Sooner or later every business owner must address the question, “How will I successfully sell my business and move on with my life?”
Many of the owners I have talked to seem to be ‘marching in place’ acknowledging that they need to plan for their future but are in denial about the need to plan ahead. They seem to believe that the process is simple and the time to ‘make it happen’ will be short. Actually, that’s not the case for most of them.
Every Business Owner needs to develop a transition strategy with plenty of time to execute it 'on their time table' to withdraw their equity, assure the continued success of their business and, prepare, personally, for the 'next phase' of their life.
The transition strategy must address three key areas of concern:
Financial
Personal
Company
They often have addressed the financial aspect but not the other two.
Here are five key questions for the Business Owner to answer that become the building blocks of each Transition Strategy:
1) How will I harvest my investment?
2) Who will purchase my business?
Will I sell to an external buyer?
Will I sell internally - to my family, partners, key staff?
3) What is the legacy I want to leave?
4) What do I want to do in the next phase of my life?
5) What is my timetable?
Developing and implementing a Transition Strategy can be a long term process that begins with working out the answer to these questions, planning the strategy and identifying the action steps to 'make it all happen.'
All these questions are inter-related. For instance, the owner must decide who the prospective buyers might be. If it will be internal buyers, the seller must determine that the buyers are prepared well in advance. The buyers must have passion, the ability to manage the business and the money to buy the business on the owner’s terms.
Several owners I've worked with expected to sell to their partners or staff only to discover that there wasn't enough time or the potential buyers didn't have the resources.
I have also worked with several owners who think they are ready to sell the business but 'get cold feet' because they aren't prepared, emotionally, to move on with their lives. They haven't chosen a next phase of their lives after they make the transition. Making the decisions feels like a dead end or like falling off a cliff. So they hold on too long and their equity diminishes.
For the transition to be successful, the owner must addresses the five questions and develop a comprehensive Transition Strategy well in advance.
My work focuses on these five questions. I begin working with the business owner, helping her or him explore their aspirations and cataloguing the key issues they need to address to plan their transition, Working with the owner, and sometimes their key professional advisors, I help the owner identify he or/his desired results and develop a transition strategy to achieve those results.
In future articles, I’ll discuss various elements of the planning process.
Showing posts with label strategic planning. Show all posts
Showing posts with label strategic planning. Show all posts
Friday, July 22, 2011
Saturday, August 14, 2010
FIVE WAYS YOUR BUSINESS OWNER'S WORLD IS CHANGING - Why you need to think about it
Do you feel the earth moving under your feet? Every business owner is experiencing change. But each of you responds in the different way. Some anticipate and adjust – experimenting with new approaches and new processes. Others ‘hunker down’ and keep doing what worked, hoping that it will work again.
But the change is often so significant that ‘fine tuning’ what you used to do may not be enough. If you are unable to ‘meet your market,’ your company’s future is in doubt. Here are five ways change is occurring – some external, some internal.
Your Customers’ Buying Patterns are Changing Some are outsourcing, often overseas, products they bought from you. Some are abandoning old products and old production methods and no longer want the items your company used to sell to them. Or their product mix has changed and they aren’t buying as much from you that they used to.
Technology is Changing Your customer wants you to provide a better or different product/service - or produce it faster or cheaper. If you don’t or can’t meet their needs, they’ll find someone who will and you’ll lose that income stream.
Communication Methods are Different Face to face contact is still important to stay in touch with your current customers to understand how their needs and buying patterns are changing. You also need to be ‘out there’ finding prospective new customers and understanding how your markets are changing. In addition, you need to get the word out via the internet and the new social media. In addition to our web site, other electronic media (face book, blogs, newsletters, etc.) are essential to help prospects learn about your company’s unique capabilities.
Your Employees’ Attitudes Are Changing They know what’s going on in the world and in your markets. If they don’t see the company changing with the times, they get scared and start protecting their interests – working slower to make each job last, being unwilling to try new ideas, Or they leave your company to find new opportunities – often with the best people going first!
You Are Changing, Too Maybe you’re ‘running out of steam;’ losing your passion for this work. Maybe your knowledge and experience don’t match the changing world. Maybe you are ‘playing not to lose,’ no longer willing to take risks; not wanting to invest money in new methods, new equipment and training for your people. Maybe you don’t want to ‘get out there’ to meet with your customers and prospects – which brings us back to the first point!
