Once an entrepreneur has become established and they have built their business to a point where it can become self-sufficient or the infrastructure is strong enough to withstand a transferRead More
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]]>Once an entrepreneur has become established and they have built their business to a point where it can become self-sufficient or the infrastructure is strong enough to withstand a transfer of power, there are many questions that should be asked. Exiting a business that you have built is not a decision that should be made quickly, so take a moment to ponder the following questions before making a choice that could adversely affect your destiny.
Here are the top questions some authors on exit planning suggest entrepreneurs ask before exiting a business:
Entrepreneurs often make the mistake of stepping away from their business too quickly, before the business has had a chance to grow to a point where exiting is feasible. Most business experts recommend taking at least two years to properly evaluate the marketplace and their business’ place in the landscape. Business trends that can torpedo everything you’ve built can emerge seemingly overnight and scuttle even the best laid plans.
In order to get the best sale price for your business or pass it down to the next person in line, you need to be able to show all of the correct paperwork. Entrepreneurs will often try to execute a rapid transfer, but you need a great deal of time to ensure that your exit goes smoothly. If you are planning on being able to exit your business within a month or two, you should reconsider this plan.
Putting together the correct plan for exiting your business takes years of careful preparation. Do not allow yourself to be swayed by those who present you with plans that entail walking away in a more expeditious fashion.
Before you exit your business and pass it on, you should know what members of your current team are going to remain in place after the transition has been made. You will also need a team that can help you through the transitional period. This means hiring experienced business attorneys, accountants and appraisers. If you are inexperienced in these matters (and even if you aren’t), you should bring in a consultant to provide valuable advice.
Having a team to guide you through the process of exiting your business gives you the help you need in avoiding a variety of common pitfalls. You should also know which members of your current team wish to remain on board after the transition period has been completed. Some team members may wish to exit as well, in order to pursue new opportunities. Others may decide that they wish to remain a part of the company, but may be concerned about potential changes to their role.
In the business world, certain periods are much more tumultuous than others. As a result, the timing may not be right for you to step away from the business that you carefully shepherded through its infancy and watched grow into what it has become. A lot of entrepreneurs choose the wrong times to sell their business or hand it down to the next person in line.
If you are trying to exit your business during a period of decline, don’t. In order to think like a true entrepreneur, you must strike when the iron is hot. The best time to exit your business is when things are on an upswing. Stepping away when you are at the peak of your powers is incredibly difficult, but necessary.
When you decide to remain at the helm during a period of prosperity, this is thinking with the mind of a business owners, not the mind of an entrepreneur. Make sure the timing is right before handing your company off to the next person.
Is whoever you are passing your business down to ready to handle the responsibility? Is there a strong infrastructure in place that will allow them to succeed, even after you are gone? A business that has become entirely too dependent on its owner is one that is doomed to failure, should they ever decide to exit.
The best businesses are the ones that can still run at maximum efficiency if the owner is not there. Take a moment and consider times in the past when you decide to step away. When you have gone on vacation, was the company able to run properly or were there a variety of hiccups? Or were you never able to go on vacation because you were worried about potential complications?
No one wants to see everything they have worked for crumble the moment they step away. So make sure you know for certain that the business can continue to thrive and grow without your constant presence.
After control of the business has been transferred over, the new executive or executives may need your help to ensure that the transition goes smoothly. Are you willing to remain on board, albeit in a smaller, more advisory type of role? The person who you are handing the company down to could want your help and they may have a certain level of trepidation during the early going.
Before exiting your own business, be sure that the new regime has the ability to hit the ground running. If not, then you may need to stay attached for a little while so that the transition period is not as rocky. Staying on and becoming a consultant can help ease the growing pains for whoever you are passing your company down to.
Finish Big by Bo Burlingham
The Exit Strategy Handbook by Jerry Mills
Sell Your Business for More Than It’s Worth by Michelle Seiler-Tucker
Final Act of Onwership by Jerry Baltus
The Art of Resignation by Steven Feiner
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]]>A summary of things you should know about The Exit Strategy Handbook according to Jerry Mills: Introduction In this episode Jerry Mills shares all his insights on his book, TheRead More
The post A Preview of The Exit Strategy Handbook with Jerry Mills appeared first on The Entrepreneurs Library.
]]>In this episode Jerry Mills shares all his insights on his book, The Exit Strategy Handbook, where he reveals the best way business owners can prepare themselves for selling a business.
