A founder I know took a call on a Tuesday afternoon in March. A trade buyer, unsolicited, with a number attached. He had spent eleven years building a specialist manufacturing business in the north west, and here was somebody offering to buy it.
He said no. Not because the number was wrong, but because he had no way of knowing whether it was right. He had never decided what the business was for. He had built it forwards, one good year after another, and now somebody was asking him a question he had never asked himself.
Eighteen months later he sold. The number was lower.
That gap, between the offer he could not evaluate and the one he eventually accepted, is the most expensive thing I see in my work. It is almost never caused by a bad negotiation. It is caused by eleven years of decisions taken without a destination.
01Why do businesses get built forwards and sold backwards?
Because building forwards works. It is how anything gets off the ground.
You find a customer, you serve them well, they tell somebody, you hire. The logic is local and immediate. Each decision is judged against the one in front of it: can we afford this person, can we win this account, can we survive this quarter. That is the correct way to run a company with eight staff and a fragile pipeline.
The problem is that nothing tells you when to stop operating that way. There is no alarm at £5m. The habit that got you there is the habit you keep, and it keeps producing locally sensible answers to a question that has quietly changed.
Selling, when it comes, works in the opposite direction entirely. A buyer starts at the end. They begin with what the business will be worth to them in three years, then work back through every assumption that has to hold for that to be true. They are reading your company as a set of forecasts about the future, and you have been running it as a series of responses to the past.
Two different logics, meeting for the first time in a data room. The founder is always the one caught out.
02What does an end state actually specify?
Four things. Vague versions of any of them and you do not have an end state, you have a mood.
A number. Not "life-changing" and not "enough". A figure, after tax, that you have actually tested against what you want to do next. Most founders have never done this arithmetic, and a surprising number find the figure is lower than they assumed, which changes everything about the pressure they are under.
A date. A year, at minimum. It does not have to be right. It has to exist, because a date is what turns strategy into sequencing. Without one, everything important is scheduled for "when things calm down".
A form. Trade sale, private equity, management buyout, employee ownership trust, or holding it and taking income. These are genuinely different businesses to build. A company optimised for a trade buyer looks different from one built to be run by its managers, and you cannot hedge your way to both.
Your role afterwards. This is the one founders skip, and it is the one that ruins deals. Do you want out on day one, or are you happy running it for a buyer for three years? The answer changes the structure, the price, and whether you spend your fifties doing something you resent.
The founders who get good outcomes are rarely better negotiators. They are people who decided something specific, early, and then spent four years making it true.
03How does a destination change what you do this quarter?
This is the part that surprises people, because starting at the end sounds like a planning exercise for later. It is not. It changes what you do on Monday.
Take a single decision: a large new customer who would represent 30% of revenue. Built forwards, that is an obvious yes. It is the best month you have had. Built backwards from a trade sale in four years, it is a serious question, because customer concentration above roughly a quarter of revenue is one of the first things a buyer prices down, and it takes years to dilute. You might still take the customer. But you would take it while deliberately funding the sales capacity to dilute it, rather than discovering the problem in diligence.
Or take a hire. Built forwards, you hire the person you need for the next twelve months. Built backwards from a business that runs without you, you hire the person who can hold a function on their own by year three, which is a different person, usually more expensive, usually earlier than feels comfortable.
Or take how you record things. Built forwards, the accounts exist to satisfy your accountant and minimise tax. Built backwards, the accounts exist to demonstrate to a stranger that the earnings are real and repeatable, which means the add-backs and the personal expenses and the informal arrangements need cleaning up years before anybody asks.
None of these are exit tactics. They are operating decisions. The destination is what tells you which answer is correct.
04What does it cost to leave the destination undecided?
The cost is real, and it is paid quietly, which is why it goes unnoticed.
Options close. A business that has grown entirely on the founder's relationships cannot easily be sold to a trade buyer in year six, because the relationships walk out with the founder. That option did not get rejected. It expired, unnoticed, somewhere around year three, in a series of decisions that each looked fine at the time.
Value gets left in the business rather than realised from it. Founders who have not decided tend to reinvest by default, because reinvestment is always defensible. Some of that is right. Some of it is capital going into a business that will never return it at the multiple the founder assumes.
And the founder gets tired. Eleven years is a long time to run something without knowing what finishing looks like. The people who burn out are rarely the ones working hardest. They are the ones who cannot see the end of the thing they are working on.
05Is this the same as planning to sell?
No, and the distinction matters, because "exit planning" makes a lot of good founders switch off.
Deciding your end state might mean deciding you are never selling. Plenty of excellent businesses are built to be held, to pay their owner well, and eventually to pass to a management team or a family member. That is a legitimate destination and it produces its own set of implications, most of them about governance and succession rather than value.
What it cannot mean is not deciding. Undecided is not neutral. Undecided is a decision to let circumstances choose, and circumstances usually choose during the worst week of your year, when somebody rings on a Tuesday afternoon with a number.
06Where do you actually start?
With a conversation you have probably been avoiding.
Write down, in one page, what the business is for. Not the mission. The outcome. What you want out of it, by when, in what form, and what you are doing the day after. Then take that page to three people who will argue with it: someone who knows your numbers, someone who knows your market, and someone who has already done what you are describing.
You will change it. That is fine. A destination you revise annually is worth an enormous amount more than one you never set. The revision is cheap. The eleven years without one are not.
The founder from the Tuesday afternoon call runs a different business now. He started again, smaller, and the first thing he wrote down was what finishing looked like. He says it is the only real difference between the two companies, and the only one that mattered.