The bottom line is that you need to ‘think bold and act bold.’ What used to work may not be good enough for your company’s survival and future success.
For you, the owner, its essential that you step back from your day to day problem solving and take a long term, big picture look at the new environment your company is operating in. And you may have to set a new direction to succeed in these new times.
Or, maybe, its time to face the fact that you and your company no longer fit in this changed world. If that’s the case, its time to transition into a new phase of your life: one that fits you and matches this different world.
Making that transition, as daunting as it may seem, is better than going down with the sinking ship!
But the change is often so significant that ‘fine tuning’ what you used to do may not be enough. If you are unable to ‘meet your market,’ your company’s future is in doubt. Here are five ways change is occurring – some external, some internal.
Your Customers’ Buying Patterns are Changing Some are outsourcing, often overseas, products they bought from you. Some are abandoning old products and old production methods and no longer want the items your company used to sell to them. Or their product mix has changed and they aren’t buying as much from you that they used to.
Technology is Changing Your customer wants you to provide a better or different product/service - or produce it faster or cheaper. If you don’t or can’t meet their needs, they’ll find someone who will and you’ll lose that income stream.
Communication Methods are Different Face to face contact is still important to stay in touch with your current customers to understand how their needs and buying patterns are changing. You also need to be ‘out there’ finding prospective new customers and understanding how your markets are changing. In addition, you need to get the word out via the internet and the new social media. In addition to our web site, other electronic media (face book, blogs, newsletters, etc.) are essential to help prospects learn about your company’s unique capabilities.
Your Employees’ Attitudes Are Changing They know what’s going on in the world and in your markets. If they don’t see the company changing with the times, they get scared and start protecting their interests – working slower to make each job last, being unwilling to try new ideas, Or they leave your company to find new opportunities – often with the best people going first!
You Are Changing, Too Maybe you’re ‘running out of steam;’ losing your passion for this work. Maybe your knowledge and experience don’t match the changing world. Maybe you are ‘playing not to lose,’ no longer willing to take risks; not wanting to invest money in new methods, new equipment and training for your people. Maybe you don’t want to ‘get out there’ to meet with your customers and prospects – which brings us back to the first point!
The bottom line is that you need to ‘think bold and act bold.’ What used to work may not be good enough for your company’s survival and future success.
For you, the owner, its essential that you step back from your day to day problem solving and take a long term, big picture look at the new environment your company is operating in. And you may have to set a new direction to succeed in these new times.
Or, maybe, its time to face the fact that you and your company no longer fit in this changed world. If that’s the case, its time to transition into a new phase of your life: one that fits you and matches this different world.
Making that transition, as daunting as it may seem, is better than going down with the sinking ship!
Tuesday, February 23, 2010
RETIREMENT PLANNING FOR BUSINESS OWNERS
Next Tuesday March 2, Pete Wendel will be the featured speaker at the Niagara University Family Business monthly breakfast. His subject is "Business Owners - Are you prepared to retire?"
In this session he'll explore factors to consider in preparing yourself and your business for a successful transition into the 'Third Phase' of your life.
Successful transition is a long term process. Questions covered will include: Have you planned a meaningful life after work? Will your business continue? Will you be prepared financially?
.
There are a limited number of openings available for guests. To register go to www.niagara.edu/fbc. There is no charge.
In this session he'll explore factors to consider in preparing yourself and your business for a successful transition into the 'Third Phase' of your life.
Successful transition is a long term process. Questions covered will include: Have you planned a meaningful life after work? Will your business continue? Will you be prepared financially?
.
There are a limited number of openings available for guests. To register go to www.niagara.edu/fbc. There is no charge.
Thursday, November 5, 2009
EVALUATING YOUR POTENTIAL SUCCESSORS
A key factor in planning for your retirement (what I call your transition) is being confident that the people who will succeed you have the 'timber' (aka the ability, passion, knowledge etc.) to lead your company into the future.
Choosing and developing them is one of your challenges. It's an obligation you have to your partners, shareholders and other staff members.
If you fail, all the rest of your work in building a sustainable organization will have been wasted. You will have failed in leaving your legacy.
