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Not All Strategies Are Created Equal
Succession planning, Exit Planning, and business planning may seem interchangeable in most people’s eyes. However, each type of planning plays a very different role in the process of designing, and then implementing, a strategy for leaving your business and planning for the future. You can’t use one strategy without the others when it comes to running, growing, operating, and eventually leaving a business.
Indecision: The WRONG Decision
“I haven’t decided what I ultimately want to do with my business, or when I want to exit, or how much money I’ll need, or whom to sell to, so how can I plan my exit? Besides, I don’t want to exit right now.” If you’ve said this, or thought it, you are not alone. Many business owners are either overwhelmed with the thought of exiting or are so busy fighting daily business fires that they think they cannot plan their exits.
Know that in your indecision, you are making a decision. As Winston Churchill observed, “I never worry about action, but only about inaction.” When you take a passive attitude toward the irrefutable fact that you will – one way or another – leave your business, you are deciding to settle for a least profitable exit for yourself and for your family.
Protecting Your Company's Value In A Recession
All owners should be, at a minimum, protecting the existing value of their companies. This issue is devoted to explaining a few of the ways you can do exactly that by concentrating on specific items taken from a fiscal year agenda that we use with many business owners. (Meeting annually with your advisors before your fiscal year-end is a great way for all of you to keep your planning on track.) If you would like a copy of the entire outline, please contact us.
How Does Exit Planning Protect Business Value?
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.
Keeping the Fire in Your Belly as the Economy Cools
Faced with a barrage of bad economic news, business owners wonder first how they will survive in what promises to be a tough environment and then, if they’ll be able to leave their companies when they planned. Before we can help owners to answer that question, let’s look at their three options: (1) hunker down until the market recovers; (2) actively work to build business value; or (3) sell now for whatever you can get.
Before we look at the pros and cons of each option, remember that there is no “right” or “one-size-fits-all” answer. You and your advisors need to sit down and look at your particular circumstances before choosing the path that is right for you.
While Managing Short-Term Issues Don't Forget Your Endgame!
In this issue, we discuss the four areas where business owners who want to both survive in today's economic climate and emerge from it poised for growth (or sale) can focus their energies.
These areas are:
- Preserving and Protecting Value
- Identifying Value and Cash Flow
- Creating Revenue
- Creating Value
Tough Times Crown Cash Flow As King
Today, we discuss an area where business owners who want to both survive in today's economic climate and emerge from it poised for growth (or sale) can focus their energies: quantifying cash flow.
As you consider ways to meet today’s economic challenges, a vital first step is to focus on company cash flow.
Increasing Revenues During Tough Times
Why should you worry about creating value when you’ve got more pressing fires to fight? Well, if you hope to sell or transfer your company when tough times end, your company must be valuable enough to attract a buyer and to finance a comfortable life after the sale.
We are not advising you to ignore the various fires that threaten your business today. We are suggesting
that you fight those fires with your endgame in mind.
In Tough Times, What Are Your Options?
In this issue we discuss how owners of mid-sized business are making decisions about their futures in a quickly changing economy.
As exit planners, we consistently urge business owners to take the initiative when planning their exits. Today, we apply that perspective to encourage business owners to go beyond panicked headlines and take a clear-eyed look at their options in light of their: (1) exit objectives, (2) companies and (3) current M&A conditions in their marketplaces before they decide if their exits must be moved forward or delayed.
Will Your Future Look Like Today?
An economic downturn can force many owners to postpone their plans to exit their companies. We look at the several actions owners could take to respond to that delay:
- Ride out the storm doing one’s best to protect value.
- Use the time to build business value.
- Avoid the delay altogether by selling as soon as possible for whatever one could get.
Take Time to Work on Value Drivers
In a strong Merger & Acquisition (M&A) market, buyers compare the relative strength of your company’s value drivers to those of your competitors. In today’s M&A market, however, buyers want companies that possess all of the characteristics of a well-run business. Additionally, tighter credit forces buyers to use more of their own capital to buy businesses so they look for acquisitions that carry minimal business risk. Companies with strong value drivers in place carry less risk. Companies lacking one or more value driver(s) simply will not attract interested buyers. This harsh reality means most owners have a lot of work ahead.
Want to Build Business Value In A Recession?
In an economy when many of us are tempted to bury our heads until the shooting is over, smart business owners are realizing that this may be the perfect time to acquire smaller, less adaptable, less capitalized or less well managed competitors.
As the sellers of goods or services, owners sometimes forget that they, too, can be buyers. And in this
buyer's market, you can expect to find not only lower purchase prices, but also much more attractive sellerbased
financing and earn-outs.
Economic Downturn Gives Owners Time to Prepare for the Recovery of the M&A Market
Economic downturns give all business owners, quite literally, pause: pause in growth, pause in hiring, pause to reconsider exactly where our companies are heading — or need to head — if we are to meet our owner-based goals. There are many benefits of using the time afforded by an economic downturn to create and enhance the
value drivers in your company.
The fundamental questions owners must ask are:
- Am I using this precious commodity — time — to prepare my company and myself for sale on the
day that the economy revives?
- Or, on that day, will I be where I am today: wishing to sell, but buried in the everyday details of my
business and doing little to chart a course toward my ultimate goal?