Until putting this newsletter together, I had never heard of Nipsey Hussle (aka Ermias Joseph Asghedom). Shame on me.
I found that Nipsey wasn’t just an amazing rapper, but a strategic entrepreneur. Among other things, he opened one of his “Marathon Clothing” stores in the Crenshaw commercial district because he wanted to invest in his neighborhood. Learn more about Nipsey here.
But I digress.
I found Nipsey because of one of his quotes:
“As an artist, as a brand, as a rapper, as a musician, you know you got a window and a lot of people, even an athlete; they don’t have an exit strategy. It’s just living in the false reality that it’s going to be like this forever.”
Nipsey was a smart man (he died in 2019).
I have had the pleasure of working with entrepreneurs from all over the world. It doesn’t matter what industry they are in, what country they live in, how many people are involved in the business, one thing is for sure…they almost always DO NOT have an exit strategy.
Oh, you work for a business? Well, you’re not off the hook. The same goes for you.
I know hundreds of people who go to their job, day after day, without any sort of ongoing career or financial plan. Look, I’m not shaming them, it’s just true.
You may be thinking you don’t need an exit strategy. Perhaps you want to leave the business to your kids when you pass. Or perhaps you want your business partner to take over. Maybe you dream of selling big someday. Maybe you think you are untouchable in your job.
(NOTE: I know too many people that wish they’d had an exit strategy ready to go in March of this year.)
Whatever is in your head, we need to get that plan on paper and start on the strategy immediately.
When do you begin the exit strategy?
When you start the business. When you start the job. Today. Now.
When I left an executive publishing position in 2007 to start what became the Content Marketing Institute, I had dreams of selling for millions. But, at first, I did nothing about it. Oh, I thought about how amazing it would be, but I didn’t plan for it.
About a year after starting the business, I wrote this statement under the heading “Financial Goals” in my Moleskine notebook (where I keep all my goals).
“My wife and I sell the company in 2015 for over $15 million dollars.”
This was written in 2008. That year, the business generated about $60,000 in total revenue and took a $50,000 loss. The business was worthless. In context, the statement was laughable…ridiculous.
As crazy as it was, this was the statement I read to myself twice a day, once in the morning when I woke up and once before I retired each evening (retired makes me sound old, but I couldn’t think of a better word).
Then, every so often, I would tweak the overall strategy for the business to help deliver on that goal. My wife and I made thousands of decisions over several years in order to make that statement a reality.
There was a reason why we chose that particular year (2015) and the total amount ($15 million).
First, by 2015 my children would be 14 and 12. My hope was to sell the business in order to spend time with them before they left for college or their next journey.
Second, my wife and I did several analyses and believed we needed $10 million dollars to do all the things we wanted to do in the future…for our kids, for our charity, for our style of living (my wife likes to throw lots of parties…oops…I hope she’s not reading this), etc.
So, we conferred with our accountant and attorney, did the math, and realized we’d need to sell for $15 million dollars BEFORE taxes to take home $10 million, considering employee gifts as well as federal and state taxes.
We missed the time by a year (we actually sold in June of 2016), but we ended up hitting the goal.
I believe in making my own luck. There is a process. Some put in the work and some don’t.
Okay, let’s say you want to go along for the ride on this. Where do you start?
According to the Edward Lowe Foundation, there are a number of steps to the creation of an exit strategy.
First, decide on a target date for a change in your role.
Next, get feedback from your family or investors. If you have loved ones working in or out of the business, they need to be aware of what you are thinking. Plus, it makes you accountable (always a helpful thing in accomplishing goals).
Then, create the plan. You can sell the company to your children, to employees or to a strategic or financial buyer. You could merge with another company. For non-business owners, you could plan to get a promotion, a role in a different company, plan to start a business, etc.
Once complete, publish the plan. Your team members and family members should know your intentions.
One of the best things we did when we sold CMI is making sure the management team knew that our goal was to sell the company and that they would be compensated on any transaction.
Ready. Set. Go.
The following was an excerpt from Joe’s newsletter. Only subscribers receive the full version.