Separating The Twins
I recently read a book titled Exit Ready: Rocks, Roles and Results That Power Your Exit Plan. It was written by fellow EOS Implementer Tyler Smith, and it does a fantastic job of laying out exactly how to execute a business owner’s exit from their business while optimizing for their highest priorities.
The book is written for businesses already running on EOS, and it positions the owner’s exit as a “final boss” of the challenge of entrepreneurship. Even with large, highly profitable businesses, there are lots of owner entanglements which must be resolved in order to ensure the highest possible sale price as well as the highest likelihood of the company’s leadership team continuing to thrive after the owner has moved on.
Consider the following:
The owner has tight, vital relationships with the key customers of the business.
The owner is still involved in key decisions made during daily operations.
Key processes are undocumented, living solely in the owner’s head.
The owner (and their spouse) have signed personal guarantees on company debt.
These type of entanglements typically reduce business value by 20-50% and dramatically increase the risk of post-sale failure.
The book created a mental picture for me of the challenge of owner transition - a vision of the owner and their business as conjoined twins.
When humans are born in conjoined fashion, surgically separating them is dangerous, if not impossible. The good news about separating an owner from their business is that it can be done on a timetable of their choosing - and when done properly, the business grows whatever competencies that are held solely by the owner at first. The business can generate whatever organs it needs, in this metaphor.
The book does an excellent job of getting granular about how this is accomplished, but I’ll give you a mild spoiler: The answers lie in the EOS tools themselves. Putting all of the owner entanglements on the company’s Issues List and tackling them strategically over time will get the job done. And using the Accountability Chart to identify who is going to take on the things currently handled by the owner (over time, not all at once) are essential to preparing for an owner exit.
But it’s not an issue until the owner and their team make it an issue - and that reluctance to imagine or discuss a future without the owner sometimes costs businesses precious time that they wish they had back.
Conjoined twins only occur .001% of the time in human reproduction - but 100% of businesses that transcend their founder will need to undergo this transition. With millions of business owners approaching retirement in the next decade, the question isn't whether to prepare for exit, but when to start. The businesses that begin this work years before they plan to sell capture significantly more value.
So I urge you to contemplate this simple thought experiment: How different would your business be today if it were truly “Exit Ready?” That is the work that lies ahead - let me know when you are ready to tackle this challenge. I’m here to help.