Tag: Planning

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Should I Sell My Business Without an Advisor?

Optimizing the sale of your company should not be a DIY undertaking. A business sale is complicated, not a do-it-yourself activity. This is not like selling your home. Business owners can and do a lot themselves, we all do.

 The riskiest thing you can do: The most complex transaction you will ever likely engage in is the sale of your business. Selling your company by yourself, your life’s work is just too risky.  This is true from a legal perspective and financial perspective. And when most of your net worth is tied up in the company, you cannot afford big mistakes as you work on exit planning.

 Engaging a professional team to help you sell will maximize the sale price, optimize terms, and minimize the risks inherent in such a complex transaction. Your professional advisory team should also include expertise in exit & succession planning.

Selling baseball cards on eBay or selling your used car might have low financial risk. And we do not recommend selling your house by yourself even if you can get good data on comparable home prices. It is definitely not a good idea to do so with your company. This is even more true through the chaos of COVID, economic challenges and changes, uncertainty in politics (impeachment, a new administration, new potential tax changes, trillions in federal spending), as well as issues tied to your industry.

 One current client example: the first offer that came was a business value at about 30% of the number now under discussion. On their own, our client may have taken that first offer up by 100% but they would most likely not have taken it up more than 200%. Every case is unique but investing in the right advisory team will help you maximize what you walk away with for retirement, or whatever your plans may be.

Are you ready? A few thoughts: Sell Now? Wait for the Economy?

 

David Shavzin

Call if we can help you think through your specific situation. Always happy to have a conversation to provide some guidance on business valuation, exit planning, and the transaction. 

David Shavzin, CMC, Exit Strategist

Transactions, Value Growth, Exit Planning, Succession Planning

Founder and President, The Value Track, Atlanta, Georgia
Co-Founder and President, Exit Planning Exchange Atlanta

770-329-5224 david@GetOnTheValueTrack.com
Our BLOG // LinkedIn // www.GetOnTheValueTrack.com

 

 

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The Bridge to “There!”

March 15, 2020

I taught my grandsons there are only two places in the entire universe:  “Here” and “There!”

When one would ask if I had seen his baseball glove, I would respond, “No, it’s not here. So it must be there!” They thought that was pretty neat and I would overhear them telling their brothers the same thing!

So as a business owner, you should know where you ARE – you have your numbers.  But where do you WANT to be – say in 5 years? Where is your THERE?? What does it look and feel like? Why do you want to get there?

Having worked with hundreds of business owners domestically and internationally, I am always saddened to have a client tell me they don’t know or aren’t sure where they want to be in that time frame.

I remind them of what the Cheshire Cat told Alice, “If you don’t know where you’re going, any road will get you there!” But that “there” may not be the “there” where you intended to go!

No one disputes the necessity of planning, but the truth is that many business owners spend more time planning a vacation or a hunting trip than planning the future of their business.

I believe the primary reason is that the cares of the daily operation of the business choke out the priority of setting aside time to do the reflection necessary for a clear path forward. Stephen Covey wrote about the conflict in his seminal book First Things First, where he addressed the URGENT against the IMPORTANT.

In Quadrant I are the Urgent AND Important issues; these are the fires that have to be put out to keep the business running. Operational breakdowns, bad quality, customer complaints, delayed shipments, employee disagreements, and the list goes on!

Quadrant II is where the Important issues that are NOT Urgent reside.  This is where ALL the important issues of life reside: date night with the spouse, attending the kid’s ballgame or dance recital, reading important literature, meditating/praying, planning, reflecting, taking care of our health. We all recognize the importance of these activities in our lives, but our spouse won’t divorce us if we miss a date night – – – the fires burn up our relationships.

The paradox of this is that the ONLY way to get control of Quadrant I is to camp out in Quadrant II! Do the planning necessary to PREVENT the fires in the first place!

Let’s be honest, charting the path for a business five years out can be a daunting exercise, but it is essential to arrive at our “There!”

Strategic planning is of paramount importance. If you would like more information, feel free to contact me for a FREE 45-minute “The Bridge to There” presentation in your operation. Get a high-level view of what your future path can be!

