Is your business creating a Golden Parachute or Golden Handcuffs?
Written by: Jeff Snyder
Most likely you created your business for financial success, control over your independence, time freedom or to expand your God given gifts. You gave up a paycheck, matched 401K, possibly a pension and a ready-made team of professionals to rely on. Ahhh but you also gave up being an employee who can be downsized at any given time for any reason. But too often we end up being an indentured servant to ourselves…who is generally much harder to satisfy than any manager! In essence, we are still an employee with less security and more responsibility.
Entrepreneurship is an adventure, much like piloting a plane. First you choose your destination, and fuel up. Wait, not so fast…too much baggage on board, lets eliminate some of those bad habits. Next your taxiing down the runway excited for your trip. Then your business takes off…oops, emergency landing, need more fuel. After the “cash injection” you are back in the air, hitting some turbulence but navigating well through it all.
When first beginning a business, Entrepreneurs need to reinvest most of their profits back into the business. All too often this is a habit that continues through the duration of their business and when it is time to exit and enjoy the fruits of their labor, there is a wake-up call. Commonly they learn they have created Golden Handcuffs and cannot exit the business because they are the business, or the true value of the business is different than what they thought it would be or how to mitigate the taxes of the business sale. Another pitfall is “lack of a flight plan” or not implementing processes that make your business scalable and sellable.
To be a successful Entrepreneur you must do 3 important things:
Adopt a goal of “Work Optional Wealth”, wealth that makes work optional.
Run your business like you must sell your business tomorrow. Understanding the proper valuation components is key to your exit strategy.
Harvest your profits. You must put your oxygen mask on first or “pay yourself first” and create assets OUTSIDE the business so you can land softly with your Golden Parachute and enjoy the financial success that began the dream.
Being an Entrepreneur is exciting, frightening, isolating, freeing, satisfying, and much more. I don’t know many who once they have taken this path would go back to being an employee. Being an entrepreneur does not mean you must give up security; it just means you should have a plan from the beginning and execute that plan faithfully.
Learn more about positioning your business for success when Jeff speaks at the Focus on Entrepreneurs Conference April 27-28. Get your tickets here.