Exit strategy – GoForth Institute Blog | Canadian Entrepreneur Training

Should you call it quits in your small business?

At GoForth Institute, we’re all entrepreneurs too, and most of us have been business owners more than once. Entrepreneurship is a rewarding journey, but it’s also got its fair share of failures and struggles.

Obviously, we want you to love what you do, but like the song says – sometimes love just ain’t enough. If you’ve been getting that nagging feeling that maybe this particular stage of your entrepreneurship journey is at an end, one or more of these signs might sound familiar to you:

You’re losing money at a rapid pace. It can take up to three years for a small business to turn a profit, but if you’ve tried everything and still see your money slipping away faster than it’s coming in, it’s not good. Lack of cash flow is the number one cause of business failure.
Your relationships are suffering. If you’re so stressed that you’re taking it out on your loved ones, or work so much that you never see them, it could also be an indication that it’s time to close up shop. However, it could also be an sign that you need to hire some help!
You’re bored. When you started your small business, you were thrilled by it and spent every waking hour dreaming and planning. But what if you have no more ideas and are just running on fumes? Could you benefit from seeking outside help with planning or networking?
You dread your workdays. If the thought of another day as a small business owner makes you feel miserable, that’s not a good sign. Analyze this feeling. Would a new direction for the business help? Some new employees to take the load off? Think about what it would take to make you love your small business again, and plan out all options.
Your health is taking a turn for the worse. If the pressure and stress you’re feeling about your small business is taking a toll on your health, then something’s not right.

Is it time to close your business?

If you answered ‘yes’ to one or two of these things, you may have a problem. It might be a sign that it’s time to think of an exit strategy. However, it could also be a sign of a problem that can be solved in a different way – a staff member to take the load off, for example.

As we said above, most businesses don’t become profitable until about the third year of business, so we usually don’t advise throwing in the towel after, say, 14 months. However, if you’re starting to feel like maybe you want out, take it seriously. Take time to analyze all options available to you, to make very sure this is the best course of action. If you do decide to close up shop, regroup, reflect, and plan for your next small business!

We should also mention here that skills training can make the difference when it comes to entrepreneurship success. No matter what stage of business you’re in, small business education, like the kind offered by us at GoForth Institute, may help you tip the balance from “What do I do?” to “I have a plan!” Knowledge is power!

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Does your family business have a succession plan?

family-business-succession Note: This post was originally published on May 9, 2015. We’ve updated it with more recent statistics from the PWC Family Business Survey.

According to the PWC 2016 Family Business Survey, 43% of Canada’s family-run businesses don’t have a succession plan in place, and only 12% of family businesses survive to the third generation. We think: yikes!

Why is a succession plan necessary?

We get it – if you plan on working in the business for the rest of your life, it’s hard to have the “after I’m gone” conversation with your family members. It makes people uncomfortable and it’s hard to talk about. However, it’s critically important to have a strong plan for who will take over the family business once your time is up. Otherwise, the business you’ve worked so hard to build could face major disruptions to customers and suppliers – and harm the business overall. It’s not enough to assume your eldest child or favourite niece will take over and run things the way you’d envisioned. A well thought-out plan, laid out on paper, will make things clear for everyone, all to the benefit of your family business.

