I was reading an article this morning about the "Rule of Thumb" to have your exit planned on the day you start your business. This might surprise you that I would be reading about the exact work that we do for our clients, but I'm sure that it probably does not.
When I left college I only knew my future as far as my next job and I certainly did not image I would be starting a couple of companies years down the road. A couple of my advisors told me when I left college to make sure that my job fit my personality which was another "Rule of Thumb". I remember thinking to myself, "yeah that's nice but I have to make money" and I could only think as far as getting that first big paycheck. It was only twelve years later that I could get the fog out of my head from chasing a paycheck and realize that the "Rule of Thumb of job personality" was correct.
And although I agree with the exit planned in the beginning theory it is not always what faces us first in founding a company. Most startups have very limited cash and often are started because the owner is just looking for a way to generate some income to live on. I've had owners of a company tell me that they would never have started the company except they were forced to figure out something after the recent layoffs at work. Some mentioned they just couldn't take it from their boss anymore.
Don't misunderstand me, because I'm not indicating this is the best method to start a company. Rather that sometimes with little cash and very little time to generate income to pay the bills most startup owners would be hard pressed to spend the time thinking about their exit. Many companies are just asking the question "Will I have the option for an exit?”
Rule of Thumbs are often very helpful to keep in mind but not always practical to implement early and often can only be understood fully after we've messed up. Hindsight allows the brain to make that "aha moment" that recognizes the "Rule of Thumb". But if you want to avoid the self-discovery mistakes and avoid driving with a rear view mirror then I would suggest you find a mentor or advisor who has made lots of mistakes and/or seen many more. It is only by listening to these advisors that you possibly can avoid some of the same mistakes.
I personally have several mentors that have steered me around very difficult potholes and yet I still find myself sometimes driving forwards by looking in the rear view mirror. Mentors and advisors cannot always prevent us from driving with the rear view mirror but they can be a passenger who says "Hey!!! Stop it!!"
To be continued....
John Hamel is the Managing Member of Austec Business Transitions, LLC. helping businesses optimize value relative to exiting their company.