Get Yoda's Wisdom

There was a recent article in the Wall Street Journal entitled, "The Economy Stole My Retirement." In it, there were several anecdotal stories of various entrepreneurs in various geographies and markets lamenting about how they can't go and enjoy their retirement because of this bad old economy! Maybe that makes a nice grabber of a headline, but mostly, it's an excuse for not paying enough attention!

The economy always has an impact on an entrepreneur's business.  How the entrepreneur reacts to it (and, of course, most importantly, when) will be critical to the success of his/her small business. Sitting around waiting for it to get better is not a strategy.  Determining a plan of action that's built on both time and market factors is a start.  That is, if this pattern lasts for six months, here's how it probably will impact us in the market and here's what we have to do.  If it lasts for twelve, etc.

As for what the economy means to an entrepreneur's retirement is dependent on what their "exit plan" is...if they have one. And too many do not. In the article they were lamenting about how valuations for their businesses weren't what they needed for a comfortable retirement. Valuation is like beauty - in the eye of the beholder. What they need and what the market will pay are way too often, two different things.

But also, having an "exit plan" that is basically "when I'm 65, somebody will offer me a gajillion dollars for my business and I'll ride off into the sunset" reminds me of the old New Yorker cartoon with a professor up at a board filled in its entirety with equations and he's pointing to the last one at the lower right and says "and then a miracle occurs!"

I'm here to tell you miracles don't occur very often!

You plan for your exit (and associated retirement) the same way you plan for how your business grows.  No wishing and hoping, but a step by step approach that has rational personal, professional and financial objectives of the entrepreneur and a rational valuation expectation underpinning it. You update this plan, periodically, the same as you do your market plans; especially when the economy goes sideways.

Be careful.  Sometimes entrepreneurs put their businesses on "automatic pilot." It happens in the best of companies, with the best of entrepreneurs.  You get "fat, dumb and happy," especially in good economic times like we had for a very long time up to about four years ago. If this is you, time to change.

Figure out what you need to do to compensate for the economy until it turns around (and we all believe it will) on both the day-to-day business and exit fronts.  Update market plans and update (or develop, if you don't have one) your "exit plan."  Then get back into the game hungrier and more determined than ever!

The Entrepreneur's Yoda knows these things.  He's been there.  May success be with you.