Ralph Watson

Ralph Watson has a varied and extensive career spanning 45 years of increasingly responsible positions in both sales and operations in a very diverse mix of industry specialties, including food processing, textile and apparel, financial services, and professional management consulting.

 

 

Ralph served as a Senior Executive Analyst with a number of international consulting companies focused on the family-owned, privately held market where he distinguished himself as one of the top analysts in a highly competitive field.  In early 2014, he personally coached 10 businesses in Europe.

Ralph C. Watson, Jr.    404.520.1030

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber – Managing Partner, ITB Partners

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Planning for the Rebound – Part 2 of CEO Preparedness Guide

Planning for the Rebound

Business is Reopening

Like the eye of a hurricane, businesses raked by the leading edge of the COVID-19 pandemic are now taking a cautious look outside. Though the winds have subsided, and it’s tempting to think that the worst is over, the eye simply gives us a chance to prepare for what’s left to come. But the time is now to begin planning for the rebound.

If you withstood the worst of the impacts of the pandemic so far, you likely have accepted that the storm was coming, and had battened down your hatches (or at least applied for PPP funding to keep vestiges of your business afloat). Now, as we can start to imagine a future, it’s critical to have your plan in place when the rebound hits.

For those who haven’t been willing to consider the details needed in your post-pandemic recovery plan – or simply weren’t willing to “go there” – now is the time to plan for your rebound.

The public has been released from their quarantine in many states and other states are scheduled to open. Research indicates consumers will be ready to shop and dine. The world into which they will venture will indeed be changed. Will their appetite for dining with you also be transformed?

In my view, planning for the rebound – the re-grand-opening into the brave new world – will require a three-step planning process:

  1. An accurate assessment of NOW – Analysis and cost-cutting based on where you are today, and how you’ll conduct business until social distancing is no longer needed;
  2. Planning for NEAR – Executing on pivots or changes to your offerings to help your cash flow to improve your survivability, and;
  3. Plan NEXT – Stop random acts of marketing and follow the 12-step approach that follows “The Growth Gears,” a strategic marketing book authored by Art Saxby and Pete Hayes, to plan for your recovery.

https://www.growthgears.com/

Let’s explore further.

Step 1: ACCURATE ASSESSMENT OF NOW

Where have your customers gone? Are they still in need of your unique brand of hospitality? Have you maintained your competitive edge? Can you keep your employees active and engaged in the business? Many businesses are grappling with these and other questions, as they fight for survival in an apocalyptic present, and uncertain future. Here are four tips to consider when planning for the rebound and assessing your business:

      • Review costs

Most people have already done this – things like canceling recurring services that are simply irrelevant, asking for payment terms on necessary services, and in general, having a series of difficult conversations about labor, supplies, and rent. Job No. 1 is to understand your cash flow – and factors influencing it.

      • Review competition

        What is your competition doing now? How have they pivoted? Did they reduce hours of operation?  Were they forced to close? Is there something you could do with your local competitors to encourage customers to order takeout and delivery?  For example, an entity called “The Great American Takeout” has formed, and has encouraged customers via social media posts to takeout food to support restaurants every Tuesday since March 24.

      • Reconnect with your employees

Did you furlough or lay anybody off? With the crew that is left, what has the pandemic done to morale? How are you? Now is the time for frequent communication with your current and past employees. To prepare for reopening, you should prepare a plan to re-hire and train employees.

      • Reassign tasks

To keep employees on the payroll (assuming you have sales because you are offering curbside pick-up or delivery), reassign team members to answer the phone, shuttle deliveries, or serve as curb-side ambassadors. In the short term, this could also mean repurposing the business for strictly philanthropic purposes. One restaurant invited the American Red Cross to park its Bloodmobile in their parking lot for a blood drive to help medical professionals.

Step 2: PLANNING FOR NEAR

Planning for the rebound needs to happen now.  If you’ve withstood the worst of the pandemic so far, you may find that the tweaks you’ve made temporarily should be considered for permanence. Now, more than ever, understanding the customer’s needs and wants – and how you are positioned to be a guiding force in their upturned lives – can be a make or break proposition. Here are some ways to be a part of this change:

      • Rethink offerings.

