John Dini Archives - Page 2 of 11

Decisions Made from Fear

August 25, 2025 by John F. Dini

“I’m taking the logos off my trucks. It just makes them a target for personal injury lawyers.”

“I don’t want to put our newest product innovations on our website. The competitors just copy them.”

“We’re creating a human resources LLC so that employees are separated from the rest of our business. That way we’re safer from spurious claims.”

“We pay all of our employees to bring their vehicles back to the yard every night. We don’t want to be responsible for what they do on their own time.”

“We were thinking of opening a new location, but the news says the economy might dip.”

“I thought about hiring another salesperson, but I can’t be sure they’ll pay for themselves.”

“Our margins are shrinking, but a price hike may cost us customers.”  

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When Fear Dictates Decisions

I can’t. We won’t. I shouldn’t.

Sound familiar? These thoughts creep in as your business grows. You’ve overcome a lot already—taking that first leap, pushing through uncertainty, making tough calls when the stakes were high. But now, you have something to lose. The fear of getting it wrong can paralyze progress.

There’s a well-known quote from Elon Musk. When asked, “What words of encouragement would you give to an entrepreneur?” he answered, “If you need words of encouragement, don’t become an entrepreneur.”

Starting a business meant stepping into the unknown. You did it once—and maybe you’ve forgotten how much courage that took.

There’s a saying worth remembering:

“We know about half of what we need to know. Another 25% is stuff we know we don’t know. The last 25% is stuff we don’t know that we don’t know.”

It’s that last 25% that causes the most anxiety. The unknowns we haven’t even considered yet. They can stop us in our tracks.

So we do what feels safest: nothing. Better to protect what we have than risk the comfort of the present for the uncertainty of the future.

But here’s the truth: staying still isn’t safe. It’s just quietly risky.

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Exit Planning: A Different Kind of Fear

Thinking about life after your business? You’re not alone if that brings up more questions than answers:

• What will I do with myself?
• Who am I without this business?
• Will I still feel needed or fulfilled?

That’s why most business owners don’t have an exit plan. It’s not urgent, it’s not easy—and frankly, it’s intimidating.

But the transition will come. The sooner you face it, the more options you’ll have—and the better prepared you’ll be.

This is where an experienced advisor is invaluable. A good advisor doesn’t just help you plan for exit—they help you clarify your goals, address the unknowns, and convert fear into forward motion.

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Turn Unknowns Into Strategy

Entrepreneurs are natural goal-setters. You’re wired to chase progress. With the right guidance, the fears that hold you back become challenges you can tackle.

Working with an advisor brings structure to uncertainty. It moves you from:

• “I don’t know where to start” to “Here’s the next step.”
• “What if I make the wrong decision?” to “I’m making informed choices.”

You’ve already taken one of the boldest risks in starting your business. Don’t let fear dictate what comes next.

Partner with someone who knows the road ahead—and can help you navigate it.

John F. Dini develops transition and succession strategies that allow business owners to exit their companies on their own schedule, with the proceeds they seek and complete control over the process. He takes a coaching approach to client engagements, focusing on helping owners of companies with $1M to $250M in revenue achieve both their desired lifestyles and legacies.

Missed Opportunities

July 7, 2025 by John F. Dini

Your business is doing pretty well. You’re adding to your personal savings every month and are more focused on tax strategies than making payroll. But how do you know if you’re leaving opportunities on the table?

Some indicators are obvious. Others, less so.

One of the easiest to spot is stagnation. Businesses are like living organisms—they either grow or they shrink. Flat or declining sales are a warning sign. Stagnation limits opportunities for your top employees and makes it easier for competitors to lure away your customers with newer, more innovative solutions.

How does your growth rate compare to your industry or market? If others are growing and you’re not, standing still is really falling behind.

Customer Feedback

What are your customers saying? Your salespeople are often the first to hear feedback from the field. If you’re hearing things like, “Everyone complains about our new auto attendant,” the right response isn’t “Everyone is doing it—they’ll get used to it.” Instead, track call volumes and see if it’s driving customers away.

When was the last time you ran a Net Promoter Score (NPS) survey? The NPS question is simple but telling: “Would you recommend our product or service to another business?” On a ten-point scale, anything below a seven indicates a lack of enthusiasm. Sevens and eights are neutral at best. Only nines and tens are true fans—and every business should aim for a strong percentage of those.

Are you paying attention to buying trends from your top 20% of customers? The Pareto principle holds true in most businesses—that 20% often accounts for the majority of your revenue. Is their total spend declining? Have some of your best customers stopped buying altogether? Has anyone asked why?

