When business owners begin to think about their business exits, they tend to focus on one specific goal that they want to achieve. Some owners focus on when they want to exit, some focus on how much money they want when they exit, and others focus on the person or group that will take over once they exit. But what’s the process that takes owners from thinking about what they want, to acting on what they want?
In the context of Exit Planning, it’s important for business owners to understand the two-pronged approach that Exit Planning Advisors take to Exit Planning. The first prong is the general prong, which focuses on a successful business exit for a business owner. The second pro... Read More
Generally, business owners feel comfortable being owners. They enjoy what they do, but rationally, they know they need to change their roles in their businesses eventually. But most owners don’t resist planning their exits on a rational basis. Instead, they resist Exit Planning at an emotional level.
Consider Clancy, a 50-year-old business owner. He loves working at and owning his 25-person manufacturing company, but he knows that he’ll eventually need to start preparing for retirement. He assumes that if he can sell his business for about $5 million, he and his wife can live comfortably and still help send their grandson, Ralph, to the finest colleges. He gets his bu... Read More
If you were to draw a picture that visually represents your role in your business, what would it look like? Are you at the top of a traditional Christmas-tree-like organizational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel? As anyone who has tried to fly United when O’Hare has been hit by a snowstorm knows, a hub-and-spoke model is only as strong as the hub. The moment the hub is overwhelmed, the entire system fails. Acquirers generally avoid hub-and-spoke managed businesses because they understand the dangers of buying a company too dependent on the owner. Here’s a list of nine warning signs you’re a hub-and-spoke own... Read More
According to surveys, up to 79% of business owners plan to exit their businesses within the next 10 years, with more than half saying they want to exit within the next five years. However, many business owners fall into the trap of the "rolling five-year Exit Plan," in which owners constantly reset their exit dates for five years later. This often prevents them from taking tangible steps to accomplish their exit goals.
To highlight the consequences of setting an exit date, let’s look at a case study involving a business owner, Charles Franklin, and his Exit Planning Advisor, Mathilda Traubert.
Charles met with Mathilda to discuss the first steps he needed to t... Read More
When you set about starting your business, you likely had big goals and expansive dreams about its success. Whether success meant having an impact on your community, making as much money as possible, or something else, you probably wanted your business to become the ideal firm in your market.
As you build your business toward the ideal, you concurrently build your business’ value, which is a key aspect of a successful Exit Plan.
Does this mean that hiccups, stalls, or unforeseen failures in the growth of your business’ value will directly affect your business exit? While that can be true, proper planning helps mitigate those kinds of fluctuations. Consider the... Read More
The idea of exiting their businesses, which for many owners define their professional lives, can seem like a gigantic undertaking. They ask themselves, "How can I possibly do all of this? Where can I go for help, and what do I need to know?"
These questions are perfectly normal to ask as you consider your business exit. Further, business owners are absolutely correct in thinking that Exit Planning is a gigantic undertaking. No single business owner or advisor can create and implement an Exit Plan alone. In our experience, most successful Exit Plans occur through a process of collaboration among several different professions.
It can be stressful to go someplace... Read More
An important part of a successful ownership transfer, regardless of Exit Path, is the presence of key employees. Key employees are those who have a direct and significant impact on business value, meaningfully participate in the business’ strategic future, and whose combination of skills and experience would be exceedingly difficult to replace.
Because of their role in the business, key employees can just as easily stall your business exit as facilitate it. Consider the story of Maria Villalobos, who had her Exit Plan stalled by one of her key employees.
Maria Villalobos was nearing her retirement. Over 30 years, she b... Read More
10 Things That Make Your Business More Valuable Than That of Your Industry Peers
The value of your company is partly determined by your industry. For example, cloud-based software companies are generally worth a lot more than printing companies these days.
However, when we analyze businesses in the same industry, we still see major variations in valuation. So we dug through the data available to us from our partners at The Value Builder System™ and we found 10 things that will make your company more valuable than its industry peer group.
1. Recurring Revenue
The moe revenue you have from automatically recurring contracts or subscriptions... Read More
Is Now the Time To Sell Your Business?
Have you been thinking about selling your business but just can’t decide if now is the best time? Do you find yourself repeatedly analyzing the economic situation and wishing you had a crystal ball? There are positive signs and there are negative signs….
If you’re still up in the air and can’t quite decide whether or not to hit the eject button, here are six reasons you might want to consider getting out now.
1. You’re less interested in fighting the good fight
A lot of business owners took the Great Recession in the teeth. If you’ve got your business stabilized and the prospect of possibly having... Read More
Across Iowa, we are experiencing a ‘silver tsunami’ of aging baby boomers. One area of our economy we know this will affect is the changing of ownership in family-owned companies. It is well documented that only about 30 percent of family firms make it to Generation 2 (G2) and a tiny 12 percent make it to Generation 3 (G3). These transitions must be planned carefully and proactively to ensure the firm survives.
So how do we do that?
Let’s consider a simplified five-step approach to help organize what can be a very challenging process:
1. Communicate Objectives/Goals/Timelines
The focus here is on “Communicate”. Existing ownership and the next generatio... Read More