Protecting Your Best Asset

If you are planning your exit from the business, what is the best asset that you have to sell? Unless you have patented product, exclusive rights, or long-term customer contracts, you answer was likely “Our people.” Even if you have strategic differentiation like the ones above, “our people” was still likely a top-three answer. Proponents of Human Resource Accounting correctly point out that few businesses have a bigger investment. Hiring, training and developing talent is at the center of most successful organizations. But people aren’t chattels. How can someone rationally consider paying top dollar for your successful business when its best asset might disappear the ... Read more

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Exit Timing and the Global Economy

How much will your exit timing be affected by the global economy? Most small businesses serve local markets. Their owners, if they have thought about it, plan to sell to a local individual. If the local market is healthy, why worry about the rest of the world? A few weeks ago I attended a presentation by  Austan Goolsbee, former Chairman of President Obama’s Council of Economic Advisors and the youngest member of his cabinet. Dr. Goolsbee was also a college champion debater (he beat Ted Cruz in the national finals) and a member of an improv troupe. That makes him an anomaly in the “dismal science;” ... Read more

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Business Buyers: The "Buy Now, Pay Later" Generation

If you are preparing to sell your business, your buyers will likely be members of the “buy now, pay later” generation. Generation X is the first demographic group to be raised in a culture that put little emphasis on savings. Diner’s Club was introduced as the first “charge card” in 1960. By the end of that decade competition from member cards (American Express and Carte Blanche) and bank-owned revolving finance cards (MasterCard and Visa) began placing millions of cards in consumers’ hands. In a competitive credit environment, advertising for the revolving charge cards was directed to the pleasures of paying for something after you already enjoyed the ... Read more

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Is Your Business Built on Individual Heroics?

Great employees are a wonderful gift, but individual heroics aren’t healthy for your business. Someday, you will start thinking about leaving the business. Perhaps you already do. When you begin planning for your transition, what will your company systems sound like when you describe them to a critical buyer? “Yes, we have a process for that. It hasn’t been updated, but Martha knows it like the back of her hand.” “We really don’t have anyone cross-trained on that machine. Bucky likes to work alone, but it’s okay because he hasn’t taken a vacation in three years.” “We always use Andy on that route. There are lots of traffic ... Read more

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Good Customers Can Be Bad

When can good customers be bad? What could be wrong with a customer who buys a lot, pays promptly, and never has a service problem? They might be buying too much. No matter how strong or comfortable a sales relationship is, it could end. You may be confident that the customer is yours for life, but therein lies the problem. Someone who buys the business doesn’t have the same level of confidence that the customer will be around for a whole new ownership lifetime. Many mid-market companies rode one horse to success. There were bringing in a few million dollars in revenue when the landed “the big one.” ... Read more

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The Immortal Business Goes on Forever

Do you run an immortal business? I hope so. If you answered “no,” or even hesitated to be sure of your response, then you don’t think of your business as immortal. So when do you plan to shut it down? Most owners react viscerally to that question. They’ve invested too much time and too much sweat to watch their companies become a memory. They care too much about employees and customers to entertain the idea of  abandoning them. For many, the business is a part of them. Shutting it down would be like having a piece of you die. Ironically, we play mental gymnastics in our ... Read more

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Selling Your Business: Money isn't Everything

When I was a kid my mother said “Money isn’t everything” in response to every envious glance at another kid’s stuff. As I became successful enough to afford things for my children, I reversed the meaning. “Money isn’t everything” became my reminder that their possessions didn’t make them better or happier than others. The same holds true for companies. An entrepreneur who is struggling to generate sufficient working capital is an unlikely prospect for a lender, let alone an investor. I regularly receive approaches from business owners who have a great ideas, but have run out of capital without generating cash flow.  They usually have ... Read more

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Selling to Employees: Is Your Exit Strategy Right in Front of You?

When I interview a prospective client for exit planning assistance, we usually explore selling to employees. The first reaction is always “That won’t work. They don’t have any money.” If you have a company with reasonable cash flow, a talented management team and sufficient time, selling to employees is not only a realistic option; it may be the best way to get value from your business. I’ll define those parameters for you in a minute. If you haven’t read my eBook Beating the Boomer Bust, follow the link for the free download. My research shows that the hard numbers will inevitably translate into a hard market. ... Read more

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What's in YOUR Nondisclosure Agreement?

A Nondisclosure Agreement (NDA) has become one of the basic standard documents in every company’s wallet. Between the rising swell of Baby Boomer owners entertaining exit planning, and greater caution surrounding the legal issues of strategic partnering, an NDA is now the standard next step following many initial exploratory conversations. What should you protect in an NDA? (Note: I am not an attorney, and I don’t create Nondisclosure Agreements for clients.) First, there is the question of who is covered by the agreement. Most allow for advisors to each party to see the agreement. That can encompass accountants, attorneys, consultants, bankers and employees. I think employees present the ... Read more

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What the Heck is Exit Planning?

The wave of Baby Boomer retirements is beginning. I’ve been writing and speaking about exit planning nationally for the last ten years, (you can download my free eBook on the subject here), but the inevitability of the demographics is gaining momentum. Today, Boomers in their late 60s are starting to sell the businesses they’ve built over the last 30 years or so. They are just the tip of the iceberg. Millions more are steadily approaching their career finish lines at a rate of hundreds every day. Exit Planning is a new discipline, developed to meet a massive market need. Unfortunately, like any new service offering, ... Read more

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