If you’re a restaurant, you might offer groceries or sell toilet paper. Most restauranteurs reduced their menu offerings to optimize the to-go experience. For retailers, this can involve sticking with conveniences like online ordering and curbside pick-up. Creativity is key. Here are some creative examples:

        • Red Roof Inns: The lodging company offered up hotel rooms as a remote office and alternative resting spaces during the day for truckers for only $29.
        • Fogo de Chao: The unique Brazilian restaurant shifted its focus to offer curbside packages of ready-to-grill cuts of meat.
        • Wow Bao: The restaurant has begun “selling the materials necessary to make a simplified version of their menu of bowls, buns, and potstickers to other restaurants and ghost kitchen facilities,” according to the website Restaurant-Hospitality.com.
        • Subway: The sandwich chain is testing a Subway Grocery concept in California. The beta program allows customers to order items such as baked bread, deli meats, sliced cheese, vegetables, and soups.
        • Panera: Like Subway, Panera Bread has launched a grocery offering at scale to allow customers to order essential grocery items such as loaves of bread, milk and produce, and to have the items available for delivery or drive-up pickup.

      • Reconsider sacred cows

As businesses rethink their offerings, they can run smack into certain “sacred cows” that seem to be integral to their identity. For example, a full-service eatery may balk at delivery options, since that fish dish might be ruined in the 30 or 45 minutes it takes to deliver it. This is no time for those kinds of pretensions. Find a way to make a meal pack, or focus on offerings that can be delivered successfully. Several restaurants have created pop-up drive-throughs, with no more than a tent and a landlord’s blessing. And the likes of Home Depot have shifted to curbside pick-ups even as it prided itself on counseling customers in the store.

      • Reschedule Initiatives

Retailers and restaurants that had planned remodeling projects could move those up, but only if the resources exist to do so. Only the best-capitalized businesses will be able to embark on a remodeling project now, but if you can move up the date, it’s worth doing while your dining room or bricks-and-mortar location is closed. Of course, such initiatives can still be hindered by government directives that limit non-essential work and will vary by municipality.

      • Reconnect

Communication matters more than ever. We may be keeping our distance physically, but we’ve never been more social. We have regular Zoom happy hours, and we can still call upon clients virtually on a regular basis. B2B companies will have closer relationships since they sell directly to their clients, but B2C companies shouldn’t go quiet either. They need to reach out every few days, so long as they are mindful in tone and content.

On an April 8 webinar sponsored by Valassis and featuring data from Technomic, they suggested:

Planning for the Rebound: Connect to your guests
Source: Valassis

If you can maintain communication with your customers through advertising, social channels, and email, do it.  You must be mindful of your tone and message, but the research of the past 93 years is clear – if you can maintain or increase your advertising during a downturn, especially when your competitors don’t, you will be rewarded with higher sales and market share during the recovery.

Step 3: PLAN NEXT

Opening Soon

Planning for the rebound sooner, rather than later, is critical.  Those who wait for the rebound to begin will be late to the party. If you wait too long,  you will likely lose market share to more aggressive competitors.

With what you’ve gleaned from studying your competitors and company in Step No. 1, above, it’s time to learn more about your customers as they exist today, to get an idea of what and who they may be in the future. The shifts in public policy, social interactions, virtual workspaces, and personal hygiene will likely be tectonic in scope. As a result, you need to understand how the shifts will affect your business and which ones you may be able to exploit.

Ways to learn about your customers now, so you can plan for the Next.

  • Google Analytics – Look for shifts in devices used, demographics, source of traffic, etc.
  • Email surveys – Query your customers about their lifestyle, media preferences, food choices, favorite foods, etc. as they were prior to the pandemic, and as they are now. Do a gap analysis to find opportunities.
  • Read – Information abounds online regarding perceived or guessed new behaviors by many sources. Pete Hayes, CMO, and Principal for Chief Outsiders outlined the basic steps to follow in his blog “COVID-19 Crisis – 12-step Pre-Recovery Checklist for CEO’s. Also, McKinsey & Company posted an opinion on how to prepare for the next stage of the crisis. Their opinion is deeply rooted in management consulting expertise and is more about preparation for the next stage of the crisis vs. recovery.

