In this past week I’ve seen 3 situations where business owners did not take the advice of the specialist engaged to deliver it.  Here is what happened.

Situation One: Involved a company in financial distress; where the business owner simply had no idea how to get out of his situation.  He conveyed his situation to several different advisors and each were adamant in the direction he should take.  The trouble was, the advice from each was so diametrically opposed, it only became more confusing.  In the end he simply chose one to follow, angering the others because each felt they were right.  Time will tell, but it’s looking like his own gut feel was correct.

Situation Two: Involved a successful company that was heavily impacted by the Global Financial Crisis.  Sales had declined by half yet costs remained unchanged, and it was clear the company had to restructure urgently or perish.  Retrenchments were necessary, but the method recommended for this did not sit well with the owner who had a strong and caring relationship with his employees.  He agonised over the decision about how to do it in a way that would meet his own moral code, and in the end went against the advice to do it his way.  The outcome was a tremendous success with the exiting staff actually agreeing to the need to be retrenched, and using his own style has those staff leaving on a friendly note.

Situation Three: Involved a business owner negotiating to sell a family asset that was co-owned by a sibling.  Relations had broken down so significantly, it was almost to the demise of all parties.  Advice had been sought and a plan of action had been agreed, but when the deal was required to settle, the family business owner went with his gut feel rather than taking the advice entirely.  He orderd a change in tact, resulting in a successful outcome for all.

What this tells us is that Experts can only provide you with so much guidance, and their advice will only ever be as good as the information you provide about the situation or problem and the experts own experience.  In some of the cases, the experts involved were put out and even became angry at their client, but their clients were correct to follow their own intuition.

So as a business advisor, you’re probably wondering why I would share with you about cases where the clients were clearly in a better position to decide for themselves ultimately, as it seems a bad advertisement for specialist consultants.  However that is my point entirely.

No specialist is going to be right every time, but you are quite right to consider many alternative views before you make your decision about the matter at hand.  By listening to others in the know, you are learning valuable information formulated from their previous experience and knowledge base.  When you blindly follow advice, there is likely to be more trouble ahead than can handled, so listening, thinking through and weighing up the options for an outcome that sits well with you, is the most effective thing you can do.

Here to Your Profitable Exit!

Leigh Riley

I was listening to my iPod when I read the news of Steve Jobs passing earlier today due to pancreatic cancer.  It rocked me, at the sad loss to his family and the company he’d built over 30 years of his 56 years of life.

But Did Steve Really Die?

I’m not trying to be glib about such a sad event in history, but I am serious with my belief that Steve lives on because of the incredible legacy he has left to the world with his creations.  Steve not only placed his very own special mark on the Apple company that is now a world-wide household name, his legend will continue for generations ahead.

At age 21, he started Apple with two colleagues from his parents garage with minimal start up capital.  They dreamed big, then made those dreams a reality. A business rollercoaster unfolded, with mistakes made and disputes unravelling a power struggle that forced Steve out of the company in 1985.  Never being one to be held back, Steve forged forward developing the animation studio Pixar that he acquired, and in 1997 returned to Apple, completely turning around the then struggling company, boosting its value off the charts.

The resurgence of Apple under Steve Job’s vision and management saw it become the USA’s most successful company with more cash than the US government, but it is the innovation that has completely revolutionised the computer world that resonates most.

Steve understood very well the impact of succession, continuity and legacy.  He has exited from Apple twice.  The first time proved to almost be the company’s demise, but the second time around, he’d learned the lessons and this time he built it for continuity. He knew how to boost his business by reaching for the stars, but also how to inspire a team to follow on and implement to make it all a reality.  I say that Steve lives on through his legacy, as he will go down in history as having been an inspiration to all entrepreneurs with a dream and as having had a lasting profound impact on society for decades to come.

My team “The Exit Experts” send our most sincere and heart-felt condolences to Steve’s wife and 4 children whose loss must seem indescribable right now.  Steve’s body may rest in peace, but his legacy continues on.

The Ultimate Succession Plan

For me Steve has become the guidepost for what I would term the ultimate ideal business ’continuity strategy’, because there aren’t too many phenomenal leaders that can leave their post without so much as a hint of financial hitch in sight like Steve has.

