Trusted Advice On Preparing A Business For Sale
Exit Planning Article
Are You And Your Business Headed In The Right Direction?
By Bill Quish, Mergers and Acquisition Specialist and Certified Exit Planning Advisor
With all the uncertainty in today’s world, now is a good time to reflect on whether your life and business are headed in the right direction. While the getting was good, as it was up until about twelve months ago, it was human nature for some of us to veer away from the goals we had set for ourselves. Many others are still wandering aimlessly because they never took the time to think about what they wanted to accomplish in their lives.
This article is not about telling you, the business owner, how you should live your life. Instead, it recommends a process that will enable you to identify where you want to go both in life and in your business so that you can quickly determine whether you are on the right path at any given moment.
The process I am referring to is a series of “Goal Dashboard Reports.” Studies have shown that people who develop and act on their clearly written goals are much more likely to be successful in life. Like a car’s information gauges, the Goal Dashboard Reports provide important information necessary to understand the current status of your personal, business and exit/retirement goals. It consists of three to four, 8.5 x 11 pieces of paper that should be readily accessible throughout your day. I recommend reviewing these reports at the beginning of each day and whenever you feel yourself being overwhelmed and thus being swept up by the events of a hectic life.
Personal Goals
Your Personal Goals Dashboard should be broken down into one, three and five year timeframes. The basis of these goals should be your core beliefs. Your core beliefs are a cognitive framework that supports your thoughts, beliefs, values and perceptions. Core beliefs operate at a subconscious level influencing your behavior and reactions to what is going at any given time. Make sure your goals don’t conflict with your beliefs because doing so could undermine the achievement of the goals. For example, if you are struggling to build a prosperous business, you could have a core belief that “money is the root of all evil.”
While each person’s goals will vary, a few examples might be: I will exercise four times a week. I will spend more quality time with my wife and kids. I will buy a beach house by June 2010, etc. To the right of each goal should be the specific actions steps required to achieve the goal including a realistic completion date. To the right of action steps should be each goal’s current status.
Business /Professional Goals & Business Performance Metrics
Business/Professional Goals
The Business and Professional Goals Dashboard should start with your company’s mission. Your business and professional goals should be broken down into ninety day, one and three year timeframes. Examples of these goals might be: I will maintain 40% gross margins in 2009. I will evaluate the company’s core processes to create efficiencies. I will acquire another company to expand my services geographically. I will earn $500,000 and $750,000 annual compensation in years 1 and 3, respectively. I will assemble a strong Board of Advisors. I will improve my time management skills, etc. To the right of each goal should be the specific actions steps required to achieve the goal including a realistic completion date. To the right of the action steps should be each goal’s status.
Business Performance Metrics
Do you know exactly how your business is performing at any given moment? A Business Performance Metrics Dashboard is a one page document that is essential for tracking financial data and other relevant operational information. Among its important goals is to align the management team’s understanding of the business. While companies utilize financial forecasts such as cash flow projections to look at the business’ direction, this dashboard provides management with a concise understanding of what is happening currently. The key is to limit the information to only the most critical data required. This brevity enables the information to be reviewed quickly.
Information required for the dashboard is collected daily from various departments and could be assembled by your controller/CFO for presentation to you, the CEO. Examples of information to include could be: bank balances, loan balances, accounts receivable, accounts payable, gross margins, production, sales backlog, burn rates, break-even level, days sales outstanding, inventory turnover ratio, etc. Other relevant information could include headcount, overtime hours worked, quality/delivery scores, new sales orders, new customers, and status of key proposals and projects, etc. Information presented should be compared with historical performance. This process will enable you to identify trends early on and take corrective action where required.
Exit/Retirement Goals
If you are a frequent reader of this Newsletter, you know most business owners fail to plan for their exit/retirement from their business because it can be a highly personal and emotional process. This is especially true for family-owned businesses. Our experience indicates that most business owners who fail to plan are subsequently unhappy with their decision to sell and with retirement in general.
The first step to a successful exit/retirement is to clearly identify your exit/retirement goals. Among others these should include to whom or what type of buyer you want to sell, when, and for what amount. Other goals might be: I will update my estate plan. I will develop a contingency plan for my business in the event of my sudden death or disability. I will develop a broader senior management team to minimize my post-sale time commitment with the new owner. I will develop a comprehensive exit plan in 2009, etc.
As you did with your personal and business/professional goals, to the right of each exit/retirement goal should be the specific actions steps required to achieve the goal including a realistic completion date. To the right of action steps should be each goal’s current status.
In closing, time is the greatest commodity we have. For those who fail to plan, your time on this beautiful planet will be filled with lost opportunities. The reality is no matter where you are in life, it is never too late to start planning. Do yourself and your loved ones a favor and take a day off from work to focus on developing your core beliefs, goals and performance metrics. Share them with your spouse, business partner, trusted advisor or business coach. Ask them to check-in on your progress on a quarterly basis. Doing so will keep your feet to the fire.
If you would like a copy of these Dashboard Templates and/or discuss how to use them, please contact me at bquish@lyonssolutions.com.
Bill Quish is a Mergers and Acquisition Specialist and Certified Exit Planning Advisor(CEPA). He is a Senior Managing Director at Lyons Solutions LLC. Bill can be reached at 860-658-1845 or at bill@mergermaven.com.
