Exiting a business may not be the first thing a CEO thinks about when planning his/her company’s growth trajectory. Still, it can quickly become a possibility as new growth targets are set and market dynamics change. One of the first questions I ask my clients is, “Do you know what success looks like in your business one to three years from now?” Some companies have big ambitions from the get-go. Others ramp up their ambitions in tandem with their growth. They might start small, but once they get from A to B, they recognize bigger possibilities.
The size of an exit can vary, but in my experience working with hundreds of CEOs, many of whom lead companies with nine-figure-valuations, they all follow four critical steps.
- Think BIG!
The first step is to believe. Have a real desire to think big, stretch yourself and stretch the people in your organization. If setting a nine-figure exit goal sounds simple, it’s not. Seeing an opportunity is one thing. But committing to such a BIG goal, putting the steps in place to hit it, and following through on that vision takes courage that only the best CEOs have.
- Put leading actions in place.
When determining your activities and the short-term targets you want to hit on your way, I always recommend a three-year plan. Developments in technology and the global economy are changing businesses more rapidly than ever. Three-year projections will lead you to realistic goals and actionable tasks. But five years? 10 years? If you try to see too far into the future, you might lose sight of an achievable vision.
Make sure you have specific and measurable activities that will lead to outcomes. Often when I ask companies to define these measurable activities, they give an outcome like a sales number, a gross profit number, a gross margin number, or a net profit number. Or, just as bad, a CEO will point to lag indicators like last month’s sales figures or last quarter’s growth as evidence that the company is moving forward. They don’t, however, provide the specific activities that will lead them to the outcome they want. An activity is something that’s leading. For example, I need to make 100 calls per day to get five appointments. That’s a leading activity to score. Define and measure the specific activities that lead to growth.
- Hire the best and get out of their way.
Figure out what you want and how to get it and then hire the best people in the country or in the world to drive you to that outcome. Find the people that fit your values and your culture. Find people you want to work with, who have deep experience, and who you believe can take your company to the next level. Have the courage to put your ego in your pocket. Get great people, align them with your organization and its values, and hold them accountable for driving toward your goals.
It’s important to note that the people, systems, and processes that got an organization to a certain point in its growth are not the same people, systems, and processes that will take the organization to the next point.
Typically, the people who grew the business during the start-up phase, let’s say to $10 million or $20 million in revenue aren’t people who have been running large organizations. Growing from $20 million to $100 million takes a different talent with a different skillset. You need people who have been there before and who know how to lead. We see this dynamic play out in countless companies – the CEO is trying to transform the business with the same leadership in place. It doesn’t work. Make sure you have the right talent to achieve your next level goals.
Also, CEOs who have shepherded a business from start-up to profitability are used to doing everything themselves. And maybe that was necessary when you were alone stuffing mailers and making cold calls in the basement. But to get to a nine-figure exit, you’re going to need to hire the absolute best people in key leadership and management positions and let them do their work.
If you want to be a control freak and micromanage top talent, you are going to lose. Top talent doesn’t want to be micromanaged. Leaders have got to have the courage and the confidence in the people they brought on board, to recognize that there might be other ways to get something done, and it might even be better than how they would have done it.
If your direct reports really can’t execute without you guiding their every move, then they’re not the best.
- Hold yourself and your company accountable.
Scoreboards and regular KPI reports are critical to making sure your team is focused on hitting the targets that will lead the company to big results. But a nine-figure exit requires an extra level of strategy and accountability that’s best achieved via annual or quarterly planning sessions.
To be clear: an annual planning session is not you, the CEO, standing on a stage telling everyone else what you want them to do. An effective planning session requires third-party facilitation so that the CEO is a participant. Don’t underestimate what a powerful impact you can have on your company by simply joining the group, listening to feedback, and settling on new processes and goals together. You won’t just get more buy-in from your team, you’ll send an important message: I’m accountable just as much as you all are.
Also, make sure your organization follows best practices that enable every opportunity to win. One of those critical best practices is ensuring a high level of communication with your leadership team. Review results every quarter. What went right this quarter, and what went wrong? What did we learn? How did we do compared to how we said we would do? What are the biggest challenges we’re currently facing, and how are we dealing with them? What are the biggest opportunities in front of us? We can’t chase them all. What will be the most impactful? Where do we want to be by the end of the following quarter, and what are the activities that will get us there?
Every one of our clients who has achieved nine-figure exits went through this exercise quarter in and quarter out. It may seem like overkill, but a high level of communication and pressure every quarter produces results.
- See it. Your company’s potential is limited only by your vision for its success and the team you assemble to realize that vision.
- Track it. Focus on the activities that will lead to bigger numbers tomorrow, not yesterday’s successes or failures.
- Adjust it. Hold quarterly or annual planning sessions to focus your team on what’s working and correct what’s not.
Written by Mark Moses.
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