Many of you know I’m an auto racer and also teach high performance driving. I also taught driver’s ed to teenagers at one point in my career.
In all forms of driving, the challenge was to get the driver to look further ahead. Humans evolved to look down at the ground and a few feet ahead; where threats might come from. We did not evolve to see the threats ahead of us while traveling 60 mph (or 130 mph in the race car). You learn that if you look far ahead, preferably at the horizon, you don’t lose sight of anything in the foreground.
This is a good metaphor for business. We tend to focus on what is in front of us, the day-to-day. The urgent drives out the important.
Even those who are not working on a detailed Exit Strategy (a service I offer by the way), you need to be looking out five to ten years or even more. Why? I’m glad you asked.
Ask yourself whether you want to be doing the same thing, in the same way, that you’re doing today in the career or business in five or ten years. Many of you won’t but even if you do want to be doing the same thing in the same way, ask yourself another question: Will your industry be operating in the same way in five to ten years?
Many industries are currently undergoing consolidation. In this type of environment being a little guy may not make sense. Should you be making yourself attractive for sale? If so, it will take at least two years to buff up the business for sale. By “buff up” I mean separate the owner’s transactions from the business, provide accurate financial records for several years and establish profitable and growing net income that is sustainable by another owner.
Many industries are requiring greater size for economies of scale. An example that comes to mind, and staying with the automotive theme, is small automotive repair shops. The computer equipment needed to diagnose modern cars coupled with the costs of environmental compliance with local, state and federal laws makes the future not-so-bright for small shops. It probably makes sense to get bigger to spread the additional costs over a greater volume.
And many industries are experiencing a paradigm shift due to technological changes. It has been said, “If your business is ink on paper, you’re dead or dying.” Witness the book and newspaper businesses. Retailing is experiencing another change, although it depends on what you’re selling or renting. I’m sure you can think of many more examples.
The point is to try and anticipate the winds of change, whether micro or macro, and make plans to benefit your situation.
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