What are you doing today that will build your business legacy so it can continue on well after you exit?

Here’s to your successful business exit!

Leigh Riley

Small to Medium sized business (SME’s) often struggle to raise capital for expansion plans, especially since the Global Financial Crisis.  It’s even harder for SME’s to liquidate part of their business when they need cash to fund other activities, which is one of the reasons having an SME is considered risky.

Financiers are more reluctant to loan on SMEs because of the illiquid nature of them.  If Financiers find themselves having to foreclose on the business they’ve loaned funds to that is struggling financially, the last thing they want to do is run the business.  They prefer to liquidate quickly to regain the capital loaned.  This is typically harder to do for SME’s, and that is why more and more Financiers are demanding SME’s have a clear path of succession and a formal exit strategy to enable them to recoup the funds loaned more quickly if the business folds.

But what if my team could show you a way for SME’s to fund capital raising easily and provide a facility to liquidate the business quickly if needed?

That’s exactly what I intend to do in my next Webinar:  “How Smart Entrepreneurs Raise Capital to Grow or Go From Their Business”.

When you register for the Webinar, you’re going to discover some of the most innovative techniques you’ve ever heard about raising capital for your business, and you’re going to see a live case in action to demonstrate how easy it is to raise capital.

You’re going to uncover things like:

• 8 Funding Solutions for Growing or Going
• 2 Proven Legal Methods to Raise Capital in Australia
• How the valuation process is crucial for raising capital for your company, and how being able to raise capital easily can help BOOST your business valuation
• 5 Essentials for Good Capital Raising
• 7 Risk factors you’ll want to overcome to ensure you attract the capital you require
• There’ll be a live case demonstrated to show you how easy it is
• We’re going to make you an offer to get started raising your business capital right away.

The best bit is that it’s totally FREE to attend!  You can join our 45 minute Webinar/Teleseminar by registering here now.

The Capital Raising Webinar/Teleseminar will be held on:

Wednesday 5th October 2011  at 7.30pm

Or

Thursday 6th October 2011 at 11.30am.

If you’re looking to Grow or Go from your business soon, you can’t afford to miss “How Smart Entrepreneurs Raise Capital to Grow or Go From Their Business”

Here’s to your profitable exit strategy with easy capital raising!

Leigh Riley

How can You Boost Your Business Valuation?

Increase Your Business Acquisition Attractiveness by:

• Developing a market presence that is desired by potential buyers
• Obtain critical mass with demonstrated consistent growth across niches
• Maintain higher margins than your competitors
• Add value with a management team and systems
• Create effective planning that aligns your business motives with your employee’s actions

If you haven’t already done so, make sure you register yourself to attend the FREE Webinar I’m running so you can learn all you need to know about how to BOOST your Business Valuation.  I’ll be interviewing Business Valuation Guru, Sean Hutchinson live from San Francisco. Sean excels in explaining the levers you can control to increase your business valuation and I’m very certain you will learn a lot from listening to him. Register for

Date: Thursday 8th September, 2011
Time: 11.30am
Register Now for the FREE webinar at http://yourbusinesssuccession.com/bizval-webinar1.php

You can’t afford to miss this opportunity to learn all you can about how to BOOST your business profits and valuation.

Here’s to Your Profitable Business Exit!

Leigh Riley

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When a Wall Street capital markets guru from New York directly quotes what I have to say as a Succession Strategist, it’s time to pay attention, sit up and listen.   I can almost hear you thinking “I have no intentions of exiting my business for some time, so I don’t need to worry about exit planning yet”;  Sound familiar?   But Here’s why:

1. Taking notice to understand what a business buyer wants is the key to understanding how to position your business so that it can be sold any time, at a premium price through just about any circumstances.

2. These days, business buyers are getting smarter and already have the end in mind before they buy. That means they want to know you have an exit strategy in place before they buy, because one day they will want to release their capital quickly and easily too.

3. Financiers just aren’t lending on business acquisitions the way they used to before the Global Financial Crisis (GFC).  These days they also want to see there is a clearly defined exit strategy before they’ll loan to buyers wishing to purchase a business.  So you better get your business in order if you plan to sell it some time in future.

