Business owners are often told to work on the business instead of in it. At some point, they also need to start working on their life instead of simply living in it.
This is one of those questions that can make the room get quiet pretty quickly. And the real question is fully contained in the last three words:
Who are you?
Not what would you do and not whether you would have enough money, although I’m not saying those aren’t important factors. Just three words to sit with for a bit…
Who are you?
For someone who has spent 20, 30 or 40 years building a company, that can be a surprisingly difficult question to answer because so many people identify you with the business and the business with you. Doing something for decades naturally has a way of making us describe ourselves in terms of what we do, but that’s only a sliver of who we are.
Business owners wear a lot of hats. Founder. CEO. Leader. Rainmaker. Problem solver. Employer. Mentor. Decision maker. Maybe even the person whose name is on the building.
Those are special roles and seats not everyone can sit in, and they can become a big part of how you see yourself or even describe yourself to others.
While it’s hard to stop and recognize, your business determines where you go in the morning, who you talk to during the day and which problems need your attention. People know who to call because they need an answer or employees look to you for direction. Customers want your opinion and vendors know your name. There is always another decision to make, another opportunity to pursue or another problem waiting to be solved.
While that can be exhausting at times and to most people from the outside looking in, you know it can also be incredibly fulfilling.
But you also know an age-old truth I say often: “None of us are getting out of here alive.”
One day, if everything goes according to plan, you no longer own the business you spent a big chunk of your life building. Maybe that’s unplanned or hopefully more likely, you sell it.
We spend a lot of time in exit planning talking about preparing the business for that day. What’s it worth? How dependent is it on you? Have you built a capable management team? Are revenues predictable? What risks would concern a buyer? What can we do over the next several years to make the company more valuable and ultimately transferable?
Without a doubt, those are important questions and I would even say crucial ones.
But there is another often overlooked asset that needs to be prepared for the transition.
It’s you.
For years, business owners have been told they need to spend more time working on their business instead of simply working in their business. The idea is that you have to occasionally get above the daily activity and think strategically about where the company is going. No argument here on that one.
But, I think there comes a point when an owner needs to do the same thing personally. You need to spend some time working on your life instead of simply living in it.
That probably feels unnatural to most entrepreneurs. Almost any business provides its own scoreboard of sorts with things like revenue, profit, growth rate, employee headcount, number of locations, customer rosters, and even market share. There is always another game to win or mountain to climb and some reasonably objective way of knowing whether you are making progress.
But life doesn't give us quite as convenient a scoreboard, does it? So, we tend to put those questions off when someone asks us what we want the next 20 years to look like? Or who do we want to spend our time with? What are we curious about that we've never had time to pursue? Or where do we still want to make a difference?
In other words, “Who are you becoming?” which is just another way to say “Who are you ‘out there in the future’ and what gives you a sense of purpose when nobody needs you to make the next decision?”
It’s a deeper question: What am I moving toward, rather than simply what am I retiring from?
I've always believed that exit planning is much broader than selling a company. A good exit plan should bring three parts of an owner's life into alignment: the business, the financial and the personal.
Most successful owners naturally gravitate toward those first two. They understand the business side like the back of their hand. And eventually they begin working through the financial side of what the company is worth, what they need from a transaction, what the tax consequences might be and whether they have accumulated enough wealth to live the life they want without depending upon the business.
The personal side, on the other hand, is easier to postpone because there isn't a spreadsheet for it, yet it may ultimately determine whether the exit feels successful. It can also blow the deal up at the 11th hour when the cold feet of “not knowing” details about what’s next stare you in the face.
Imagine spending 30 years building something that actually needs you, with a calendar full of meetings only you can handle, the phone ringing with calls only you can answer and the issues hitting your desk that only you can solve
Then imagine waking up one Monday morning and realizing nobody is waiting for you.
For most people, that sounds a lot like heaven. For business owners and entrepreneurs, it can be incredibly disorienting.
That's why I don't think owners should wait until after a transaction to figure out what comes next. The next chapter deserves some planning too and that really comes down to…you guessed it…
Who are you?
That doesn't necessarily mean retirement, because most entrepreneurs I know aren't particularly good at doing nothing, and I don't think doing nothing should be the goal anyway. For most, retirement is not even the goal, so much as it is about transitioning into a new phase of productivity.
The next chapter might mean investing in other businesses, mentoring younger entrepreneurs, serving on boards, traveling, teaching, or more time on philanthropy. Spending more time with family, starting another company, or pursuing something you put aside 25 years ago because the business needed you more.
It may even mean continuing to work in the business, but with freedom from the daily burdens and decisions. The difference is that now you're doing it because you choose to, not because the business can't survive without you. To me, that's one of the biggest goals of exit planning.
Yes, you want to build a valuable company and yes, you want it to be transferable. Yes, you want to create financial independence and preserve as much of the value you spent decades creating as reasonably possible. Of course.
But you are also trying to create something even more valuable - Options.
To sell or to stay. To sell to family or employees, or to an outside buyer. To slow down or to do something completely different. And the confidence to know that whichever one you choose, there is still a meaningful life waiting for you on the other side.
So maybe the question isn't, "When do you plan to exit your business?" Maybe the better question is…
If I took the business away tomorrow, who are you?
If that question is difficult to answer, that's okay. It may simply mean you have some work to do. But not on your business this time…on your life.