As speculation continues around who will succeed Marc Bolland as CEO of Marks & Spencer, my attention has been drawn to what should be a key priority for any business leader – having a solid exit strategy.
For the entrepreneur who, like me, has put their heart, soul and countless hours into growing a business, considering how to exit, pass it on or sell up is a difficult decision.
I’ve heard some entrepreneurs describe their exits as akin to losing a child or body part. While, for me, this is a little farfetched, when you have invested so much of yourself into a business, it is understandable how heart-wrenching a move it can be.
As a founder or leader of a business you have put your indelible stamp on the company you run, so finding someone to step into your shoes and take over the reins needs careful planning.
CEO transitions are risky times for companies. When the departing CEO has had a strong run, there is worry about his successor’s ability to maintain the momentum.
Just look at the difficulty David Moyes faced in replacing Sir Alex Ferguson at Manchester United. That being said, the success of Tim Cook as CEO of Apple proves that it can be done.
Entrepreneurial businesses need succession plans in the same way that individuals need wills. Your business has many stakeholders to consider so you owe it to them all, and yourself, to plan ahead.
But many entrepreneurs are unwilling to plan for succession. There may be a reluctance to give up control; an inability or unwillingness to see someone else in charge; and finally, the belief that ‘No one could possibly take over after me’ and ‘If I give up control, the company will inevitably fail’.
While I can understand that when you are busy running a successful business, choosing a successor or thinking about an exit strategy is unlikely to seem a pressing matter.
Without having a plan in place, a company can flounder for weeks or months, or worse, suffer irreparable damage, which surely no business owner wants when you’ve worked so hard on building it up.
That being said, there is a move over the past few years of entrepreneurs building a start-up based solely upon a three year exit plan. The days of doing a start-up because it’s a great idea and you have a passion to see your idea realised are quickly diminishing.
Entrepreneurs are setting up businesses, with a quick exit in mind. I worry that this approach focuses on what your potential acquirer would want rather than what your customer might want.
I don’t think when Mark Zuckerberg started Facebook he could ever have imagined it would have grown so big and I certainly don’t think he started with a three year exit plan in mind.
Zuckerberg claims to only care about the Facebook product itself, and I actually believe him, even though on paper he is rich beyond even the wildest dreams of most. He has focused on continuing to make his product great and the best performer possible within its market.
While I agree that it is never too soon to start working on a succession plan, I don’t think CEOs and other company leaders should make cashing out the be-all and end-all of how they determine success.
Many advise that you should be thinking about your exit strategy the day you start your business. And I can see merit in this, as an exit strategy can provide focus and play a key role in determining the strategic direction for the company.
Just because you define your exit strategy from the offset doesn’t mean you have to execute it anytime soon. By keeping the issue of exiting in mind as you build your business, you have the flexibility to handle the exact strategy at the appropriate time.