A lot of founders hear “exit readiness” and mentally leave the room.
They’re not selling. They don’t want to sell. Maybe they never will.
Fair enough.
But I think we make a mistake when we treat readiness as something you do only for a future buyer.
Many of the things that make a company easier for someone else to buy also make it substantially easier for the founder to own.
Imagine someone else had to understand the company
A buyer wants clean financial information because they need to know what they’re buying. You need clean financial information because you need to know what you’re running.
A buyer likes management depth because they don’t want the company to collapse when the founder leaves. You benefit from management depth because you don’t want every problem landing on your phone.
A buyer likes diversified customer relationships because concentration creates risk. You benefit for exactly the same reason.
A buyer wants repeatable processes and institutional knowledge because they need confidence the company can continue. Those things also make hiring, training, delegation and growth easier today.
Build optionality, not an exit
I like the word optionality better than exit readiness.
A business with strong information, capable management, durable customer relationships and less founder dependence gives the owner more choices.
- Take a real vacation.
- Pursue another opportunity.
- Bring in capital.
- Hand more responsibility to the next generation.
- Survive a life interruption.
- Sell if the right opportunity appears.
- Keep owning it because it no longer requires quite so much of you.
Use the due-diligence question as a management question
Every once in a while, look at your company as if you were buying it tomorrow.
What would make you nervous? What would you struggle to understand? Which relationship would you be afraid of losing? Which employee would you worry might leave? What only works because the founder is there? Which number would you want explained before you wrote the check?
Then forget about the imaginary buyer and ask a better question: Which of those things is making my company harder to own right now?
A better business before it’s a better transaction
The cliché is “work smarter, not harder.” This is really the less-cliché version of that.
The best reason to build a transferable business may be that you get to enjoy owning it before anyone else does.
You don’t need an exit plan to build a company with less fragility, better information and more choices.
And if you ever do decide to sell, you won’t be starting the work when the buyer is already at the door.