Do You Need a “Grow to Go” Strategy? – Business Transition
“Grow to Go”, is a shorthand that I use for a business owner that needs (or simply) wants to grow the business to a higher level of revenues and/or profits to make a more successful business transition. OK, but why does someone who wants (or needs) to leave their business, want a Grow to Go strategy?
1. Financial Gap: Some owners must grow the business to fund their retirement (or seed their next venture). Many owners have 80% of their net worth in the business. If you need $1 million to retire and you have $200,000 in savings – your business needs to fill that $800,000 gap. Increasing it’s value (often a multiple of profits), might mean you need a $200,000 or more increase in profits. Not necessarily easy for a smaller business, but Grow to Go can work.
2. No internal candidates: While a family member may take over a business for a host of reasons, if you have no heir-apparent, you may need to show an outsider that the business revenues and profits are on a strong growth track. Many owners as they get older, let their business slow down. Grow to Go requires you to invest and take risks.
3. Hire Your Buyer: If you have no heir apparent, and don’t simply want (or cannot afford) to sell now to a third party, you may hire a Number Two (COO/President), with the desire to buy the business in the future. That person will undoubtedly want to buy into (or help formulate) a strategic growth plan. some may fund the purchase out of those incremental profits.
4. Something left to prove: If you have ever felt, “if I can grow this to $X million, then we will finally be with the big boys”, you are essentially saying “I want to go out on top”. Grow to Go fits this nicely, as it give you a reason to take the risks and motivates you through the inevitable roadblocks ahead. Growth for it’s own sake, may not do this, (since you have not growth to $X millions yet); you may need a prize at the end of the race.
Whether or not Grow to Go is right for you, your transition plan really depends on your personal goals, your fears about the transition process, and your vision for your life after leaving the business. If you would like to think more deeply about this, I encourage you to download “What’s Next? For Your Future” or by clicking the image below:
Paul Cronin is COO of Successful Transition Planning Institute, visit , www.theplatinumyears.com