Regardless of your current posture on the COVID-19 pandemic, it is a certainty that the danger will eventually come to an end. Now is the time to be sharpening your pencils and honing your strategies so you can be ready for the next steps.

Photo Doug Reifschneider
Doug Reifschneider

https://www.chiefoutsiders.com/profile/doug-reifschneider

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber – Managing Partner, ITB Partners

 

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Plant a Pine Tree!

Do you know the best time to plant a pine tree?

TWENTY YEARS AGO!!

Do you know the best time to plan your exit strategy??

The first day you stick the key into the front door of your new office!

Franklin Covey said, “Start with the end in view!”

I know in the excitement of launching a new venture and all the chaos that ultimately ensues, an exit strategy is the LAST thing on an aspiring business tycoon wants to consider.  The problem is that once it is pushed to the back burner, it tends to stay there for the next 30-40 years!

So let’s compromise!  If you are 55 years old and own a business, it is time to start giving serious consideration regarding what your ultimate destination will be.  An “Exit Strategy” is about selling the business off and a “Succession Plan” is about passing it down to the next generation, but both demand serious consideration well before you are ready to step away.

Two realities must align at the same time to maximize the value of a business: The owner must be mentally and emotionally prepared to walk away from a business they birthed and nurtured for the last 30-40 years AND the business must be structured to operate without the daily oversight of the owner and generating the highest level of profitability possible. Invariably, the business owners get to the finish line before the business is ready to command its highest multiple!

Now a good M&A guy can recast your financials to take out the country club membership and the spouse’s Cadillac, but if profits have been leaking out of the business, there just isn’t enough lipstick to make that pig win the blue ribbon!

The reason a 10-year runway is advised is to be able to make any necessary corrections in the business and run at that higher level for at least 3 to 5 years prior to going to market to demonstrate sustainable profitability.

As Dr. Ortego used to say, “The VALUE of a thing is the PRICE it will bring!”

Plan NOW to MAXimize Your Exit!!

 

Ralph Watson

Ralph Watson has a varied and extensive career spanning 45 years of increasingly responsible positions in both sales and operations in a very diverse mix of industry specialties, including food processing, textile and apparel, financial services, and professional management consulting.

Ralph served as a Senior Executive Analyst with a number of international consulting companies focused on the family-owned, privately held market where he distinguished himself as one of the top analysts in a highly competitive field.  In early 2014, he personally coached 10 businesses in Europe.

Ralph C. Watson, Jr.   404-520-1030

Thank you for visiting our blog.

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber – Managing Partner, ITB Partners

 

 

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Business & The Virus

A prudent man foreseeth the evil, and hideth himself (or ‘seeks refuge’): but the simple pass on, and are punished.  Proverbs 22:3

Ralph Watson

Regardless of where Covid-19 originated, it is an actual virus and it is among us.

Mass hysteria has gripped our country emptying our grocery stores and gun shops and tanking our economy. I’m not making a political statement nor placing blame.  I am simply acknowledging the current reality of our world and the tragic effect it is having on our businesses, large and small.

Let me invite you to step away from the madness for a few minutes for a dispassionate chat about our current situation.

At this point, there is precious little we can do with the country on lockdown.  Our customers are not circulating in the marketplace, but are rather cocooned in their homes possibly shopping online. That doesn’t mean we can’t do ANYthing!

In his seminal book, The 7 Habits of Highly Effective People, Stephen Covey presented his Time Management Matrix exposing the relationship between Urgent tasks and Important tasks.

Quadrant I was the “Urgent & Important” containing all the fires that business owners face all day long: operational breakdowns, customer complaints, employee disagreements, accounts receivables, job bidding, and the list goes on ad infinitum! This is the quadrant in which we spend most of our waking business hours.

Quadrant II was the “Important but NOT Urgent” containing – honestly – all the most important issues of life: date night with the spouse, children’s ball game or dance recital, thinking & planning, reading important literature, praying or meditating, taking care of our health and on it goes.

The paradox of these two quadrants is that the ONLY way to get Quadrant I under control is to camp out in Quadrant II and DO the Important work of strategic business planning and management self-improvement! As you are able to become proactive and look down the road to see potential dangers, you are able to make those provisions to avoid the fires and reduce the size and tyranny of Quadrant I.