Technology: Internal and External

A while back, we wrote about the cost of new technology relative to the value of the people using it. Are you taking advantage of the latest tools? How are you using AI? ChatGPT, Claude, DeepSeek, and Perplexity (along with a growing list of others) can do more than draft emails. They’re a gateway to broader AI solutions. Try asking them about emerging innovations in your industry. How are companies streamlining office work? What AI tools exist for logistics, material handling, workflows, or scheduling?

Are you making the most of trade shows and conferences? Are you there to look for new ideas, or just to catch up with old friends? Are you attending your customers’ industry events—not to sell, but to see what new products and systems they’re adopting? Understanding their innovations helps you stay relevant as a supplier or partner.

What does your innovation pipeline look like? Are you consistently working on improving your products, customer experience, and internal operations?

Human Resources

How challenging is it to hire new talent? Are people leaving for better opportunities? Are you seeing fewer responses to job postings? Are new hire salary demands creating tension with your existing pay structure? Finding good people is hard—but it’s even harder if you aren’t competitive in the talent marketplace.

You may not have immediate answers to all these questions—but asking them is the first step. They’ll help you identify gaps, spark new ideas, and strengthen your business for the future.

Remember, you don’t have to solve all of this alone. The right advisor helps you ask the right questions, find the right answers, and act on them. Fresh perspective and outside expertise often reveal opportunities you didn’t know you were missing.

Goals and Resolutions

June 17, 2025 by John F. Dini

There is a difference between goals and resolutions.

Businesses set goals. These can be budgetary, operational, recruiting, sales or profit oriented. Individuals make resolutions.

Business Goals

Goals are focused on a particular outcome, and so should be specific. It’s worth the time to get into the details. If you intend to increase the company’s cash flow, how will that be done? If it’s by boosting sales, what has to change to make that happen? You could add a new product line or enter additional territory. It may require hiring and training new salespeople.

You can also increase the cash flow by reducing your Cost of Goods. Is there a purchasing analysis software that would identify ideal order quantities? Should there be new competitive bidding between vendors? Perhaps the company has grown to the point where it needs to recruit full-time purchasing personnel.

Cash flow can also be improved by production efficiency to reduce expenses, early payment incentives for customers, or by financing receivables.

Once the specifics are determined, the rest of the SMART equation comes into play. How will you Measure success? Who is Accountable for making it happen (and does their compensation reflect success?) What Resources should be allocated? Any effort requires personnel or investment, and frequently both.

Finally, what is the Time Frame? Is it the whole budget cycle? What interim measurements are needed to track progress? Are there contingency plans if the goal falls behind schedule?

Personal Resolutions

Individuals make resolutions. They are promises (even if only to yourself) to commit to a new behavior. By definition, they are often tied to a broader aspiration.

If that aspiration is an exit strategy, your resolution may begin with the time frame. “I will leave Acme Widgets on December 31, 2029.” It’s still worthwhile to think through the SMART process, but the focus would be on your individual behavior.

Specific. By 12/31/29 I will be prepared for an active second act dividing my time between clearly identified community service, our grandchildren, and traveling both domestically and overseas.

Measurable. To support my lifestyle, I will transfer my company to new owners for a price of not less than $6,000,000, which will be added to the $2,000,000 in savings I accumulate in the next five years.

Accountable. The only person responsible for this is me. I will review these resolutions every month, on the last day of the month, to consider whether I have moved forward on my goal.

Resourced. Maximizing the value of my business and leaving without regret requires that I have no day-to-day operational duties. I will create a delegation plan defining who will assume each aspect of my job(s).

Time Frame. Well, that’s where we started. Now you can sketch out the interim measurements.

Goals and Resolutions

In any business managed by the owner, both goals and resolutions are necessary to move forward. No business is likely to succeed in its goals if the owner’s objectives are in conflict with them. No owner can expect to succeed in his resolutions if the business goals don’t match.

Remember, sooner or later every owner exits his or her business. It typically goes much better if there is a plan. An exit plan is merely a strategy with an end date. Having that date defined helps a lot of other things fall into place.

What is “Holistic” Planning?

April 4, 2025 by John F. Dini

Financial planners use the term “holistic planning” frequently. It’s meant to indicate that they consider the client’s short- and long-term life goals and the future they visualize. According to Fidelity Investments Holistic Wealth Planning is continuous and considers two dozen aspects of client wealth objectives.

The Valuation Reality Gap

Only one of those aspects is ownership of a business. This raises the question “If a typical business owner has 50% of their net worth in a business, is it really just 1/24 of their planning?”

Of course not. I’m exaggerating for effect, but there is an uncomfortable truth about financial planning for business owners.

When we ask financial planners about their assumptions regarding business value, the great majority (almost all) reply that they use a value provided to them by the client. Unfortunately, most business advisors estimate that the average owner’s impression of their company’s value is at least 35% too high.

