series, you know that in the Day #16 post I discussed how to maximize ETA Deal Flow. You need to analyze a lot of businesses in order to get one to purchase in your journey to Entrepreneurship Through Acquisition (You can read the previous post by CLICKING HERE). But even though you’ve found the perfect business and were fortunate to purchase it, I’m going to encourage you to focus on the end. In today’s 30 Days to ETA post, we’re going to explore how that end-game focus — The ETA Exit Plan — can provide you with all kinds of benefits, especially financial benefits if you do things right… Enjoy!
The ETA Exit Plan
Entrepreneurs Through Acquisition (ETA) have to have a plan in place for how to get where we want to go — Something I refer to as the ETA Exit Plan. The future sale of your company is your ETA Exit Plan destination. I wish I could tell you that the road from where you are now (Acquisition Entrepreneur) to successfully selling your business in the future with generational wealth (The ETA Exit Plan) is a linear-shortest-distance-between-two-points line. Unfortunately, it rarely is a straight line! Instead, you can anticipate experiencing some type of setback along the way.
I typically refer to these setbacks as roadblocks. Your objective when you come across them, is to get on the other side (Either up/over/under or around) as quickly as possible. Here’s where the ETA Exit Plan gets good — You can anticipate coming up to another roadblock after you clear one, and another after that one, and so on. Not that that is “good” news, but it might come as news to you in general. Most of the Acquisition Entrepreneurs I work with at Tip of the Spear Ventures believe that they will not have to encounter any roadblocks on their ETA journey — WRONG! No matter how much planning you do. No matter how well you execute those plans. There will always be a roadblock along the way to the ETA Exit Plan accomplishment.
Making the ETA Exit Plan
By this point in our series, you should already have a business plan in place and be following that plan to find your future business through Mergers & Acquisitions. You’ve been preparing for this business acquisition since you discovered ETA, so it only makes sense to also focus on the sale of that business not only from day one of ownership, but before you even purchase the business! If you don’t have a business plan, drop everything and do that first. You’re not ready to acquire or consider how you will sell the business. You need to go back to the beginning of your business and identify how you want the end to occur!
How to Prepare for The ETA Exit Plan
No matter how good your original business plan is, you’ll never be able to walk away from this amazing company you’ve developed if you’re not mentally prepared. If you haven’t come to terms with letting someone else buy your business, you might even pass up millions of dollars. At Tip of the Spear Ventures Mergers & Acquisitions practice, we often speak with owners of businesses that tell us the all too often sad story about how they should have sold two-three years ago at triple the price they’re talking with us about selling their business. But there are things you can do now to prepare for the ETA Exit Plan.
What to Include in The ETA Exit Plan
- Decide what you’ll do after you sell – Make personal plans to travel, golf, take care of grandkids, spend time on a hobby, or begin another business before you leave this one.
- Gather your ETA Professional Team – Let your professional consultants, employees, family members, and friends know what your personal exit goals are so that they can hold you accountable for reaching them.
- Establish a Timeline – Decide what age you want to be when you “retire” or sell your company so that you can make appropriate personal and financial plans.
- Make a step-by-step Financial Agenda – If you know when you want to sell, you’ll know how much money you need to set back monthly in personal retirement accounts or savings accounts. If you lay out a detailed financial agenda, you’ll have the money you need to enjoy your life of leisure or your next big venture. Any profit from the sale will just be the icing on your financial cake.
- Hold your ETA Team Accountable – Just as your ETA Team is holding you accountable, hold them accountable as well. Don’t let anything slip through the cracks that could leave you or your company vulnerable at its time.
Which ETA Business Owner Are You?
You may be a person who constantly develops plans, but you can’t start or implement them. Maybe you’re the person who starts 20 things but can’t finish one thing. Or you might be the person who has his hand in 1001 different things. Whether acting, finishing, or prioritizing is your weakness, I have the same word of caution for you. It’s WAY too risky to jump right into ETA or into the sale of your future without having a plan. Many times, it’s impossible.
Creating the ETA Exit Plan can provide you with timelines, agendas, financial estimates, and accountability. Walking through these contingency scenarios for the time after we leave our business can help us prepare for our next step in life. Additionally, if we’re preparing to leave, we’re stepping back from day-to-day operations. That leads to a business’s self-sustainability and scalability which we previously discussed.
SUMMARY
The best-designed plans don’t do us any good unless we act. So, get the ETA Exit Plan down now as you conduct your search as an Acquisition Entrepreneur and you’ll find it easier when you go to exit the business.
Sam Palazzolo