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

While at Derby Day Races in Melbourne on Saturday, I met a person named Fran who’s brother had created a new essential and innovative building tool that is soon to be released. I cannot tell you too much about it because that would be breaching a confidence, but I can share with you exactly what I told her when she enquired about what they must do to make their business idea work for them.  Here’s the ten points I made to her:

Protect Your Intellectual Property

1. The innovation is unique and must be patented to boost your business valuation and protect the uniqueness of the product from being copied.  Anything really good will undoubtedly be copied even with a patent in place.  The trouble is, intellectual property thieves know exactly how much they can modify a new idea to legally re-produce a modified version and move in on your market share.  You have only a short space of time to gain enough market share before competitors move in on your territory.

Start With The End In Mind

2. You’ll want to understand your target audience (who wants to buy your product) and co-ordinate your marketing plan to help you gain that preferred market.  Being ‘first to market’ is a big plus for product sales as people love to embrace new and different time saving and safety ideas.  Having a strategy to engage with your target audience will be the difference between carving your market share quickly and being superseded or over-run by advanced and improved versions of your product by competitors.  You have a short  window of opportunity is to carve your corporate footprint and build your market share.  Never underestimate your competitors who will be quick to move into your space if it is a lucrative market.

3. Set a budget to meet the costs of marketing, distribution and selling costs.  Track expenditure against results.  This will help you to establish the market price of the items to be sold.  If you don’t have the budget to do this, find assistance so you can launch it well.

4. Make a big splash and noise about the product to launch the idea with a compelling up-beat story that attracts attention from media and purchasers.  You have to spread the word about your new product, and the best way to get the word out is to leverage from others that can help share your story.  Gaining some coverage on programs such as ABC’s “new inventors” can be a great way to spread the word about the new product without spending a lot on advertising.

Leverage Your Message To Boost Your Business Profits

5. Develop a Public Relations campaign to build a plan to engage all types of the media.   Send press releases to magazines and newspapers that your target audience frequently reads.  Radio and TV interviews are also very helpful to inform your market quickly.  Don’t forget to utilize the internet with YouTube and with other social media to demonstrate your offering.     

6. Install a lean but effective Sales and Distribution arm of your business by engaging positive people that share your vision and passion for your product.  You’ll want them to be proactively chasing sales by implementing a sales strategy aligned to your corporate vision.

7.  Stay ahead of the curve by continually researching and developing your product so you may maintain market leadership.  Remember your competitors lack the creativity that you have and at best be able to replicate your offering.  If you continue to modify and improve your product, competitors will always remain one step behind. 

8. If you don’t have the capital to support your strategy the way you must to succeed, and banks are not willing to take the risk on your new innovation, then seek out government grants and capital raising opportunities to assist with funding a strategy to promote your product.  If you’re not sure how, take the opportunity to utilize skills of someone that can help.

9.  Take a business approach from start up to step down.  That means having a vision and direction, like plotting a course with a succession strategy.  You’ve done all the hard work for a reason, and you’ll want to be rewarded financially for the effort and risk you’ve endured.  Utilize my PROFITS™ Keys system (Your Business Succession Book) to put yourself on a path of success through to exit.

10. Dare to dream, and drive your passion to make it become a reality!  You get one chance to get it right, so run forth with ‘informed’ reckless abandon!  It’s the only way to build your business into a valuable asset that will one day sell.

Government Grants May Help

The Exit Experts has access to number of grant opportunities you might like to explore to source some assistance with getting your innovative products and business off the ground and running sooner.  Help is just a phone call (1300 499 225) or email away.

Here’s to your profitable business succession!

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

Background: Apple Founder Steve Jobs made the iPod and iPad famous household names to build a business that has more cash than the whole of the USA government. But with all that success, Steve knew that one day he would leave the business he’d put his heart and soul into.

Strategy: Steve’s successor, Tim Cook has been groomed to fill Steve’s shoes for the past 13 years and consequently has the confidence of Steve, Apple’s board and the market in general.  No one knows more than Steve Jobs the events that can personally lead to ‘exiting a business’ well before time.  The first time he was forced from Apple was due to dispute.  The second, due to illness.  As a result, Steve is a strong advocate of succession planning for your business.

