You are so excited. You have come up with the most amazing business. You have a business and marketing plan, fabulous products and services in mind, but you may have missed one thing. Do you know what it is?
One of the most important questions you can ask yourself is, “How will I get out of business?”. It might sound a bit crazy, but it’s important, and here is why. When you start with the end in mind, your strategic plan will look a lot different, and you will avoid costly mistakes.
I learned this secret when I opened my financial planning business years ago, and American Express offered us the opportunity to turn our “financial planning practice” into a franchise. What’s unique about a franchise, is that it has systems and processes that are easily duplicated so others can be trained to step in and the business will operate in a predictable way.
So Secret #1 is to develop and document all your systems and processes into a manual
so your business can operate without you — just like a franchise!
I did this and my business actually ran without me for one year. That following year, I was able to sell it for 7 figures. But that’s just one secret.
In addition, what this meant for me, was that I now “owned” my business and if I ever decided to leave, retire or if I became disabled or even died prematurely, I could actually design a formal plan, in advance that would help determine not only the value of my business, but what would happen to my business after I was gone.
More precisely, I could design how I would get out of business some day.
This is called a “Buy Sell Agreement”, and it’s crucial to a business although most overlook it. Even when someone doesn’t have a formal “partner”, they can create a buy/sell agreement just in case they die prematurely. You will need to consult a team of experts for this task, but keep this in mind too.
So Secret #2 is Creating a Formal Agreement or Buy Sell Agreement.
It was at this point, that I hired my first business coach and where I learned the steps to building my team, creating systems and developing my formal exit strategy. This step was the icing on the cake.
So Secret #3 is Hire an Expert, Coach, Mentor or Consultant.
It takes 10 years or 10,000 hours to become an expert, so borrow that knowledge from one who is doing what you want to do! This was the smartest thing I ever did. For three years, each quarter, I would fly out to Chicago and spend the weekend with 40 other business owners learning how to create a seven figure business “that would run without me”. This included detailed follow up each time I returned to educate my staff and get them to buy into this process and make it their own.
So Secret #4 is to Focus on Your Strengths and Delegate/Eliminate All Else.
I began to groom my assistant to become my key “backstage” expert who ran all the details, managed the processes, asset management and financial planning. This enabled me to focus on my unique abilities, talents, passions and strengths so I was able to stay “front stage” 80-90% of time doing what I do so well, which was being the visionary, creating ideas, marketing, business development, networking, developing deep relationships with key individuals and groups…and of course going very deep with my ideal clients. This secret alone is worth a million dollars. It was the focusing and leveraging of strengths that made our business grow to over $100 million in assets under management.
Secret #5 is Creating Ongoing Passive Income
This last secret will not only help you enjoy your life by giving you financial freedom so you can step away from your business to spend time with your children and loved ones, take a vacation, take time off to study and grow, and stay healthy. I remember another advisor once telling me that every January he feels like he has to create another mountain.
My partner, John, and I had eliminated this problem, by turning most our income into reoccurring income. We were pioneers in this concept and decided years before most advisors, that we wanted to be on the same side of the table as our clients, and based our income on how well our clients portfolios performed through an asset management fee. Although it took 5-6 years for us to break even, we believed it was the smart choice and since that time, it has become the industry standard.
Almost every business has the opportunity to create ongoing, passive or leveraged income. There are so many types available, including advisory fees, licensing fees, membership fees, dues, renewals, products and programs, affiliates. The list goes on and on.
Creating passive income is part of a solid exit strategy because it helps your business have value even without you in the picture, and the ongoing stream of revenue becomes part of the formula for determining the value of the business when it is sold or transferred at death.
Developing a smart exit strategy involves so much more, including branding and reputation. So whether you are just in startup mode, or already have a thriving business, exploring and then developing an exit strategy as soon as possible could be one of the smartest things you do this year. Ask yourself, “What is the alternative?” Chance, luck, working forever?
If you are interested in a 30 minute complementary business strategy session on developing your ideal business, feel free to visit my online calendar at www.talkwithkatana.com where you will be able to schedule an appointment and complete an online coaching prep form. This will help us have a very productive session.
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Certified Financial Planner®, Katana Abbott, is a Life Purpose and Legacy Wealth Coach and founder of the Six Pillars of Awakened Prosperity System™, the proven step-by-step process that shows you exactly how to create wealth, make a difference and live the life you love. To get your F.R.E.E. Video Course and receive her weekly money, mindset and manifesting articles on attracting more wealth, joy and ease into your life!