START-UP phase for a fledgling business is all about the money, it’s about securing sales, strengthening cash flow and investing in capital.
But to secure that investment cash from angels or VCs you have to be able to predict confidently your exit strategy, it means that before you even start your business journey you’re forced to plan for the end.
In theory it makes sense – the choice of exit plan will influence business development choices throughout the life of the business, as will the type of exit strategy, from initial public offerings, to strategic acquisitions and management buyouts.
But in practise it can be a challenge. Founders often want to cling on to their baby for longer than is strategically sound, or simply don’t want to consider moving on at all.
For Les Meikle it was all part of a 20-year plan put in place when he bought the assets from a company that went into administration.
At that stage the Scottish operation was turning over approximately £648,000 and losing around £48,000.
In the first year of Meikle’s ownership Wise Property Care achieved a £1 million turnover and a profit of £201,000.
Meikle’s growth plan towards exit was built on a combination of organic growth, acquisition and diversification which saw the business hit £6m turnover and profits of £1.3m in the last trading year to become Scotland’s leading contractor of its type and the most successful in the UK.
Meikle’s plan to sell the company when he turned 63 was completed in January this year, when he sold to Rentokil.
He believes an exit strategy should be in place from the get go: “From day one without a doubt,” he insists: “If you don’t know what your destination is, how could you reasonably expect to get there?”
“You should prepare the business for sale as early as possible, you just never know when someone will express an interest with a view to purchase, therefore to maximise the offer for the business the business should be able to continue to move forward in the owner’s absence.
“In addition, doing so should also give you a better quality of life if the business can run in your absence.”
Knowing when to exit is another question to be answered.
Meikle didn’t need to attract additional investment in to the business, his exit was simply to secure the future of his employees and to see what he had started hopefully go on to greater achievements.
“Age was my main consideration and the fact that the employees were increasingly asking what my plans for the business were.
“I was very keen for them to see that they had a future with the business even it was not under my leadership,” he said.
And once you’ve made the decision that the time is right, knowing how to exit the business so as not to impact staff, customers and suppliers is key.
“Clearly keep it quiet and try to execute it as quickly as possible once you have identified a willing purchaser,” advises Meikle.
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