Small Business: Tips for planning your exit

Stuart Chrisp, a founder of executive search firm Rothbury Kinross, and Totara Investments.

This week, a look into how small to medium-sized New Zealand firms planned to exit their operations.

Stuart Chrisp is a founder of executive search firm Rothbury Kinross, and Totara Investments.

Can you tell me about your background in business?

I'm actually on to my fifth career now. My first was as a lawyer, then I worked in banking and finance here and in the UK, then I branched out and brought the first Subway franchises to New Zealand. So I went from being a professional advisor, to actually rolling up my sleeves and doing it myself. Then around 16 years ago I ended up in recruitment, and have spent the past 12 years in higher-end executive search.

My current search business, Rothbury Kinross, essentially works with a lot of private businesses in growth mode, where they're doing things like transitioning from being run by a founder to bringing in professional management or professional boards.

And now I'm also involved in Totara Investments, which has two elements to its business: it's an investment fund and a consulting business aimed at high-growth, privately owned food technology and agri-tech businesses.

It's that experience with developing growth businesses that's given me a real interest in the area of exit strategies and succession, because I've seen that when it's done well it can have a big impact on the value of a business.

What are the trends you're seeing among the business owners you work with in terms of their planning for exit?

Generally the owners who are well organised in this regard have good advisors around them. One of the challenges for private business owners who have been running an operation for 15 or 20 years is a lot of their identity is tied to their business.

Generally successful business owners are hardworking and tenacious, but they don't tend to spend a lot of time looking over the horizon; they're more focused on running and growing the business.

I think one of the key things to successful succession is finding someone you can work with to provide what we call 'owner clarity'. What is it they ultimately want to achieve? It's only once you have that clarity that you can start to put a proper plan together to try to achieve that.

What's your plan regarding exit for your own businesses?

I've been doing search for a good long while, and have a long list of really great clients and a good track record, but it's a business where there's no recurring revenue and it's very hard to add capital value. That's really made me look closely at how I can take my skill set and knowledge and add value.

That's why we set up Totara Investments. As an investment fund we manage other people's money alongside our own, invest it and then we share the upside. In the next 15 years our plan is to help grow eight to 10 New Zealand companies to more than $100 million of revenue. That's something that inspires me, but also it's an opportunity to create some wealth. With that model I actually don't need to sell the business; we sell the individual investments and if we've made money on those investments we get to share in that. So it's an alternative strategy to an outright exit.

COMING UP: Social enterprises balance doing business with doing good. What are some small Kiwi companies doing in this space? If you've got a story to tell, drop me a note.

What are three key pieces of advice you'd have for a business owner who's thinking about planning for exit?

1. Get good advice from people who have 'been there and done that'. I'm a member of EO [Entrepreneurs' Organisation], and being involved in groups like that give you the opportunity to learn a lot from other business owners.
2. The more clarity you can create around where you want to go, the greater chance you'll have of getting there.
3. Don't try to do everything at once. Create a plan, but take time to execute it.