On some day in the future, you will want to retire from your business (but hopefully not photography). To do this successfully, you need an exit strategy. Dr. Stephen Covey, the famous business consultant/author, stated in his best-selling book, The Seven Habits of Highly Effective People, that you must begin every goal process with the end in mind. It only makes sense to know where you’re going, before you start. If you’ve already started, then developing an exit strategy should be put at the top of your to-do list.
A thoroughly planned exit strategy can also benefit you today, especially if the growth of your business has been mediocre. The exercise of planning an exit strategy may be just the impetus you need to operate your business differently, or more efficiently and effectively. You’ll be able to build more value in your business, so it becomes an asset of your exit strategy.
Another reason you want a detailed and documented exit strategy is because your life could change tomorrow. You may become disabled or your financial situation is dramatically altered. As crazy as it sounds, you could wake tomorrow morning or a morning five years in the future and decide to pursue a different career. There is no guarantee that photography will remain a passion that you’ll want to pursue to the end of your working life. It’s also important to remember that in an entrepreneurial, capitalistic economy, businesses fail regularly, especially small businesses. If that should happen to you, then an exit strategy makes the dissolution of your business much easier and less painful.
You start to develop an exit strategy by first “meeting” with yourself. You must ask yourself fundamental questions and record the answers.
· “Do I plan to have (or already have) a family that I must support?”
· “What will it cost to support my family?”
· “What are the goals of my photography business, in terms of size, revenues and net profits?”
· “When do I want to retire?”
· “What assets/income will I need for retirement?”
· “What would I do if I was unable to work before retirement?”
Seek the advice of others, such as parents, spouse and other family members; your attorney and accountant; or local businesspeople that you may have come to know through your community activities, or as a member of a business group.
Prepare an “informal” action plan with the answers to your questions, the advice of others and any financial or other data that are pertinent to your exit strategy. Your plan should begin with a short mission statement that describes the future destination of your business and life with as few words as possible. Next, list the specific goals of your plan: “I want my business to pay me X salary per year for X years.” I want my business to generate X net profits annually that I can invest for my retirement.” Then, note the specific strategies, tactics and timetables to achieve the goals of your exit strategy.
Once you have an exit strategy plan in a document form, you are likely to make better daily decisions because they have a direct effect on your plan. Many business owners with exit strategies also report that they are happier with where their businesses are going because they are working from a clear plan, developed for themselves by themselves. Having such a plan is also beneficial if you need to approach a lender to finance your business. Maybe, the ultimate benefit of an exit strategy for your photography business is that it can make you more confident in your ability to achieve your goals, and even bigger ones.
Photo by PhotographyTalk Member Dang
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