The October 7, 2011 Wall Street Journal’s Marketplace section’s headline was: “Apple’s Game Plan: Avoiding Culture Shock” and dealt with Apple’s decade-long succession plan for the late Steve Jobs. Now Apple is a huge, public company and yet a lot of what they did is what family business business owners should do regarding exit and succession planning.
What I gleaned from this article was that Apple:
Hired the right people
Delegated and gave responsibility (Tim Cook’s revamping their manufacturing operations is a perfect example)
Promoted from within
Created their Top 100 executives
Started Apple University to motivate people and maintain their culture
The company survives its people
Businesses often survive the owner. Too many owners think of themselves as invincible and ignore the fact that there will be an end to their time at the company. It’s when they have a heart attack, their spouse gets diagnosed with stage four cancer or the company starts declining that they decide to sell and by then it’s a buyers best case scenario.
Learn from Apple and plan for your future. You have a culture, and if you’re profitable that means it most likely is a culture a buyer would like to have. Not only is it not expensive to create and implement an exit plan, but the investment in the plan is more than recouped via a higher selling price as well as more profit and more free time along the journey.
Three tips for a more profitable exit
I just finished a book on exiting and selling a business. Much of it sounded like what I say, particularly the section that encouraged business owners to take three to five years to prepare the company and themselves. The author even gave my top reason for this and it’s because buyers and banks will ask for three to five years of financial statements and tax returns. Taking time to prepare allows you to show the results of your efforts on the bottom line.
This book also encouraged business owners, as I have for years, to have good financial systems, accurate financial statements and to “eliminate marginal perks.” It’s this area that gives the most consternation to buyers, banks and advisors. The owner whom doesn’t pay attention to the financial statements and/or treats the business as an extension of their personal checkbook often shortchanges themselves when the business is sold. Treat the business like a business; as if you are trying to win the contest for having the most profit.
Take a direct tip from Apple by delegating and reducing any dependency on you, the owner. This may mean growing the business so you have the capacity to hire management. BusinessWeek recently published an article that said flexibility and freedom ranked higher than financial gain for many business owners and many small business employees. I hear from owners constantly that they don’t want to grow the business (yet they want to sell it for a price based on what it would be if it had grown). Get over it and grow the business. The larger the business, the more profit and the higher the multiple of profit it can sell for. Your exit will be faster, smoother, at a higher price and with more cash at closing.