Copyright 2009 By Bill Quish. All Rights Reserved
By Bill Quish, Mergers and Acquisition Specialist and Certified Exit Planning Advisor
With all the uncertainty in today’s world, now is a good time to reflect on whether your life and business are headed in the right direction. While the getting was good, as it was up until about twelve months ago, it was human nature for some of us to veer away from the goals we had set for ourselves. Many others are still wandering aimlessly because they never took the time to think about what they wanted to accomplish in their lives.
This article is not about telling you, the business owner, how you should live your life. Instead, it recommends a process that will enable you to identify where you want to go both in life and in your business so that you can quickly determine whether you are on the right path at any given moment.
The process I am referring to is a series of “Goal Dashboard Reports.” Studies have shown that people who develop and act on their clearly written goals are much more likely to be successful in life. Like a car’s information gauges, the Goal Dashboard Reports provide important information necessary to understand the current status of your personal, business and exit/retirement goals. It consists of three to four, 8.5 x 11 pieces of paper that should be readily accessible throughout your day. I recommend reviewing these reports at the beginning of each day and whenever you feel yourself being overwhelmed and thus being swept up by the events of a hectic life.
Personal Goals
Your Personal Goals Dashboard should be broken down into one, three and five year timeframes. The basis of these goals should be your core beliefs. Your core beliefs are a cognitive framework that supports your thoughts, beliefs, values and perceptions. Core beliefs operate at a subconscious level influencing your behavior and reactions to what is going at any given time. Make sure your goals don’t conflict with your beliefs because doing so could undermine the achievement of the goals. For example, if you are struggling to build a prosperous business, you could have a core belief that “money is the root of all evil.”
While each person’s goals will vary, a few examples might be: I will exercise four times a week. I will spend more quality time with my wife and kids. I will buy a beach house by June 2010, etc. To the right of each goal should be the specific actions steps required to achieve the goal including a realistic completion date. To the right of action steps should be each goal’s current status.
Business /Professional Goals & Business Performance Metrics
Business/Professional Goals
The Business and Professional Goals Dashboard should start with your company’s mission. Your business and professional goals should be broken down into ninety day, one and three year timeframes. Examples of these goals might be: I will maintain 40% gross margins in 2009. I will evaluate the company’s core processes to create efficiencies. I will acquire another company to expand my services geographically. I will earn $500,000 and $750,000 annual compensation in years 1 and 3, respectively. I will assemble a strong Board of Advisors. I will improve my time management skills, etc. To the right of each goal should be the specific actions steps required to achieve the goal including a realistic completion date. To the right of the action steps should be each goal’s status.
Business Performance Metrics
Do you know exactly how your business is performing at any given moment? A Business Performance Metrics Dashboard is a one page document that is essential for tracking financial data and other relevant operational information. Among its important goals is to align the management team’s understanding of the business. While companies utilize financial forecasts such as cash flow projections to look at the business’ direction, this dashboard provides management with a concise understanding of what is happening currently. The key is to limit the information to only the most critical data required. This brevity enables the information to be reviewed quickly.
Information required for the dashboard is collected daily from various departments and could be assembled by your controller/CFO for presentation to you, the CEO. Examples of information to include could be: bank balances, loan balances, accounts receivable, accounts payable, gross margins, production, sales backlog, burn rates, break-even level, days sales outstanding, inventory turnover ratio, etc. Other relevant information could include headcount, overtime hours worked, quality/delivery scores, new sales orders, new customers, and status of key proposals and projects, etc. Information presented should be compared with historical performance. This process will enable you to identify trends early on and take corrective action where required.
Exit/Retirement Goals
If you are a frequent reader of this Newsletter, you know most business owners fail to plan for their exit/retirement from their business because it can be a highly personal and emotional process. This is especially true for family-owned businesses. Our experience indicates that most business owners who fail to plan are subsequently unhappy with their decision to sell and with retirement in general.
The first step to a successful exit/retirement is to clearly identify your exit/retirement goals. Among others these should include to whom or what type of buyer you want to sell, when, and for what amount. Other goals might be: I will update my estate plan. I will develop a contingency plan for my business in the event of my sudden death or disability. I will develop a broader senior management team to minimize my post-sale time commitment with the new owner. I will develop a comprehensive exit plan in 2009, etc.
As you did with your personal and business/professional goals, to the right of each exit/retirement goal should be the specific actions steps required to achieve the goal including a realistic completion date. To the right of action steps should be each goal’s current status.
In closing, time is the greatest commodity we have. For those who fail to plan, your time on this beautiful planet will be filled with lost opportunities. The reality is no matter where you are in life, it is never too late to start planning. Do yourself and your loved ones a favor and take a day off from work to focus on developing your core beliefs, goals and performance metrics. Share them with your spouse, business partner, trusted advisor or business coach. Ask them to check-in on your progress on a quarterly basis. Doing so will keep your feet to the fire.
If you would like a copy of these Dashboard Templates and/or discuss how to use them, please contact me at bquish@lyonssolutions.com.
Bill Quish is a Mergers and Acquisition Specialist and Certified Exit Planning Advisor(CEPA). He is a Senior Managing Director at Lyons Solutions LLC. Bill can be reached at 860-658-1845 or at bill@mergermaven.com.
Copyright 2009 By Bill Quish. All Rights Reserved