Although this may be the first time our current living generation has seen what is happening, it is not the first time for our country.  Let me acknowledge that during the Great Depression, there were bakeries that went out of business – but there were bakeries that survived. There were clothing stores that went out of business, but there were clothing stores that made it.

The point is that no business segment vanished. Some businesses in every category made it in spite of so many of their competitors folding for good.  So while we are all currently forced out of Quadrant I, now is a great time to take full advantage of the situation to get seriously deep into Quadrant II and not squander this unique opportunity to Be Greater Faster!

Read a management book. Call friends who own businesses to talk about common issues. Engage with a professional consultant – a generalist if you need overall help, or a specialist if you feel you need specific help like marketing. Reconnect with distant family. Get spiritually recentered.

Now maybe a good time to do a deep clean on your business. If you own a restaurant, pull all your equipment from the wall and clean behind that greasy frier and refrigerator. If you have inventory, get it straightened up, pull inactive SKUs and sell them off online if you can. Take a close look at your shop floor to see if there is a better way to improve the flow of production.

Now is NOT a time for deer-in-the-headlights paralysis!

If you need inspiration, reach out to someone you can trust!

Ralph C. Watson, Jr.     404.520.1030

Ralph.Watson@BeGreaterFaster.com

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber – Managing Partner, ITB Partners

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Can I Be of Help? Offering a One-Hour Conversation…

David Shavzin

…to you, your clients or other business owners who could use a sounding board at this time: Input on urgent problems (surviving); Thinking through strategy in order to come out of the crisis (thriving); Focus on building/rebuilding value if working toward a sale. Happy to share insights from 20 years as a consultant, coach, and exit strategist; helping clients grow, solve problems, build value and design their exit strategy & succession planning. Working together, we WILL get through this! Stay safe and healthy!

 

David Shavzin, CMC, Exit Strategist

Founder & President, The Value Track // Co-Founder, Exit Planning Exchange Atlanta

LinkedIn Profile // Our BLOG // 770-329-5224 // David@GetOnTheValueTrack.com

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My Business is Worth HOW MUCH?!?!

The Problem

We recently spent 2 hours explaining to two business partners what their business was worth and why. They were disappointed but excited to understand the value and how they would manage the business going forward.

 

Buying or selling a business is not easy, even for professionals who spend all their time evaluating deals. Granted, professionals have a far better understanding of the market, the supply and demand for businesses.  If they specialize in a specific industry, as many do, they have an even better perspective on the market and the competitive dynamics for that sector. They understand the challenges of that line of business, including the anticipated cost of innovation required to remain competitive.

 

Even so, the professional must deal with challenges unique to each individual deal. Depending on the strategies employed by competing buyers, whether they’re strategic or financial buyers, the professional may be at a competitive disadvantage for the same acquisition target.  In other words, buyers seldom have the same cost of capital.  For any given transaction this dynamic will work in the favor of one or the other buyer.  There are no guarantees as to an outcome.

 

For someone looking to sell their business, the challenge becomes monumentally greater.  It is likely that these owners have been completely focused on their day-to-day operations, probably paying little attention to the details of merger and acquisition activity in their industry.  As a result, they are not savvy sellers. They must learn as much as they can as quickly as possible to realize the most value from the sale of their company.

 

When we present a valuation to our clients, they are usually horrified. The value is most often nowhere near their expectations or needs. The disbelief and devastation are apparent. Why is this?  Business owners do not have a full understanding of what drives business value.

 

Ultimately, the value of a company depends on internal and external factors to the enterprise. Clearly, internal factors are more straightforward. Most people understand that sustained revenue generation is a key driving force, along with the margins generated on that revenue, and non-cash expenses, i.e. depreciation and amortization.

 

External factors in play include the overall state of the economy and the attractiveness of other businesses for sale in the same industry segment.  This will provide an indication as to the interest level for the business and other potential sellers.  Whereas buyers may be active in a depressed economy when prices may be lower, sellers are less motivated.  On the other hand, the least competitive companies may be forced to sell during a recession.