How to create a succession plan for a family business

Start early. Most experts in the field of succession planning say that five to 10 years before your planned exit is not too early to get things started. The longer you can spend planning the succession, the smoother the transition will be. This long lead time gives the successor a chance to get knowledge and experience of the whole business, try their hand at leadership, develop their own relationships within and outside the business, and gain the trust of others who might be less than enthusiastic with the impending change of leadership.
Write down your vision for the business. Where is your business headed? What do you want it to achieve? What steps are necessary to get there? Remember that your business is a business first, and decisions must be made to ensure its success.
Come up with a shortlist of successors. Related to the first point, who has the skills and passion to lead the family business in the right direction? Is it your daughter with the list of ideas for e-commerce and social media marketing, or your nephew who wants to uphold tradition and keep the business the way it is? Analyze each candidate honestly to arrive at your decision. Try to keep your emotions out of it during this process (we know it can be hard!).
Keep an open mind. You may find that the best person to pass the torch to isn’t a family member at all – it happens! Remember, the goal is the success of the business. Family members may feel slighted over this, but keep the channels of communication open and remind them that they still have to all work together to keep things moving forward successfully.
Have a chat. Don’t work in a vacuum – involve your family in this process early. Get to know what people think of the whole situation, and what their own goals are. Making your intentions known about how and when you wish to exit the business gives family business members information on which to base their own career decisions.
Seek outside help. Formalize the succession plan by getting professionals such as lawyers and accountants involved. There may be legal or financial implications for you to consider when creating a succession plan for your family business. Poor succession planning is likely to be more costly than involving professional help.
Write it down. Make sure your succession plan is written out and detailed. Present this plan to the whole family so that everyone knows what’s supposed to happen and when. Having a well thought-out and communicated family business succession plan will help make the transition as smooth as possible.

For more on succession planning and exit strategies, read a previous blog post: What’s your out? Why an exit strategy is important.

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Real entrepreneurs’ stories of small business struggle

A couple of years ago, we wrote about when it was time to throw in the towel and exit your small business. It’s a reality for many entrepreneurs – no business lasts forever, and many close within a few years.

Of course, here at GoForth Institute, we want to give small business owners all the tools they’ll need to succeed in entrepreneurship, but we also know that the end of a business is a part of every entrepreneurial life cycle.

That’s why we were interested to read an article in Entrepreneur this week, Is it Time to Give In? How to Know for Sure. Here’s an excerpt:

“I really started noticing my judgment became very clouded, and I wasn’t open to people’s ideas,” says the chairman of Camping World and host of CNBC’s The Profit. “I was so caught up in my own world I couldn’t even see new ideas.”

Have a look at the article – we think it’s important for all entrepreneurs to recognize the signs of a small business in crisis, and what can be done about it.

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Throwing in the towel – is it time to quit your small business?

At GoForth Institute, we’re entrepreneurs too. We’ve been through it all, and many of us have had more than a couple of small businesses. We know that entrepreneurship can be an invigorating, freeing journey, but we also know that it can be one of the toughest things you can do.

The downsides of small business ownership aren’t often discussed honestly, and many of us can sometimes be unwilling to admit that our particular entrepreneurship journey might be at an end. Of course, we’d want everyone to love their small business, but we know that sometimes that love can run out. So, how can you tell if it might be time to end your small business? Here are some signs:

You’re hemorrhaging money. It can take up to three years for a small business to turn a profit, but if you’ve tried everything and still see your money slipping away faster than it’s coming in, it could be a sign.
Your relationships are suffering. If you’re so stressed that you’re taking it out on your loved ones, or work so much that you never see them, it could also be an indication that it’s time to close up shop. However, it could also be an indication that you need to hire some help!
You’re bored. When you started your small business, you were thrilled by it and spent every waking hour dreaming and planning. Now, though, you have no more ideas and are just running on fumes. Could you benefit from outside help with planning?
You dread going to work. If the thought of another work day makes you feel miserable, that’s not a good sign. Analyze this feeling. Would a new direction for the business help? Some new employees to take the load off? Think about what it would take to make you love your small business again, and plan out all options.
Your health is taking a turn for the worse. If the pressure and stress you’re feeling about your small business is taking a toll on your health, then something’s not right.

If you answered ‘yes’ to one or two of these things, you may have a problem – but that doesn’t mean closing the business is the only solution. This problem could be solved by new staff, for example. And as we said above, most businesses don’t become profitable until about the third year of business, so we usually don’t advise throwing in the towel after, say, 14 months. However, if you’re starting to feel like maybe you want out, take it seriously. Take time to analyze all options available to you, to make very sure this is the best course of action. If you haven’t already done so, plan your exit strategy and tie up all loose ends. And once that’s all finished, regroup, reflect, and plan for your next small business!

No matter what stage of business you’re in, comprehensive small business education, like the kind offered by us at GoForth Institute, may help you find success. Knowledge is power!

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