Outcome: We could all pick an apple out of Steve’s orchard to gain some insight into how our own businesses should be operated, because it is a recipe for success that cannot be put down to luck alone.  For years Apple floundered until Steve’s innovation turned it around.  Steve is not only an inspiration in business, but also in life.  Check out this video:

I’ll leave you with these wise words from Steve: 

“No one wants to die, even people who believe they will go to heaven don’t want to die to get there; and yet death is the destination we all share, no one has ever escaped it….  Your time is limited, so don’t waste it living someone elses life, don’t be trapped by dogma which is living with the results of other people’s thinking, don’t let the noise of others opinions drown out your own inner voice, and most important, have the courage to follow your heart and intuition, they somehow already know what you truly want to become, everything else is secondary”.

Time to wake up and get on with it.

Boost your business valuation in preparation for your eventual departure.

To Your Profitable Business Succession!
Leigh Riley

Previous article in series |

I’m blogging to you from New York City and about to reveal the last 3 important reasons to think like a buyer when you sell your business. These are the points I emphasized to the editor of Inc Magazine (USA) when I was asked to list the things a buyer should look for when buying a business (these follow on from the previous two blogs)

Scenes form New York City: Columbus Circle in Manhattan

8.Systems and Processes

Buyers will want to check out the way your business operates as this will provide an indication of efficiencies. If it is a turnkey operation that anyone can run; and there are established, up to date training manuals, and all staff clear about their role in the business, buyers will pay a premium for that, so it makes sense to ensure you provide this if you are to profit the way you had hoped when you leave your business. If not, be prepared to have a buyer beat you down on price.

9.Leases, Plant, Equipment and; Machinery

Terms and life of leases of your business operation are essential so buyers will scrutinize these carefully. You want to make sure there are reasonable and long term leases in place to protect the continuity of the business operation. Operational equipment must be in good order, or else a buyer will be turned off believing they may be burdened with the need to inject immediate capital to upgrade for future efficiency of the business. Tired equipment, plant and machinery can be a massive drain on profitability, so sort it out before you sell, otherwise you can expect this to be reasoning to beat down your business price.

10.Exit Planning Prospects for the future

I know you’re thinking “why would it be important to a buyer to consider their exit strategy on a business they’re about to buy and probably not planning on leaving for some time?” It’s good question, but definitely don’t discount it because buyers today are thinking to start with the end in mind. That’s because the informed buyers knows one day they will want to also sell for a maximum price. The informed buyer also knows they may not always choose when they leave because unplanned events such as dispute, divorce, disability and death are a lot more common than is thought. You can help by thinking about the exit options for them, and one way to demonstrate this is to have your own exit strategy clearly mapped out. Financiers are now also asking for this information before they lend money on the acquisitions, so it really is in your interests to have this sorted out before you sell. On top of that, it will help you because what if circumstances force you out unexpectedly? Is this a business you are going to be able to off load quickly if you need to, and at a price that is satisfactory to you. If it’s a business that requires special interest or skills, you better start thinking about it now, before you sell, so you don’t get caught out and left strapped for cash.

You can read a lot more about these points I make in the book “Your Business Succession, how to enter, execute and exit your business for maximum cash flow and profit”

Here’s to Your Profitable Business Exit!

Leigh Riley

Previous article in series |

Many of you who read this blog are rapidly approaching the time when you will leave your business due to your intention to soon retire.  There are others reading this blog even though you don’t plan to leave your business for some time,  but have realised your best chance of maximising the profits you will receive from your business when you do leave involves formulating your succession plan as early in the piece as possible.

It’s commendable that you are starting to think ahead by gathering information for your education in developing your succession plan, but I’m urging you to not let it stop there.  Keeping your succession plan in your mind is a wonderful thing, but it does nothing to make tangible the positive effects that will result when you’ve implemented all that you’ve thought so long and hard about.

Just last week I was speaking with a GP that had his own Practice established over 30 years with a very large patient base.  He had an outstanding business exit strategy for his succession plan and had proudly shared it with me in confidence.  The only trouble was, it was all in his mind, and he had not taken the necessary steps to formalise his succession strategy. 

It’s ironic to me that a doctor who deals with life affecting factors that impact his patients each day, had not considered for a moment that he could also be affected by health issues and impact his ability to implement his very solid plans for succession.