Many leaders and owners pick their potential successors based on erroneous assumptions about 'What it takes' to be a leader. They incorrectly assume that loyalty, longevity, good technical competence, being a family member, etc. are the best criteria to use.
That's what it takes to be a good 'Number two' - a good 'doer.' That MAY qualify then to be good managers - this is not what it takes to be a leader. There are relativly few people who can lead.
What's the difference between a good manager and a good leader? A recent article in the Wall Street Journal is a good reference.
You may have lots of good managers in your company. And you'll be lucky - or brilliant - if you have surrounded youself with several people who have leadership potential - the qualifications to lead the company after you step aside.
THE BOTTOM LINE; take a long, hard look at the people around you.
Identify those who have leadership potential and focus on grooming them. If you don't have what you need, start searching - outside your company NOW. And stop wasting your time trying to make your good managers into mediocre leaders!
Choosing and developing them is one of your challenges. It's an obligation you have to your partners, shareholders and other staff members.
If you fail, all the rest of your work in building a sustainable organization will have been wasted. You will have failed in leaving your legacy.
Many leaders and owners pick their potential successors based on erroneous assumptions about 'What it takes' to be a leader. They incorrectly assume that loyalty, longevity, good technical competence, being a family member, etc. are the best criteria to use.
That's what it takes to be a good 'Number two' - a good 'doer.' That MAY qualify then to be good managers - this is not what it takes to be a leader. There are relativly few people who can lead.
What's the difference between a good manager and a good leader? A recent article in the Wall Street Journal is a good reference.
You may have lots of good managers in your company. And you'll be lucky - or brilliant - if you have surrounded youself with several people who have leadership potential - the qualifications to lead the company after you step aside.
THE BOTTOM LINE; take a long, hard look at the people around you.
Identify those who have leadership potential and focus on grooming them. If you don't have what you need, start searching - outside your company NOW. And stop wasting your time trying to make your good managers into mediocre leaders!
Saturday, October 24, 2009
What do you owe your children?
This is question every parent has faced - especially parents who own their own business.
Do you owe them a job in the business? Do you owe them guaranteed income?
When our kids were growing up Janie, my wife and their Mom, had a phrase that became our guide: "Every pot has to set on its own bottom." In other words, our goal was teach them to be self-suffcient - to discover what their life passion was and to support them in their quest to achieve it.
In other words, the goal was to help them identify what really mattered to them and not expect them to live out some dream we may have had for them. Although I was an engineer, there was no need for them to become engineers - unless that was what they wanted to be. They didn't have to move back to Lockport, where we live - unless they wanted to. They didn't have to come back to the business - unless they wanted to. (None became engineers, none moved back home and none joined the business. That was OK for us.)
We are pleased for their personal successes - each in their own way.
Every parent needs to ask themselves what they owe their kids. This seems to be a key question for business owners when they think about their children and their business. Somehow there seems to be an unspoked assumption that the best thing for at least one of the kids is to come into the business. The business owner may see that as the step to leaving their legacy. The child may see this as a easy step to take without any deep thought about what really matters to them, what they want to accomplish with their lives. It may or may not be the best move - for the owner, for the child (who is now an adult) or the business.
Which brings me to the question "What do you owe your children?"
First, let me offer some ideas about what you don't owe them. You don't owe them a job. You don't own them a steady income. Your don't need to decide their life purpose.
You do owe them love and support while they are educating themselves - only partial if that's all you can afford. You owe them nuturing while they are growing up. You owe them a lasting set of values that will enable them to live a successful, caring life that enhances our culture.
Then you owe them the opportunity to develop self discipline and self suffciency. You owe them respect for who they are - even though it may not be what you had hoped of them.
Last, but not least, you owe them the freedom to follow their own path and to grow into supportive, caring individuals who offer the same to those around them.
After they have sorted this all out and developed clarity about their self identity, if they decide they want to join your business, the odds are that you'll have a great staff member with potential to be a future leader!
Do you owe them a job in the business? Do you owe them guaranteed income?
When our kids were growing up Janie, my wife and their Mom, had a phrase that became our guide: "Every pot has to set on its own bottom." In other words, our goal was teach them to be self-suffcient - to discover what their life passion was and to support them in their quest to achieve it.