This all adds up to one very important point for you.  If you’re not prepared with an exit strategy for your business, you’re virtually not in the game as a possibility to be sold.  If you hope to profit from the business asset you’ve built, an Exit Strategy is a ‘must have’.

You will never know when, why or how you’ll leave your business.  I only know that you will definitely leave it, even if they end up carrying you out in a box.  If you would like to control the circumstances to your benefit and profit, take action today!  Implement your business exit strategy today.

Here’s to Your Profitable Exit Strategy!

Leigh Riley

(You can see the Wall Street Capital markets guru’s blog at  http://weybenjamin.wordpress.com/)

The Future

At a recent presentation given by futurist, Morris Miselowski (Business man, dynamic speaker, entrepreneur, academic, prison chaplain, welfare counsellor, media personality and futurist guru), the audience was astounded by his vision for the future of technology and its effects on business. Most people around me expressed opinions which ranged from dismay and excitement through to some being totally shocked and aghast by the extreme innovation and change about to unfold.

During the presentation, Miselowski outlined just some of the changes that will occur in 2020:

• We will have moved forward 100 technological years
• Average job tenure will be 2.4 years
• 1/4 workers will be working remotely or virtually
• 60% of tasks and jobs performed have not yet been invented
• Our growing healthcare industry will service our ageing population as we strive for quality of life as we routinely live to 100 years of age and beyond
• Expect to see a growing number of Genetic Counsellors, Stem Cell Researches and Custom Implant Organ designers jobs being advertised
• Baby Boomers will be hiring retirement coaches and counsellor, financial advisors and wealth experts to advise them on how to maximise their post work lives.
• Digital professional will be another sought after industry due to online worlds.

Change or Die

Whatever the consensus or feelings, the message was very clear. Either move with the times and shift your business focus to be aligned with the new innovations or you and your business will be out of the race. With 20 years of change already squeezed into the past 2 years, Miselowski cautioned business owners to brace and prepare, for the next 10 years will unfold a whole century of change during that time. Now that’s enough change to surpass author Alvin Toffler’s predictions in the 1970 book titled “Future Shock”.

Future Shock

Whether your perspective to change, tends toward abhorrence or enthusiasm, there is no time to lose. Navigating your business through will require you to sharpen your business skills and optimise your business performance to capitalise through impending change. Couple this reality with surfing through the Tsunami wave of businesses about to change hands, there is no doubt there will be fall out.  Only those that team vision, with the ability to adapt will be in a position to capitalise. You are going to want a robust support team. Business Coaching with the end in mind will likely be one of the only ways you’ll achieve your goals.

Your Business Life Raft is Your Business Succession Support Team

You’ll want to demand an up-to-date succession plan. Necessity dictates your strategy to handle your eventual business exit must include provision for planned and unplanned exit circumstances. But it must also incorporate the array of strategies to unleash operational business opportunities and uncover pitfalls that could impact the lifeline of your business, it’s value and continuity. Ultimately it will affect your family and personal financial security.

Take Action today

Get started by Downloading your free chapters from the ”Your Business Succession” book.

Here’s to your successful future business exit strategy!

Leigh Riley

I’m currently in New York City and when Inc Magazine (USA) asked me to comment on what a buyer should look for when buying a business, following on from my previous blog, here’s 4 more things I told them.

View from my rooftop of NYC – Manhattan Skyline

Where is your business positioned in the marketplace?  Does it dominate a particular niche or is it floundering in the fringes?

4. Marketing

Understand the purpose and motivation of why a buyer may want to purchase your business as this will enable you to use it to your advantage. Let’s say you have a business that is uniquely positioned in a manner that could provide a competitor with the competitive advantage they long for. This could be a strategy for you to build upon toward your business exit plan and develop a superior sale price.

On the other hand if your business is just coasting along but you have identified ways to improve the performance quickly, you can offer to demonstrate this to a a potential buyer, so you may retain their interest and prevent them from insisting on a reduction in sale price.

5. Ownership Structure

This is important to you as a seller particularly in relation to taxation and a buyer in terms of future ability to raise funds for expansion plans. A seller may need to go to the expense of restructuring to ensure they’re in the best position to profit after tax. This is something you must consider before you sell with the advice from a CPA.

