1. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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2. Becoming
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3. If you don’t know where you’re going
You could end up someplace else.
Yogi Berra
American Philosopher and Hall of Fame baseball player
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4. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Story of Pat – Business Owner
• Started Business 20 years ago
• No succession or exit plan in place
• Net worth is over $2mm
• Has less than $250K saved for retirement
• Pat has lost the drive and is essentially coasting
• Business is mature and beginning to decline
• Pat is consumed with running the business.
• J. would love to win the lottery. Today!
• Pat is STUCK in the Business
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5. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Agenda Topics
• Why are you in Business?
• What is an Exit Strategy? Why is it important?
• What stage of your Business Life Cycle are you at?
• What is a Value Gap?
• Why it’s critical to build a strong Business Core.
• Business Valuations – It’s not straightforward
• Exit Options – Internal, External
• Assemble the right team of advisors
• Take Control - Now
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6. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
How we get Stuck in our Business
• No vision or plan for the business
• Having too much of our wealth tied up in the
business
• Using the business as a personal ‘piggy bank’
• Our personal identity is linked to our business
• We have not developed other interests and
hobbies.
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7. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
How we get Stuck in our Business
• Tiredness, lack of passion
• Wearing too many hats
• Paralyzed from too much stress
• External market dynamics
• “Firefighter” mentality – Always putting out fires
• Lack of Vision
• Lack of strategic planning
• Being scared to make changes (getting too
comfortable)
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8. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Get Uncomfortable – Get Unstuck
• Develop a Golden Circle – Start with Why
• Create an exit or transition plan
• Implement with a passion
• ‘Break the Tape’ – Accelerate through your
exit.
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9. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Start with Why
Do you still know why you are in Business?
• Why are you in business?
• Why did you start or buy the business?
• What are your goals?
• What makes your happy & satisfied?
• Why do your customers do business
with you?
• Why would anyone want to buy your
business?
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10. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Start with Why
Do you still know why you are in Business?
• Lifestyle – Can’t work for “the man”?
• Pursue a dream/passion?
• No one will hire me?
• Create wealth for Retirement?
• Purely an investment?
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11. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Don’t get Stuck in a maze without a growth and exit plan
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12. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Planning Your Exit
Did you have a plan when you started
your business or career?
Do you have a plan to exit your
business and protect your wealth ?
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13. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What is at stake ?
Your hard-earned wealth can be diminished
by:
Changes to your business
Changes to the global economy
Lack of a Successor
Income & Estate Taxes
Deal Structuring & Advisory Fees
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14. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
The average business owner spends
80 hours preparing a business plan
and only 6 hours preparing for their
exit.
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15. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
The longer you wait to develop an exit, the greater the risk
and possibility that you will not succeed in protecting and
extracting the wealth you created.
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16. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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17. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
2007 ROCG Survey of 502 business owners in U.S. and Canada
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18. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
2007 ROCG Survey of 502 business owners in U.S. and Canada
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19. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Sales of businesses occur in cycles
Provided by Rob Slee
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21. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
How are you going to Exit?
• Sell the business to outside buyer
• Sell the business to management
• Gift the business to family member
• Liquidate the assets
• Take it with you to the grave
• Win the lottery and just walk away from it all.
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22. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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23. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What is an Exit Strategy?
The written goals for the succession of a business’
ownership and control, derived from a well thought
out and properly timed plan that considers all
factors, all interested parties, and the personal
goals of the owners in a manner and a time period
that is accommodative to the business, its
shareholders, and potential buyers.
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25. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step 1: Setting Exit Goals
The “Why” questions
What do I want to achieve with my
business exit ?
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26. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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27. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Mental Readiness
When you begin to think about exiting
your business, you need to consider
whether you view your business as a
job or as an investment
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28. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Mental Readiness
• Are you addicted to your business?
• Is your business a job or an investment?
• How involved are you with the day-to-day
running of the business?
• Do you know what you would do if you weren’t
in business?
• Are you ready to let go and let someone guide
you through the transition?
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29. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Financial Readiness
• Can you afford the Exit Option that I most
want ?
• What % of your total net worth is tied up in
your business?
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30. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
“84% of business owners stated that the
proceeds from the sale of their business were
important to their retirement plans.”
2007 ROCG Survey of 502 business owners in U.S. and Canada
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31. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What is a Value Gap?
The difference between what you need to fund your
post exit/transition lifestyle and your current savings.
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32. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What is a Value Gap?
Asset Base
Required
Value
Gap
Current Level of
Savings
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33. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What are your assets?
Liquid
• Retirement Savings (IRA’s, 401K’s, Simple, SEP)
• Cash
• Non Retirement Savings
• Insurance
Non-Liquid
• Real Estate (Primary & Investment R.E.)