Research says that 4 million businesses will be sold over the next 5 – 10 years. If that’s even close, you know that most will be selling for well under what their value could have been…IF THEY SELL AT ALL.

 

When is the Best Time to Get on The Value Track?

The ideal time to begin building value is the moment you start your business. But most of us are scrambling to get going – and then get so busy with growth – that we delay focusing on building value and exit planning. We are caught up in putting out fires, it remains a lifestyle business, value suffers.

 

The Value Track – 7 Steps in the Process

The Value Track is a proven, 7-step process of improving profitability and building the transferable value – the real value – of your business. Embracing the Value Track approach will help you exit ownership on your own terms, create your best possible future and improve your quality of life.

Whatever stage you are at in your business’ lifecycle, this process gets you beyond all of that and onto a serious Value-Building track for your company. Click here for 3 client stories at three stages.

 

  1. Get Everyone on the Same Page
  2. Understand Current Business Value
  3. Build Your Advisory Team
  4. Exit-Readiness Assessment
  5. Build Value
  6. Determine Exit Structure
  7. Execute the Transaction

 

Are You on The Value Track? Learn More About the 7 Steps here: The Value Track

 

David Shavzin

David Shavzin, CMC
Founder & President, The Value Track

770-329-5224
david@GetOnTheValueTrack.com

Succession Planning / Exit Planning, Building Transferable Value for Sale
Our BLOG  // LinkedIn // www.GetOnTheValueTrack.com

Tags: exit plan, Exit Planning, exit strategy, transferable value, value, Value track

Thank you for visiting our blog.

Jim Weber – Managing Partner, ITB Partners

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber, Managing Partner

ITB PARTNERS

Jim.Weber@itbpartners.com

Author of: Fighting Alligators, Job Search Strategy For The New Normal

 

 

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Why Do They Continue Making The Same Mistakes?

Last week, one of my clients filed for Chapter 11 Reorganization.  Now, two of my clients are in Chapter 11, working to find a path back to solvency.  In April, I was engaged by a new client to help them find a way out of Chapter 11. In the case of the two former clients, I can honestly say that I wasn’t responsible for the circumstances leading to their demise.  In other words, I didn’t place any executives who caused these problems, and I haven’t been involved in consulting projects that resulted in adverse consequences.  To the contrary, I placed an executive to help one client navigate through Chapter 11.  Regarding the other client, I placed an executive to help them avoid business failure.   Regrettably, Senior Executives sometimes fail to heed sound advice.  In each of these situations, failure was predictable.  Management failed to adequately penetrate their home markets before moving into new territory.

 

I’ve witnessed the results of many crazy decisions during my career.   Some noteworthy situations include an ice cream brand selling franchises beyond their distribution capabilities.  Or a California-based brand that tried to move into the Southeast with a single location.   I’ve seen Southeastern brands sell franchises on the West Coast, thousands of miles beyond their management reach and distribution network.   A Northern barbecue chain leap-frogged into Georgia with a few restaurants placed across the state.  That decision was funny, in a sad way, as barbecue has a distinct regional appeal.  Another brand added drive-throughs to dogs with the hope of turning them into profitable restaurants.  Sadly, they created dogs with a drive-through.  From my perspective, the most egregious yet consistent mistake is the urge for start-ups to enter new markets before adequately penetrating their home base.  To be sure, many of those mistakes were made by rookies, entrepreneurs lacking experience or solid advice.  However, these mistakes continue to be made by experienced leaders who should know better.

The fundamental axiom for success as a traditional retail brand is market penetration.   Achieving optimal market penetration, also known as market share, conveys significant leverage to the brand.  Greater penetration yields more efficient deployment of supervisory personnel, purchasing and logistics, marketing expenditures, and employee recruiting and selection,  among others.  Developing an understanding of one’s customer profile becomes more accurate with more stores as well as an appreciation for drive time customers are willing to endure.  Additionally, the development learning curve leads to a more efficient use of capital.  And, greater penetration increases brand awareness on the street. This is retail 101. The leverage provided by following this strategy results in a healthy cash flow to be deployed in new markets when appropriate.