An owner is planning on a $3,000,000 nest egg in retirement. He estimates that $1,500,000 will come from the net proceeds (after paying capital gains tax) of selling his business for $2,000,000.

But 90% of businesses that size are sold on an asset basis. That could bump the tax rate from under 25% to something closer to 40%. If he has overvalued by the “average” of 35%, a $1,300,000 sale would net $780,000.

Impact on Retirement Goals

Now his nest egg is $720,000 short of goal. Retiring on $2.3 million isn’t exactly poverty, but it would require substantial changes to the anticipated goals.

That is why financial planning for business owners can’t be holistic if it doesn’t include the value of their business. That value should be confirmed by a third party.

Exit planning is the critical final component of a business owner’s wealth strategy. A business requires different tax strategies, risk management and timing assumptions from simply calculating around a pension. Even an appraised value can range widely between different transition strategies.

Holistic Planning in Exit Considerations

How is estate planning affected by the disposal of the business? Does it employ one or more children? Just as importantly, does it not employ one or more children? How can the business value in the estate be balanced between fair and equal? In the most extreme case, will the business be passed down as part of the estate? In that case its value may not be included as part of the owner’s wealth at all.

Will the business be sold to a third party, or as part of a management buyout or ESOP? The proceeds may be realized all at once, or over a long period of time. Is there value for any real estate involved? (A new owner may or may not wish to purchase the real property.)

Holistic planning for a business owner is far more complex than for an employed individual. It’s almost like having a second client in the room. If the planning doesn’t consider the myriad of complexities surrounding monetization of an illiquid asset (the company), it may not be considering the biggest single factor in the client’s financial future.

Cash Flow Normalization

March 3, 2025February 20, 2025 by John F. Dini

Cash flow normalization is done with the intention of identifying Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) or Seller’s Discretionary Earnings (SDE). These differing measures are not interchangeable, but are used by different classes of buyers for different categories of acquisition.

Free cash flow is an important measure when calculating the value and price for any business. It is the amount theoretically available for servicing acquisition debt, working capital, return on investment for any cash outlay in the acquisition, and future expansion.

Cash Flow Measures

EBITDA establishes free cash flow as a measurement for most mid-market businesses. It evens out the differences in earnings caused by various tax jurisdictions. In the United States, there is federal income tax at the corporate level, but many states have additional income taxes, and in some cases, even smaller jurisdictions like cities may have their own income tax. These obviously impact the profitability of a company and could distort a buyer’s impression of its profitability.
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EBITDA calculations do not include the owner’s earnings, since the companies being examined are more likely to be acquired by investors who would replace the owner with a management executive.

SDE is the measurement used to illustrate the sum total of financial benefits available to the owner-operator of a business. It assumes that the owner is running the company on a day-to-day basis. SDE encompasses not only salary, bonuses, and distributions, but includes insurance and other benefits such as a company-paid vehicle.

A simple way to put it is that EBITDA is the cash flow available for a return on investment. SDE is the cash flow available for a return on the owner’s labor.

Making Adjustments

In the SDE calculations, there are two places where there is often an adjustment of expenses to market. The first is for a family member employed in the business or partners who intend to leave simultaneously with the principal owner.

In many instances, family members are paid according to their needs or the needs of the business instead of at a market rate for the position. With family members who are “underpaid” adjusting to the market rate will have the effect of reducing the cash flow available in the business. This reflects the fact that the family member or partner will have to be replaced by someone who is unlikely to work for a below-market salary.

The opposite is of course true for family members or partners who are overpaid. Reducing their compensation to a fair market rate will add to the discretionary cash flow of the business.

A second area of adjustment is when the owner of the company also owns the real estate that the company operates in. Again, the rents paid on the real estate often reflect the owner’s objectives more than they do the practical reality of the local real estate market.
A company that is underpaying rent is having its bottom line shored up by the reduced income to the real estate entity.

Overpayment of rent requires the owner to make a decision. If they expect the same rent from a new tenant, the profitability of the business as presented to a prospective buyer will be lower. Considering that most transactions involve a multiple of cash flows, you can usually point out to the owner that trying to maintain a higher rent is not in their interest as the seller of the company. Adjusting the rent to a market rate increases the cash flow of the company and presumably the basis for an evaluation multiple.

Which Cash Flow is “Right?

The decision of whether to use EBITDA or SDE when calculating cash flow is dependent largely on the size of the client’s business. If the company has cash flow in excess of $1 million annually or is large enough to be a likely target for professional buyers, EBITDA is the appropriate measurement for cash flow.

If the company is going to be purchased by family members, employees, or another entrepreneur and has a cash flow of less than $700,000, SDE is almost always a more appropriate measurement.

Which cash flow is used is a situational decision and may change if different classes of buyers are being engaged.