6. Buying the shares versus the business

Sellers are usually advantaged by selling shares of a company (under Australian Tax Law) rather than the business itself, but if a buyer accepts this, they take on the liability factors of the company that could impact them adversely in the future, so they are generally reluctant to agree to this. One way to mitigate this risk for the buyer and encourage them to buy the shares for your benefit is to provide sale terms with ‘run off’ professional, product and public liability cover (funded by you as the seller) to protect their acquisition with insurance.

7. Management and Organizational Chart

Buyers are looking for a business that’s viability is not dependent on too much of their own physical effort. As a seller your business will be more attractive to a buyer when you can demonstrate the management and responsibility structure with an organisational chart to show who in the company has the rainmaking responsibilities versus the operational tasks. A clearly defined structure indicating little or no owner reliance can provide some comfort. Further to this, show how your key employees are remunerated with attractive employment contracts ensuring staff retention when you leave. You don’t want the buyer to have any fears about the key income generating staff leaving due to a change in ownership. Remember you’re not just selling your business; you’re buying selling everything that make the business work which may or may not include the staff.

So there you have 4 more good reasons to think like a buyer when you sell. In the next blog, I’ll reveal the last 3 which may arguably be the deal makers or deal breakers for the successful sale of your business.

Here’s to your profitable business exit!

Leigh Riley

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I am so excited to report that I successfully passed the Chicago Uni CEPA program which means I am now a fully qualified Certified Exit Planner and indoctrinated into the USA industry body known as CEPA.

Class photo from Chicago Uni – CEPA Program

To reward myself I decided on a quick trip to New York City where i was asked by the editor of Inc Magazine USA to contribute to an article about what buyers should look for when buying a business.  Over the next three blogs, I’m going to tell you everything that I told them, and this is important for you to take notes, because understanding what a buyer looks for when purchasing a business does effect you.  As a seller, you can make sure your business looks exactly like the type of business a buyer would want, and in doing so, your business will become the business that stands out in the crowd, and can command a premium price. That translates to a future set for financial security.

Here’s the first three key points that buyers are looking for:

1. Proven Financial Stability and Profitability

Buyers will want to check the historical performance of your business before they purchase and will verify reports against lodged tax statements.  They want to check out your business debt exposure and understand the debtors (money owed to the business by customers) and creditors (money the business owes to suppliers etc). If buyers are applying for finance to fund the purchase, banks will require this as part of their due diligence before they will approve a loan. If banks won’t lend, buyers may look to you to provide some assistance with Vendor Finance terms or some other financing mechanism, so you’ll need to be prepared for this. Financial data will give buyers a good understanding of how well your business has been managed financially, and enable them to gauge the ability of the business to borrow for expansion and capital improvements. Shrewd Buyers know the past is not always a good measure for the future, so make sure you offer your business plan to indicate a clear direction for the future of your business. 

2. Future Prospects and Forecasts

There are many businesses that have performed well in the past, but the future looks grim for them due to technological advancements or changes in demand and market trends.  You would be wise to provide some evidence of the future market conditions. If you are not sure why this matters, think about what iPods and iTunes have done to CD sales and you may have some idea of how trends can impact heavily on the future financial viability of the business.  Understanding your business future prospects together with a legitimate reason for selling can be a huge bonus in securing a buyer for your business. Take the time to research future prospects for your business so that buyers are secure in avoiding a dead end acquisition.

 3. Client Concentration

Consider where the main income of your business comes from and how much exposure it has to each client.  If your business receives more than 20% of its income from one source or customer, this is risky for the buyer especially if there are no service contract in place to protect the revenue source when you leave.   Everyone knows that when there is a change of management or ownership, there is a possibility of client loss, so take steps to ensure the income your business generates is secured with contracts, and that income sources are sufficiently diversified.  Income sources that are too heavily concentrated in one area, leave you open to the buyer haggling on your business price.

Like I keep saying, you need to think like a buyer when you sell, because it will help you to position yourself for strength and financial reward.

Here’s to your successful exit strategy

Leigh Riley

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Are Verbal Agreements in Business Succession Plans a Good Idea?

In business situations, verbal agreements about succession plans, or indeed any aspect of the business, are usually made because the people involved share a relationship of trust. Operating on verbal agreements appears to be quite acceptable among members of the extended family, with friends, or with partners, because there is the belief that the quality of the relationships will ensure that agreements will be honoured in the manner intended.