To say his situation was vulnerable would be dramatically understating the situation.  If you are a regular reader of my blog, you already know about the 6 Succession Triggers (Dispute, Divorce, Disability, Death, Desire for Difference, Departure due to Retirement), that can waylay the best intentions for a disasterous outcome, but if you need to remind yourself you can read the details in my book “Your Business Succession” How to Exit Your Business with Maximum Cash flow and Profits.   If you’re a medical practitioner, soon to be released is the book especially for doctors “Your Practice Succession: How to Leave a Legacy and Reap the Rewards of a Lifetime of Service to Your Community”

Recently we covered the importance of communicating your succession intentions in a blog with a case demonstrating what can happen if you don’t communicate and formalise your succession strategy.

Yes, taking action to educate yourself with the succession options and strategies that will ensure your success, is commendable, but you must also IMPLEMENT Your Business Exit Plan with a formalised strategy to ensure you are positioned to profit from your business through almost any circumstances.

Here’s to your Successful Exit Strategy!

Leigh Riley

Many people believe that they will decide when they will leave their business, yet the statistics show that 51% will leave prior to the time intended for various reasons.  If 2011 is the year you believe you would like to leave, you will need to think about how you can realise the financial rewards from a lifetime of effort.  There are a few things you can do to ensure you maximise your outcome to a smooth succession and here are my top tips for you to follow:

1. As early on as possible, you should be planning your exit and eventual sale, so get your business in order! 
 You need to build a safety net that will guarantee you a price for your efforts.  When you sell a house, you present it in the best way that you can to attract buyers and maximum price.  Selling your business is the same. 
 Make your business something that someone will want to buy.  Understanding that buyers want a business with good  systems and customer management processes, market penetration, business cashflow with profitability, and well trained people so that the business does not depend upon you to operate it. 
 
Engage a Business Coach to sharpen up your business edge in the same way you would engage a tradesman to fix up  the loose ends around the house or a personal gym trainer to help you shed some of those extra pounds. 

2. Remember it’s not what you sell your business for that will count, it is the amount you receive after tax that will  provide you with the most favourable outcome, so solid prior tax planning is essential from professionals that understand the impact of succession. 

Seek advice from Succession Planning Specialists who are working as a team. You don’t go to a general practitioner if you need an orthopaedic specialist and the same goes for business matters that need special treatment.  
To put yourself in position for the best financial outcome, you will need a team of Specialists from accounting, legal, risk management, and business broker willing to work in concert to devise your position of strength when cashing in on years of effort in the most tax effective manner.  They can also approach potential suitable buyers on your behalf when discretion is necessary due to potential market impact that may be caused by an impending sale.
3. Determine who the potential buyers may be as this may impact the method used in the changeover.  You may need to think outside the square when an immediate buyer does not come to mind.  If you are fortunate, a fellow proprietor may be the prime candidate if you are in a co-owned business.  If you are a sole proprietor, you may have staff or a friendly competitor who maybe a likely candidate to buy you out. The suitable candidate and their ability to pay for your business will impact the method for changeover.

4. Decide how the new proprietors will fund the buyout and on what terms. If you’ve been in business for a while, the chances are that your business has grown significantly in value.  Funding your purchase price may need some time and thought to ensure a prospective sale proceeds smoothly, enabling you to realise all of your hard earned equity in cash.  It may be useful to implement a key staff reward system whereby shares in the business rather than cash bonuses paid over time can help to facilitate the buy-in.

5. Deal with liabilities and personal guarantees related to the business as early on as possible, as these do not
 retire nor die with you.  Your succession plan must extend to adequately alleviate you of these responsibilities.

6. You may not be able to leave the business when you choose, so it is essential to include planning for contingencies.   Unexpected exits such as poor health, disputes, divorce or death can leave you in a weakened position. 
 

Your succession plan should provide you and your family with a pre-arranged price with tax effective terms and insurance to ensure adequate funding at your price.

You can find a lot more detail about the essential points made here in the book “Your Business Succession”.  For your FREE customised assessment to determine how well prepared you are to exit your business, go to the Business Exit Quiz. It takes about 3 minutes to complete and provide you with details of the areas you need to focus on to ensure the most profitable outcome for you when you leave your business.

Here’s to your Profitable Business Succession and your prosperity for 2011!

Best wishes

Leigh Riley