 

I can speak with authority on this subject as I spent most of my career working on retail expansion.  I began my career as a financial analyst assigned to the new store development group.  In this role, I performed analytical work on capital expenditures for new stores and other investments.  I learned how to evaluate the prospects for a new store, and the penetration required to optimize the return from a larger market, i.e. city, SMSA, or region.  I became a strategic analyst and planner shaping retail store development strategy for several national brands. Finally, I held general management positions where I was accountable for return on investment.  In fact, one of my first assignments as a senior executive was to identify and prioritize markets for focused development.   As a result, I am confident in my ability to build a retail brand, especially, food-service brands.  I appreciate the value of achieving significant market share before developing new markets.  Believe me, engaging in the development of a new market, before adequately developing a home market can be fatal to a business, especially so for a start-up.

 

So, if significant penetration of a home market is fundamental for success, why does management continue to violate this well-established rule?  Over the years, I have asked this question of countless CEOs, CFOs, and Chief Development Officers.  The only consistent response is “sometimes, management becomes so enamored of expansion that sound business practices are ignored.” Imagine, human emotions getting the better of Senior Executives.  Who knew?   The only solution is to hire accomplished retail development executives, among others, who won’t hesitate to tell the “Emperor that he has no clothes.”

Thank you for visiting our blog.

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber, Managing Partner

ITB PARTNERS

Jim.Weber@itbpartners.com

Author of: Fighting Alligators, Job Search Strategy For The New Normal

 

 

 

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Exit and Succession Planning is a Team Sport

We have advisors and coaches in all facets of life. But in this most important area for our future, for our family and for our retirement, most business owners are pretty much just “winging it”. Oh, they may have an accountant but not much more of a team to focus on exit planning in all its complexities. An advisory team is critical for successful succession planning.

Business owners start their companies to create their future. But they often lose sight of the key to making that future happen – building value. They get caught up in the day-to-day and don’t get to implementing the sustainable, positive change that allows them to transition on their own terms.

Consider: “…78 percent of small-business-owner clients plan to sell their businesses to fund their retirement. The proceeds are needed to fund 60 percent to 100 percent of their retirement needs. Yet, less than 30 percent of clients actually have a written succession plan…”
http://www.cnbc.com/2015/04/13/ew-small-biz-have-an-exit-plan.html   [I would suggest that 30% is generous, and even if accurate, that those plans are not very effective, for growth or for exit planning.]

When I speak on exit planning/succession planning/transition planning, I outline a proven 7-step process. Forming your advisory team is one of those steps.

Build a Team of Advisors.

Nobody knows everything. Many of my clients are in creative industries, designing, creating, building. You don’t want me in that role. But I have worked with many organizations and have a different experience and skill set than my clients. I bring ideas and experience from many industries and many client engagements. The other critical exit planning team members bring their own expertise to the table. These should include:

  • Exit Planning Consultant / Coach
  • CPA
  • Financial Advisor
  • Business value expert
  • Business Attorney
  • Insurance Expert
  • Estate Planning Attorney
  • Banker
  • Business Transaction Expert

When I work with a client, we build this team. The players may already be in place. Or, we may bring in advisors where there is a gap. Either way, we need this core team working with the owner. A business is complex.   A marketing action impacts finance, HR, and more. Big decisions need to take into account the effect on the whole organization and should support clear goals focused on building value.

The client receives much better advice and guidance with this approach.

This does not mean that you are going to start hiring all of these people and employing them full-time as you work toward your transition…especially if you have a few years to go. But, you should use them strategically as you build your business/succession plan. For major decisions on growth, expenditures, hiring, exit-readiness, business value, deal structure…engage their expertise!

The Bottom Line

 Find advisors who understand what you are all about, your growth and exit planning objectives. More importantly, find advisors with whom you feel comfortable. Make sure that they can work together and collaborate on your behalf.

 

********************************************************************

David Shavzin, CMC
770-329-5224
david@GetOnTheValueTrack.com

The Value Track
Succession Planning / Exit Planning, Building Transferable Value for Sale

Thank you for visiting our blog.

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber, Managing Partner

ITB PARTNERS

Jim.Weber@itbpartners.com

Author of: Fighting Alligators, Job Search Strategy For The New Normal

 

 

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New Year’s Resolutions – Seriously!

