What I mean by “putting the cart ahead of the horse,” is before starting your business you should be thinking about selling your business. If your reasons to get into business is Freedom and Cash flow, then you will need to focus on the “cart.”
People are often asking why I sold 3 franchise brands that I used to own. They wonder about their own sale, yet kind of feel odd thinking about an exit before they have even started.
So here is a bit of my story…
- My first business I sold after 9 years;
- My second business was sold after 5 years;
- The last sale, I owned the business for less than 2 years.
All three businesses were sold for different reasons. When I got started with these businesses, I didn’t have a timeline on when I would sell. But after the first business sold, I did have a better strategy for when I would sell a business in the future.
So, here’s the strategy I have used for exiting a business when my goal is freedom, cash flow, and the highest price for selling. These items need to be done as soon as possible:
- Eliminate your involvement from the day to day operations of the business (For me this is Freedom)
- Get to scale (This means 3+ locations for me)
- Create cash flow (The lifeblood of my businesses)
Freedom & Scale go hand in hand. I think it is actually easier to have 3 locations vs. 1 location. Having 3 locations with a GM who oversees 3 managers and the managers overseeing the day to day operations of their stores is my ideal management structure, and it is easier to grow beyond having just 3 locations.
This is the big picture framework I have when I start a new franchise. My focus is on the first hire and site selection. If I start to focus on all the little things, then I get caught up in the minutia and have to re-focus. (This actually happened last week with me).
Now, if I structure the business this way and I spend about 2-4 hours a week focusing on supporting my GM. If a buyer comes along, they see their involvement is about 2-4 hours a week vs. an owner acting like a GM. They will typically pay me more for that business.
So it is an easy decision (not always easy to execute) to hire a GM so I can have the freedom I want and have a business that is worth a higher value.
If you do not sell it, then at the least you could have a business that operates better and more strategically, giving you the freedom you originally wanted. This is how I can live in Black Hills in South Dakota while owning businesses out of state.