Help - I'm Stuck in My Business

Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning

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Becoming

Big Picture Advisors llc
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www.bigpictureadvisors.com

If you don’t know where you’re going
You could end up someplace else.

Yogi Berra
American Philosopher and Hall of Fame baseball player

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Story of Pat – Business Owner
• Started Business 20 years ago
• No succession or exit plan in place
• Net worth is over $2mm
• Has less than $250K saved for retirement
• Pat has lost the drive and is essentially coasting
• Business is mature and beginning to decline
• Pat is consumed with running the business.
• J. would love to win the lottery. Today!
• Pat is STUCK in the Business

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Agenda Topics
• Why are you in Business?
• What is an Exit Strategy? Why is it important?
• What stage of your Business Life Cycle are you at?
• What is a Value Gap?
• Why it’s critical to build a strong Business Core.
• Business Valuations – It’s not straightforward
• Exit Options – Internal, External
• Assemble the right team of advisors
• Take Control - Now

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How we get Stuck in our Business
• No vision or plan for the business
• Having too much of our wealth tied up in the
business
• Using the business as a personal ‘piggy bank’
• Our personal identity is linked to our business
• We have not developed other interests and
hobbies.

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How we get Stuck in our Business
• Tiredness, lack of passion
• Wearing too many hats
• Paralyzed from too much stress
• External market dynamics
• “Firefighter” mentality – Always putting out fires
• Lack of Vision
• Lack of strategic planning
• Being scared to make changes (getting too
comfortable)

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Get Uncomfortable – Get Unstuck
• Develop a Golden Circle – Start with Why
• Create an exit or transition plan
• Implement with a passion
• ‘Break the Tape’ – Accelerate through your
exit.

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Start with Why
Do you still know why you are in Business?
• Why are you in business?
• Why did you start or buy the business?
• What are your goals?
• What makes your happy & satisfied?
• Why do your customers do business
with you?
• Why would anyone want to buy your
business?
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Start with Why
Do you still know why you are in Business?

• Lifestyle – Can’t work for “the man”?
• Pursue a dream/passion?
• No one will hire me?
• Create wealth for Retirement?
• Purely an investment?

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Don’t get Stuck in a maze without a growth and exit plan

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Planning Your Exit

Did you have a plan when you started
your business or career?
Do you have a plan to exit your
business and protect your wealth ?

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What is at stake ?
Your hard-earned wealth can be diminished
by:
Changes to your business
Changes to the global economy
Lack of a Successor
Income & Estate Taxes
Deal Structuring & Advisory Fees

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The average business owner spends
80 hours preparing a business plan
and only 6 hours preparing for their
exit.

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The longer you wait to develop an exit, the greater the risk
and possibility that you will not succeed in protecting and
extracting the wealth you created.

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2007 ROCG Survey of 502 business owners in U.S. and Canada

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Sales of businesses occur in cycles

Provided by Rob Slee

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• How many businesses exist in the United States
today?
500 – 999 Em’ees 8,326

100 – 499 Em’ees 82,334
20 – 99 Em’ees
508,249

1 – 19 Em’ees
4,320,290

Non-Employee Firms:
17,646,062
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© 2010, Pinnacle Equity Solutions


How are you going to Exit?
• Sell the business to outside buyer
• Sell the business to management
• Gift the business to family member
• Liquidate the assets
• Take it with you to the grave
• Win the lottery and just walk away from it all.

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What is an Exit Strategy?
The written goals for the succession of a business’
ownership and control, derived from a well thought
out and properly timed plan that considers all
factors, all interested parties, and the personal
goals of the owners in a manner and a time period
that is accommodative to the business, its
shareholders, and potential buyers.

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It Starts with Creating a Plan and a Process
1. Set Exit Goals

2. Financial Readiness Mental Readiness

Business Readiness

3. Identify Type of Exiting Owner You Most Resemble

4. Learn & Choose Your Exit Option

5. Understand the Value of the Option You Choose

6. Execute Your Exit Strategy – Protect & Extract Your Wealth
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© 2010, Pinnacle Equity Solutions www.pinnacleequitysolutions.com


Step 1: Setting Exit Goals

The “Why” questions

What do I want to achieve with my
business exit ?

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Step #2: Mental Readiness

When you begin to think about exiting
your business, you need to consider
whether you view your business as a
job or as an investment

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Step #2: Mental Readiness
• Are you addicted to your business?
• Is your business a job or an investment?
• How involved are you with the day-to-day
running of the business?
• Do you know what you would do if you weren’t
in business?
• Are you ready to let go and let someone guide
you through the transition?
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Step #2: Financial Readiness
• Can you afford the Exit Option that I most
want ?
• What % of your total net worth is tied up in
your business?