In his book Mills walks you through a step-by-step preparation process and a host of extensive check lists that can be used as a guide for holding your financial advisor accountable when it comes to exiting your business. The goal of the book is to help you get the most value for your business and work the system when it comes to a competitive buyers market.
This book is perfect for entrepreneurs and small business owners who have little to no experience in exit strategy planning and want to be prepared when the time comes to sell.
This book is the only one of its kind that actually takes the business owner through the process. It’s also a living, breathing book, and there is software that is associated with it.
You can jump in and out based on the information you need.
Typically a company who is prepared for a transaction is going to be much better than one who is not prepared and sometimes it takes years for the preparation. So the preparation is the key component and that’s typically where business owners cut corners.
We did a proprietary survey of business owners at the Inc 500/5000 conference and award ceremony in Washington DC in 2013 and published the results in the introduction of this book.
In chapter one of the book we talk about who needs this book and that’s typically owners of private account businesses that want to someday do something with their business. This book is not driven by who might buy this book but rather by the needs of the business owners.
We talk about the future and what the next 20 years is going to look like. Is it going to be a buyers’ market or a sellers’ market? We take in to account a lot of the statistics and analysis of baby boomers.
In chapter three we talk about the importance of building a team which is the kickoff of the success of a process. Most business owners don’t know who should even be on their team and our process helps the business owner with those decisions.
Chapter four is an issue that 99% of business owners will have happen to them if they ever engaged a merger and acquisition or investment banker to help them. That is calculating the realistic value of the company. Almost every business owner has a generic feel of what their company is worth and that generic feel is not always scientific and it also doesn’t reflects the market in terms of what a potential buyer considers the company is worth. We take you through the process of how a business owner can know what a potential buyer might think about the value of their company.
Typically when the business owner knows the value of their company often they want to know how they can grow the value. In this next chapter we explain the process of how to build value in the interim period to sell a business. We also talk about the role that the business owners should or should not be doing during this period of time.
Chapter six is titled Preparing for the Last Customer and we go through the philosophy that business owners are incredible at knowing what their client wants in term of what they do on a day to day basis. We want to use that same logic to prepare for the last customer which is the buyer. So we talk about what the buyer is looking for, what they want, what are the negative spots, and some of the things that we can do to cater that to the buyer.
Chapters 8 through 25 are series of checklists that we recommend that business owners consider doing on topics such as documenting their product and service lines, documenting the competition, and key customer information. Other things we go through in the book are the dos and don’ts of contracts and leases, litigation and claims, and taxes.
The last chapter is about how to track all of this complexity and there is a very simple way that we have developed for the business owner to be in charge of the entire process at all times.
NOTE: That was just a summary. To get the full deep dive, play the audio clip at 03:53
“A well prepared business gets more offers and usually better offers than a less prepared one.” -Jerry Mills
I went to Arizona State University, spent a good deal of my career with Arthur Anderson & Co., and started to be CFO in 1987. I’m also proud to be the father of four children and almost six grandchildren.
All through my career I have been on the side of helping business owners sell their companies and through quite a few transactions. In one particular I saw the frustration business owners go through; it’s very stressful and a difficult process. I also went on Amazon and ordered and read the top 25 books on this subject and found that nobody was covering it.
As A Man Thinketh by James Allen
Buy The Exit Strategy Handbook by Jerry Mills on Amazon today
Visit B2BCFO.com to learn more about the book and Jerry’s company
Download the full transcript here (coming soon)
Listen on iTunes, Stitcher , and SoundCloud
Related books:
Sell Your Business For An Outrageous Price by Kevin Short
Final Act of Ownership by Jerry Baltus
Walk Away Wealthy by Mark Tepper
Relevant advice and tips:
7 Important Things You Need To Know When Selling Your Business
What did you like and not like about this episode? Fill out this one minute survey here.
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]]>A summary of things you should know about Walk Away Wealthy according to Mark Tepper Introduction In this episode Mark Tepper with Strategic Wealth Partners shares his book Walk AwayRead More
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]]>In this episode Mark Tepper with Strategic Wealth Partners shares his book Walk Away Wealthy. This book is the perfect fit for entrepreneurs or business owners looking for an exit strategy for their business plan. This is a book that is specific to building wealth for entrepreneurs and will focus on both the liquid and the illiquid investments. As an entrepreneur this is really the only book you need to read on wealth management.
This is a book that is specific to building wealth for entrepreneurs. It will focus on both the liquid and the illiquid investments and as an entrepreneur this is really the only book you need to read on wealth management because it covers both sides of the equation.