It’s that time again. A new year. The hope for new beginnings.  Time to make New Year’s resolutions.  Is this really meant to be a serious activity? I wonder.   Many take it as a joke while others see it as an important opportunity. I suppose it depends on the individual.  The most ubiquitous goals seem to be about our personal health and well-being. Usually, that means losing weight and going to the gym.  As I recall, fitness center memberships always spike at the beginning of the year, then taper off throughout the year.

The genesis of creating New Year’s resolutions goes back, at least 4000 years to the Babylonians.  They celebrated the New Year by pledging loyalty to their King and promises to the gods to repay their debts.  If they faithfully fulfilled their promises, they expected to receive favor from their gods.  The Romans, and Early Christians had similar traditions.  Today, it is largely a secular practice.  Approximately 45% of Americans make New Year’s Resolutions, with an 8% success rate.  

Making New Year’s resolutions is easy! I do it every year. Accomplishing my resolutions, however, requires effort.  I was curious to know how others view New Year’s resolutions, so I polled my colleagues on the subject, which I recapped in the following paragraphs.

Don told me, “The only New Year’s resolution that I’ve ever been able to make and keep (so far) I made 35 years ago, and that was not to ever make another New Year’s resolution. All kidding aside though, as each year passes, I find myself reflecting on who I am, what drives me, and how I can grow a stronger servant spirit to those I interact with. Therefore, I’d say that an ongoing resolution is to strive to be a better person, to realize & attempt to improve on the areas I fall short, and to always remain open to opportunities to utilize my life experience to help others whenever and wherever I can.” 

Sue said, “My POV may be a bit different than others as well.  I tend to take a more philosophical approach vs. the bucket list…So, it’s more of an inventory of “what really matters? and structuring strategies to get there” and the tactical issues tend to fall into place.  With so much (and needed) focus on Leadership qualities and when put into practice the potential positive impact on the lives of others, this approach resonates with me.”

Don and Sue believe in big general goals.  Their interest is focused on affecting the lives of others. They understand the need to create specific tactics to achieve those broader themes.

Mark wrote, “Life is an ever-changing beautiful puzzle. The best way to make your wonderful life puzzle is to visualize your wanted future experiences and share them with others so they can participate and improve them with you. Setting temporary resolutions or goals may be the wrong puzzle pieces to build your better life. See bigger than simple puzzle pieces for your life. At work, setting goals for projects is good. But for life, goals are too small and rigid. Be flexible and evolve your life puzzle picture.”

John told me; “January 1 is the milestone to turn over a new leaf, go forward with that idea that’s been stuck in your head for months, lose the bad habits that are keeping you down.  Don’t listen to the naysayers that don’t believe in resolutions. I say even if it fails, at least you’ve given yourself an opportunity to feel optimistic, good about yourself and belief in your future. And from there, on to the next resolution, do your best to make it stick. Write it down, tell someone, make a daily commitment to remind someone what your goals are. Find daily quotes for encouragement, “even if you don’t feel like it, get up, dress up, show up and never give up”

Mark and John are serious about creating bold Resolutions.

Richard is focused on execution. “Format your New Year’s resolution in terms of a SMART goal. Especially the part about measurable and time bound.  Share it with friends who you will want to know how you’re doing.”

Eric has a tightly focused Resolution.  “As I mentioned, my New Year’s resolution is to focus on effective communications.   As the old saying goes, tis better to remain silent and be thought a fool, then to speak and remove all doubt.”

Personally, I like to fast forward 12 months to visualize where I want to be, then determine how to achieve that result.  For example, I want to become a more effective leader.  I plan to achieve this goal by listening more; to be more positive; and be more supportive in my personal relations.

If you aren’t serious about improving your situation, making New Year’s resolutions is pointless. If you are serious, it means replacing unproductive habits with productive habits.  In other words, creating new habits.  If you are reading this post, I am confident you are serious about action to improve your situation.

Thank you for visiting our blog.

I hope you enjoyed our point of view and would like to receive regular posts directly to your email inbox.  Toward this end, put your contact information on my mailing list.

Your feedback helps me continue to publish articles that you want to read.  Your input is very important to me so; please leave a comment.

Jim Weber, Managing Partner