In other words, the goal was to help them identify what really mattered to them and not expect them to live out some dream we may have had for them. Although I was an engineer, there was no need for them to become engineers - unless that was what they wanted to be. They didn't have to move back to Lockport, where we live - unless they wanted to. They didn't have to come back to the business - unless they wanted to. (None became engineers, none moved back home and none joined the business. That was OK for us.)
We are pleased for their personal successes - each in their own way.
Every parent needs to ask themselves what they owe their kids. This seems to be a key question for business owners when they think about their children and their business. Somehow there seems to be an unspoked assumption that the best thing for at least one of the kids is to come into the business. The business owner may see that as the step to leaving their legacy. The child may see this as a easy step to take without any deep thought about what really matters to them, what they want to accomplish with their lives. It may or may not be the best move - for the owner, for the child (who is now an adult) or the business.
Which brings me to the question "What do you owe your children?"
First, let me offer some ideas about what you don't owe them. You don't owe them a job. You don't own them a steady income. Your don't need to decide their life purpose.
You do owe them love and support while they are educating themselves - only partial if that's all you can afford. You owe them nuturing while they are growing up. You owe them a lasting set of values that will enable them to live a successful, caring life that enhances our culture.
Then you owe them the opportunity to develop self discipline and self suffciency. You owe them respect for who they are - even though it may not be what you had hoped of them.
Last, but not least, you owe them the freedom to follow their own path and to grow into supportive, caring individuals who offer the same to those around them.
After they have sorted this all out and developed clarity about their self identity, if they decide they want to join your business, the odds are that you'll have a great staff member with potential to be a future leader!
Wednesday, October 21, 2009
Three Important Questions Before Retirement
I've been thinking a lot about business owners considering retirement who will be selling their business. There are, to me, three key questions that every business owner needs to address for their retirement to be successful:
- Will I have the money I need to support the life I want to live after I retire? That involves money I have saved and invested, my retirement funds and the proceeds from the sale of my interest in the business.
- Have I built a strong sustainable company that will continue after I move on? Have I developed the people with the passion and the competence to lead the business and hold to the values I instilled?
- Have I chosen a meaningful life after work that I will move into? I know that successful retirement is not an ending, It's a transition into a different 'venue' - one that will give me satisfaction because I am doing something I love to do. To be successful I need to prepare for the 'Third Phase' of my life.
People who have answered these questions in a way that matches their aspirations can move on knowing that they can make a successful transition and leave a successful business as their legacy.Those who haven't are in danger of holding on too long and destroying the very business they spent their life to create.
What about you? Are your prepared for retirement? If you are in your late fifties or early sixties think long and hard about these questions as if your life depended on it. Because it does!
Monday, September 28, 2009
YOU HAVE TO LET GO TO WIN
A few days ago the Gallup Organization published the results of an eight month survey that showed that business owners have the highest overall well-being of any occupation group – followed closely by Professionals and Managers/Executives.
Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”
In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.
It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.
Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’
The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!
They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.
Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?
Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.
No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’
Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”
In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.
It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.
Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’
The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!
They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.
Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?
Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.
No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’
Wednesday, June 17, 2009
RETHINKING MY MISSION STATEMENT
Ever since I 'finalized' my mission statement (see the masthead at the top of this blog) a few months ago, I've had an uneasy feeling. It just wasn't quite right.
First, my focus isn't just business owners - its business leaders, both owners and non owners.
My expertise (and my passion) is in two areas:
First, my focus isn't just business owners - its business leaders, both owners and non owners.
My expertise (and my passion) is in two areas:
- Helping business leaders build the next generation of company leadership - including both their successor and the leadership team - to assure the future success of the company.
- Helping those leaders plan and implement their personal transition from the business into life after work - what I call their 'third phase.'
Second, ownership transfer, including 'harvesting income upon retirement' is the work of lawyers and financial advisors - people the business owner (hopefully) already has retained.
My role is as a personal coach, team builder and strategic planner - all areas of focus significantly different than the work of lawyers and financial advisors. I might often interact with these professionals but, most of the time, I see myself working directly with leaders and the leaders' team.
So, based on this reasoning, I have changed my mission statement to:
Coaching business leaders contemplating retirement
Who want to leave a lasting legacy and
Build a meaningful life after work.
There, that feels better!
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