I would recommend reading it from beginning to end. It’s broken up in to three different sections and chronologically set up to be read that way.
Planning is a process, not an event. The longer you wait to get started, the less money you’re ultimately going to get for your business. Begin your financial and exit plan as soon as possible and continue to revise it along the way.
There are three main sections in the book; building value, monetizing value and preserving value. We have twelve different secrets that you need to know if you really want to have the most financially successful life as an entrepreneur.
Secret #1 is creating your exit plan before you need it. What this chapter talks about is there is a misconception that you don’t need to focus on your exit plan until you are ready to sell and the fact is you should begin working on your exit plan the day you start your company. Even if you are a startup you need to start focusing on what you are eventually going to get out of that business. The only reason you should be going into a business is to hopefully one day sell it at a substantial profit.
Secret #2 is knowing the value of your business. One of the biggest issues that entrepreneurs have is they are emotionally attached to their businesses and because of that they over value their company. We talk about how evaluations are calculated and how to go about determining your valuation without costing an arm and leg.
Secret #3 is value is more than cash flow. Earning is important but there are two parts of the valuation equation which is earnings times a multiple. The multiple is going to be determined based on how risky a company is in the eyes of the acquirer. The most risky the company appears to be, the lower the multiple, therefore the company is not worth as much. The less risky it is, the higher the multiple. This chapter focuses on how to increase the multiple.
Secret #4 is how to make yourself expendable and it talks about how to remove yourself from the operations of the business. You need to build a business that can stand on its own and we talk about how to do that.
We then hop into the monetizing section of the book and the first secret there is selling is your best exit option. If you are looking for the best financial reward, the best way you can go about doing that is by selling to a third party. We talk about how complicated that process can be but we also try to explain it so that there’s no curve balls if and when you do decide to go through that process.
The next secret in that section is if you can’t or won’t sell, consider an internal transfer. An internal transfer would be possibly selling to your family members, your key employee or your management team. Unfortunately, if you decide to go that path, you are not going to get the same financial payday. We are going to tell you how to go about doing that in the most efficient manner possible.
The next secret is to never sell your business yourself. In our experience a good investment banker is worth their weight in gold. They are typically able to get you significantly more money than what their commission cost you. What we do in this section is we talk about how complicated the process can be, how you can screw it up if you try to do it alone and we map out exactly how investment bankers get paid. There is more to a good deal than a sale price. This chapter is all about what are the other terms of the deal that you need to pay close attention to.
The last section of the book is preserving value. The first secret there is having a financial adviser create your personal financial plan. What we focus on is to do it now, don’t wait until after the sale. The next secret is plan for the unexpected and make sure you are covered if anything happens. The secret after that is to not bet your retirement on starting another successful business. We talk about ways to protect you from starting another business, losing all your money and then having to go and find a job because that puts you in a pretty awful situation.
The last secret is to find something to fill the void after your liquidity event. Identify what it is that you’re really passionate about prior to selling your business and pursue those passions after.
There is a term that I refer to that kind of summarizes the purpose of the book and that term is irreversible financial mistake.
“Once you sell your business you can’t give the money back and start growing it again, it’s a done deal; it’s time for you to move on.”
I own a wealth management firm called Strategic Wealth Partners based out of Cleveland Ohio. Our focus is on working with entrepreneurs and taking care of their wealth management needs.
I am married and have three kids who are seven, almost five and almost three.
The majority of my clients are entrepreneurs and entrepreneurs tend to have very unique wealth management situations. Entrepreneurs need to focus on building and growing both their liquid investments but also their illiquid wealth, growing that is just as important, if not more. What we found is on average about 80% of entrepreneurs net worth is tied up in his or her illiquid business. And additionally most entrepreneurs are only going to sale that business one time and that is going to be the most significant financial event of their life. We really wanted to put together a book that looked at both sides of the wealth management equation.
The E-Myth by Michael Gerber
Buy Walk Away Wealthy by Mark Tepper on Amazon today
Visit SWPconnect.com to email, call, or learn more about Mark
Follow Mark Tepper on Twitter
Download the full transcript here
Listen on iTunes, Stitcher , and SoundCloud
Related books: Final Act of Ownership by Jerry Baltus | From Idea To Exit by Jeff Weber | Sell Your Business For An Outrageous Price by Kevin Short
Relevant advice and tips: 7 Important Things You Need To Know When Selling Your Business
What did you like and not like about this episode? Fill out this one minute survey here.
The post A Preview of Walk Away Wealthy with Mark Tepper appeared first on The Entrepreneurs Library.
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