Women's Business Blog

Entrepreneur's Tip of the Week: Begin with Your Exit in Mind

You've decided to start your own business because you have a "killer" idea that just can't fail. You've worked all your life for other people and learned what it takes to run a business as the CEO - Chief of Everything Officer - to get it off the ground. You know that your idea will fill a void in the marketplace and has shelf life - meaning it won't become obsolete and can be scaled. You've saved enough to invest in your dream business and you have friends and family that believe in you and want a part of the dream. You've taken the time to map out your idea by writing a detailed business plan which will also help you in obtaining bank financing as you get ready to launch and perhaps VC funding if you require it. The business plan demonstrates that you will be cash positive at the end of the first year of business and by end of year two you'll be making more money than you are now by working at your current employment. You're ready to start pitching the idea to funders, clients and vendors and you believe you have done everything an entrepreneur must do before launching their company.....but wait....what is your exit plan?

Many entrepreneurs are shocked by this question. Their answer is, "I have waited all my life to start my own business. I don't plan to ever sell it." Or, "I want to run my own business until I retire and then have my children take over the business." Or, "I know that I will be very successful and someone will want to buy my business because it will be very profitable."I say, "Really? Really?"

And, what if you become disabled or sick or your children don't want to take over your business or you aren't successful because you don't have what it takes to run your own business or when you are ready no one else has any interest in doing what you do? If you plan on ever getting VC money you better realize now you will need an exit plan. VC's are only interested in how they will get a return on their investment. As an entrepreneur you should be interested in the same thing....don't you agree?

The savvy entrepreneur plans his/her exit at the beginning. (S)he recognizes who the potential buyers in the market are for the business and may plan to partner in a small way with them sometime early in the company's life. (S)he certainly watches carefully what is happening in his/her industry and the industries that align with his/her business. It is never too early to plant seeds for an exit. 

Of course, if the plan is for a family succession, the entrepreneur must get the family involved in the business as soon as possible. It is best to get family trained outside the business before bringing them in so that there is an opportunity to learn a variety of best practices from the industry.

An employee succession plan also requires planning but this is best worked through with your business advisors to make sure it is executed in the best interest of the business and you.

Having an exit strategy in place will also assist the entrepreneur with plans for growth. Decisions can be made knowing that they fit into a long term plan for a successful sale. For example, if your exit plan is to sell to a large competitor it makes no sense to make your investment for growth in a direction that is incompatible with that business. You will be able to reap a greater return if your buyer is able to leverage your business in as many ways as possible. The principle of economies of scale is important to consider.

Finally, every business plan, like every roadmap, must have a beginning, a middle and an end. You may not be able to identify the who you will sell to, or the when you will sell, but planning for the how much is a responsibility you can't ignore. Begin your business with the exit in mind.

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3 Tips For Writing a Successful Business Plan

You've decided your days of being a corporate drone are over - entrepreneurship here you come! You long to be a small business owner making the day to day decisions of who gets hired and who gets fired - whether your strategy is B to B (business to business) or B to C (business to consumer). You believe you have what it takes to bootstrap the business (finance it yourself slowly). But, first you know you must put it all down on paper and write the dreaded business plan.

Whether you want or need a loan you need a roadmap to determine first whether or not the business is even feasible. You've got your executive summary written which describes the business and excites you every time you read it. You know you have what it takes to develop a new niche in your industry. What you need now is evidence that your business idea has merit and has customers just waiting to sign on.

The first tip is to define your competition accurately. Yes, you do have competition even if there currently are no other businesses like the one you plan to start. Your competition consists of every business that is asking for the $$$ you want from your potential customer. For example, a new niche magazine must compete for the advertising dollars for all media resources in the geographic or demographic area. Or a new e-business must compete with no only other web business of a similar nature but the bricks and mortar businesses that may also offer a similar product or service. Think broadly when you define your competition.The more competition you have the greater likelihood of success. (see previous blog - Love the Competition).

The second tip in writing your business plan is pricing. Too often entrepreneurs believe that they can underprice their competition and build clientele in that way. If your competitors have been around for a while I can promise you they know how much it costs to provide the product or service the deliver and what it takes to make a profit. You must price yourelf to make a profit or there is no reason to go into business in the first place. Starting a business is all about making profit. It is also about margins. Not every business makes more because of volume. For example, if you are providing a service at some point volume will require you to hire more people and your margins will go down. All of this information must be built into your plan. This is the reason you are writing a business plan -- so you will be aware ahead of time of the costs of success as well as failure.

Finally, third, don't underestimate your cost of doing business. This is where most entrepreneurs err in their planning. They believe that they can bootstrap every step of their business. You may be able to start that way but often when the business really gets ticking expenses can skyrocket and you better have made accommodations for the spike. For example, you start the business in your home and don't expense any of the costs related to the business. Business is so good you need to expand out of your home and hire staff and rent an office. You now have payroll, rent, utilities, phones, deposit and more. Did you account for these expenses in your business plan when you were pricing your product or service? If not, you'll be out of business before you can say "business plan"!