What happens to the verbal succession plan when things change?

However, the problem with verbal agreements in business is that circumstances can change – people’s recollections become distorted over time, and the resulting misunderstandings can cause not only relationship breakdown, but also breakdown of your business.

Case study – verbal agreements in a family succession plan leave the successors vulnerable

Sonya retired and handed over her farm business in equal shares to her two children, who had always worked hard on the property.

Sonya asked for no payment for the business, and the children agreed to pay a lease fee for use of the farmland to provide Sonya with the income she needed to fund her retirement.  They did not have a formalised lease and arranged the terms on a verbal agreement basis , which seemed fair to everyone at the time because of their family relationship.

When Sonya suffered a heart attack, she decided to liquidate her assets by selling the farmland. She felt entitled to do this because it was her property.

Verbal Agreements Can Lead to Relationship and Business Breakdown…

Unfortunately Sonya’s adult children could not afford to buy the land and the new owners plans for the land did not include allowing Sonya’s children to continue farming under a lease arrangement. This resulted in the children losing everything they had worked for – they were effectively out of business and even out of a job.

This sorry story is an excellent example of why verbal agreements are not suitable succession arrangements, even in loving or close families.

How to protect all members of your family in your succession plan

One straightforward succession solution to avoid this disaster would have been to arrange a written, formalised lease agreement between the family members so that the rights of all involved would be protected. The agreement could have been extended to allow the adult children first right to buy upon Sonya’s decision to dispose of the property.

Furthermore, funding could have been arranged with terms to arrange payment over time, or by using insurance to provide immediate funding upon certain events—such as a heart attack.

Discover more succession solutions

You can read the full details of suitable succession strategies for similar situations in Part 5 of my book “Your Business Succession: How To Exit Your Business With Maximum Cash Flow and Profits.”

To Your Profitable Business Exit,
Leigh Riley
Succession Solutions Specialist

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How your family’s health can impact on your business exit profits…

In this series, I am revealing 6 of the Situational Errors that can prevent your business from capitalising when you exit your business at any stage, particularly when the exit is beyond your control. My previous post revealed the first of these situations, where Brian, the owner of a Mechanic workshop, had made an error in judgement about succession planning.  He did not see the need to implement a business exit strategy because retirement seemed a long way off at his age. Unfortunately he developed a severe illness which forced him to exit his business at a very young age, causing financial hardship for his family and job loss to his employee.

In this post I’m going to insist that you don’t limit your thinking to how your own health can impact the continued viability of your business, because this would also be an error of judgement. In my book “Your Business Succession” Case Study # 8 discloses how Judy’s profitable, home based clothing manufacturing business was forced to a grinding halt because her child was diagnosed with leukemia and in need of constant, ongoing care.

How prepared is your business to enable you to care for a sick child?

Judy had some very capable employees, but none were driven or talented enough to run the business without her leadership.

The smaller your business, the more vulnerable it can be if you have to exit early

The smaller your business, the more vulnerable it can be, so structuring your business with an exit strategy for diverse situations is essential if you want to maintain financial viability in the face of the unexpected.  Now you have read about two situations where the business owners thought succession planning was only for people about to retire.  Each had no way of knowing they would soon be forced from their business well before retirement age due to situations beyond their control.   Don’t leave your business exit strategy to chance. Make sure you’re in a position to profit – no matter what the situation!

Business succession solutions

Succession solutions exist for all business ownership structures.  A typical small business exit strategy involves arranging a formal Buy-sell agreement with another interested party. This could be with an employee or a colleague already operating in your industry.

For dozens of tips and detailed case studies to kick start your successful business exit strategy  and invest in your future you want to read the book “Your Business Succession…how to enter, exit and execute your business for maximum cash flow and profit”.  If you don’t find a solution to help you with your business exit plan, I will happily refund the purchase price!

How well prepared are you to exit your business with maximum cash flow and profit?

Take the FREE Business Exit Quiz, and receive your own customised report which will reveal the strengths of your business exit plan and uncover any shortcoming that you must address if you want to maximise your profitable outcome from your business when you exit  – through any circumstances.

Here’s to your profitable business exit!
Leigh Riley

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