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“84% of business owners stated that the
proceeds from the sale of their business were
important to their retirement plans.”


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What is a Value Gap?

The difference between what you need to fund your
post exit/transition lifestyle and your current savings.

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What is a Value Gap?
Asset Base
Required

Value
Gap
Current Level of
Savings

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What are your assets?
Liquid
• Retirement Savings (IRA’s, 401K’s, Simple, SEP)
• Cash
• Non Retirement Savings
• Insurance
Non-Liquid
• Real Estate (Primary & Investment R.E.)
• BUSINESS VALUE
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How will you achieve diversification ?
Typical Owner Desired Financial
Allocation Allocation

Beach House /
Boat

Fixed Income
Private
Private Company
Company Equities 20%
90% Fixed Income

Equities

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How to Close the Value Gap?

• Save More
• Reduce Post Exit/Transition Life Style/Needs
• Grow Company Valuation (business growth)
• Buy Winning Lottery Ticket
• Hope your Children Create the next Facebook or
Google.

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Step #2: Business Readiness
• How prepared is your business for an exit?
• How healthy is your business?
• What part of the business life cycle are you at?
• Do you know how to grow your business to
increase its valuation?
• Is your management/personnel motivated or
incentivised to stay?

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Step #2: Identify if your business is ready

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Why Business Growth is Critical to
getting to a successful exit.
• Creates a strong Business Core
• Creates leverage for a stronger exit/transition
• Creates renewed passion and focus for the business
• Creates basis for long term earnings and cash flow
growth
• Creates positive momentum for company and brand

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What is your Business CORE?
A Business has 3 components
A. Skeleton (Business
Structure/Operations)
B. Muscle (Products/Services/Processes)
C. Skin (Brand Equity, Public Presence)

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What is your Business CORE?

CORE =
Comprehensive
Operational
Efficiencies &
Resources
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Step #3: Identify What type of Owner you
most resemble
•The “Get me out right away for the most money” exiting owner,

•The “Well-Off But Choose to Keep Working” exiting owner,

•The “Stick Around and Grow the Business” exiting owner, and

•The “Rich and Ready to Leave” exiting owner (can use any option).

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most resemble
•The “Get me out right away for the most money” exiting owner,

•The “Well-Off But Choose to Keep Working” exiting owner,

•The “Stick Around and Grow the Business” exiting owner, and

•The “Rich and Ready to Leave” exiting owner (can use any option).

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most resemble

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Step #4: Five Primary Exit Options

1. Sale of the Business
2. Private Equity Group Recapitalizations
3. Employee Stock Ownership Plans (ESOPs)
4. Management Buyouts
5. Gifting Programs/Family Succession

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Exit Options and the Exit Quadrant Chart

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Owner Readiness and the Exit Quadrant Chart

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Step #5: Understand the Value of Your
Exit Option
Business Valuations
• Range of Values depending on exit options
• Different valuation methods can apply
• Not all value can be realized at time of exit
• Valuations can change quickly and dramatically
based on market dynamics

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Range of Values
Sale to an Outside Synergy Value
Buyer

Recapitalization Investment Value

Management Buyout Investment Value
(structured)

Employee Stock
Ownership Plans Fair Market Value

Gifting Fair Market Value

Liquidations Asset Value
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Step #6: Execute/Implement Your Plan

• Assembly an advisory team
• Share your plan with all stakeholders
• Continuously revisit your plan as
business, financial and mental readiness
conditions change
• Don’t procastinate – Don’t let your plan
collect dust on a shelf - Take Control Now.
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Step #6: Execute/Implement Your Plan

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A Typical Exit Advisory Team
Business
Owner
M&A Legal
Advisor Advisor
Exit
Strategies
Deal Structuring / M&A Legal
Advisor
Process Agreements, Estate
Planning

Insurance Growth
Advisor Consultant
C.P.A.

Estate Planning, Wealth Business Growth Taxes, Financi
Protection als
Business CORE
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“It’s never too early to begin
this type of planning, but it may
certainly one day be too late.”

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Summary
Get Unstuck - Take Control Now
• Understand your “Why” factors
• Determine your mental, financial and business
readiness
• Create a strategic plan of action
• “Grow” to Exit and beyond
• Assemble the resources/team that will assist you in
executing and reaching your objectives

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Learn More
Download the White Paper

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Thank you . . .
. . for attending.
If you would like any further information about
our Business Growth & Exit Strategies solutions
for your personal or business needs, contact us
for a free initial consultations.
We will be happy to meet with you.

Big Picture Advisors - (843) 216-2493
www.BigPictureAdvisors.com

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Help - I'm Stuck in My Business

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