• BUSINESS VALUE
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34. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
How will you achieve diversification ?
Typical Owner Desired Financial
Allocation Allocation
Beach House /
Boat
Fixed Income
Private
Private Company
Company Equities 20%
90% Fixed Income
Equities
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35. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
How to Close the Value Gap?
• Save More
• Reduce Post Exit/Transition Life Style/Needs
• Grow Company Valuation (business growth)
• Buy Winning Lottery Ticket
• Hope your Children Create the next Facebook or
Google.
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36. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Business Readiness
• How prepared is your business for an exit?
• How healthy is your business?
• What part of the business life cycle are you at?
• Do you know how to grow your business to
increase its valuation?
• Is your management/personnel motivated or
incentivised to stay?
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37. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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38. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Business Readiness
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39. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Business Readiness
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40. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #2: Identify if your business is ready
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41. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Why Business Growth is Critical to
getting to a successful exit.
• Creates a strong Business Core
• Creates leverage for a stronger exit/transition
• Creates renewed passion and focus for the business
• Creates basis for long term earnings and cash flow
growth
• Creates positive momentum for company and brand
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42. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What is your Business CORE?
A Business has 3 components
A. Skeleton (Business
Structure/Operations)
B. Muscle (Products/Services/Processes)
C. Skin (Brand Equity, Public Presence)
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43. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
What is your Business CORE?
CORE =
Comprehensive
Operational
Efficiencies &
Resources
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44. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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45. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #3: Identify What type of Owner you
most resemble
•The “Get me out right away for the most money” exiting owner,
•The “Well-Off But Choose to Keep Working” exiting owner,
•The “Stick Around and Grow the Business” exiting owner, and
•The “Rich and Ready to Leave” exiting owner (can use any option).
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46. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #3: Identify What type of Owner you
most resemble
•The “Get me out right away for the most money” exiting owner,
•The “Well-Off But Choose to Keep Working” exiting owner,
•The “Stick Around and Grow the Business” exiting owner, and
•The “Rich and Ready to Leave” exiting owner (can use any option).
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47. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #3: Identify What type of Owner you
most resemble
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48. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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49. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #4: Five Primary Exit Options
1. Sale of the Business
2. Private Equity Group Recapitalizations
3. Employee Stock Ownership Plans (ESOPs)
4. Management Buyouts
5. Gifting Programs/Family Succession
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50. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #4: Five Primary Exit Options
Exit Options and the Exit Quadrant Chart
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51. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #4: Five Primary Exit Options
Owner Readiness and the Exit Quadrant Chart
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52. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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53. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #5: Understand the Value of Your
Exit Option
Business Valuations
• Range of Values depending on exit options
• Different valuation methods can apply
• Not all value can be realized at time of exit
• Valuations can change quickly and dramatically
based on market dynamics
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54. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Range of Values
Sale to an Outside Synergy Value
Buyer
Recapitalization Investment Value
Management Buyout Investment Value
(structured)
Employee Stock
Ownership Plans Fair Market Value
Gifting Fair Market Value
Liquidations Asset Value
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55. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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56. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #6: Execute/Implement Your Plan
• Assembly an advisory team
• Share your plan with all stakeholders
• Continuously revisit your plan as
business, financial and mental readiness
conditions change
• Don’t procastinate – Don’t let your plan
collect dust on a shelf - Take Control Now.
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57. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Step #6: Execute/Implement Your Plan
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58. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
A Typical Exit Advisory Team
Business
Owner
M&A Legal
Advisor Advisor
Exit
Strategies
Deal Structuring / M&A Legal
Advisor
Process Agreements, Estate
Planning
Insurance Growth
Advisor Consultant
C.P.A.
Estate Planning, Wealth Business Growth Taxes, Financi
Protection als
Business CORE
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59. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
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Lessons in Business Growth & Exit Planning
“It’s never too early to begin
this type of planning, but it may
certainly one day be too late.”
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61. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Summary
Get Unstuck - Take Control Now
• Understand your “Why” factors
• Determine your mental, financial and business
readiness
• Create a strategic plan of action
• “Grow” to Exit and beyond
• Assemble the resources/team that will assist you in
executing and reaching your objectives
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62. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Learn More
Download the White Paper
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63. Help! I’m Stuck in my Business
Lessons in Business Growth & Exit Planning
Thank you . . .
. . for attending.
If you would like any further information about
our Business Growth & Exit Strategies solutions
for your personal or business needs, contact us
for a free initial consultations.
We will be happy to meet with you.
Big Picture Advisors - (843) 216-2493
www.BigPictureAdvisors.com
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