Write your business plan with success in mind. Yes, you can grow it slowly, but make sure you have accounted for what it will look like when you have the customers you dream of. Only then will your business plan be your roadmap to success.

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Women's Business Coach: TIP OF THE WEEK: Pricing

How do you put value on what you do? This is one of the top questions I am asked as a business coach. I believe strongly in developing a business plan. I don't care how sophisticated you think you are or your business is, a business plan demonstrates, in black and white, your expenses and therefore what you MUST charge for your work. The majority of women I work with under value their work for their clients. Although you have spent years perfecting your craft or expertise, you still believe you don't deserve the BIG BUCKS! Get over it! You deserve to be paid a fair price for what you contribute to your clients and their business. Most women entrepreneurs dive in many years after they have finished school and applied their talents at other corporations. They have put in the time to charge at the highest level for their expertise -- yet, for whatever reason, they feel uncomfortable telling those that want to hire them that they are worthy. Let me share my own story, as it changed my life early in my career. In 1990, I was 39 years old. A very good client of mine was impressed by my work and wanted to hire me to do work for him on the side. He asked me to come and meet with him. I had a full time job making a pretty good living at about $65,000 per year. He wanted me to work part time to advise him on marketing. I went to the meeting wondering how this could possibly work. He told me how impressed he was with my talents and how much he would appreciate my ability as an advisor to his marketing team. Then he asked me, "What would you charge to work with our company monthly to advise us on our marketing/pr program?" There it was an opportunity to really take on the world and show myself to be the true entrepreneur I knew I could be. I quickly assessed the situation and thought, "would he think $500 per month would be asking too much, or maybe $100 per month since I was already in a 40+ hour a week job?" All this was going in my head when he looked at me with those intense eyes and said, "What do you think, could you help us out at $5000 per month?" I couldn't believe my ears. He wanted to pay me almost more than I was making now full time just to have me available to his team to provide my opinion on their marketing materials. I swallowed hard and said, "Yes, I think that would be fair." To this day I wonder what color my face was and how I managed to keep a straight face and accept his offer. I learned a very important lesson that day. NEVER under value your talents. NEVER under estinmate how others see you. You have worked hard and you deserve to be paid fairly for your work. So, this week's tip is to do your best to look outside yourself and ask yourself if you are truly being paid for your experience, talents and all you do for your clients. I promise you, no one will ever walk up to you and demand to pay you more..you need to make that demand of yourself. You are worth it. Now go out and price the contribution you make in the business world at a number that makes you feel a chill. That's the only way you'll know you've priced yourself right.

Women's Business Coach: TIP OF THE WEEK

This week's tip is all about planning. Some people believe in creating and following a business plan and others believe in winging it. However, the old adage "a failure to plan is a plan to fail" is ABSOLUTELY true when it comes to running a business. With or without a formal business plan,  every entrepreneur and/or small business owner MUST plan the day, the week, the month, the quarter, the year and in some cases beyond. Now this may seem like very simple advice but most don't follow it. Those that do....succeed. A plan is a roadmap for your business. With a map you have a destination in mind and a path to get you there. Although, I am a true believer that life is not about the destination but the journey we take.....YOU are NOT the business. The business needs a plan. The business needs a destination. Only by reaching the destination can a business grow. This week's tip for you the entrepreneur and/or small business owner is to make a plan each day with goals in mind so that you will have a benchmark for measuring daily wins. Write down a list of things to do and check them off as you complete each item. Make sure the list is doable in your 8 to 12 hour day as finishing the daily race is important for building your confidence for achievement. When you starting winning on a daily basis your business has no choice but succeed.

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Exit Strategy: 5 Tips for Women Business Owners

Plan the end at the beginning. Every entrepreneur knows the importance of a business plan - a roadmap of where you are going and how you are going to get there. But just like any itinerary, the critical piece to the plan is the destination. In the case of a business, that destination is the sale.

(1) always run your business as if it were for sale. Take care of your customers and your employees as if they were family. Get them to sign contracts whenever possible.

(2) be clear on your goals for a sale. Are you interested in staying with the company long term? Do you want to cash out completely? Do you want to earn more money if the company grows after you are gone? Do you want your employees to have security for at least a short time after you leave?

(3) keep quiet until the deal is finalized. Employees have enough to worry about. Business deals fall apart every day at the last minute. No one benefits from information that is premature in this circumstance.

(4) find a buyer that provides you with a sense of comfort and get promises in writing. Again, often a lot is said while you are selling the business and the buyer is buying the business. But the only thing that counts is what the finally document reads. Get it in writing! 

(5) put yourself and your future first. It's your trip. Make sure it is worth the investment.