Help - I'm Stuck in My Business

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Help! I’m Stuck in my BusinessLessons in Business Growth & Exit Planning

Big Picture Advisors llc www.bigpictureadvisors.com

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Becoming


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If you don’t know where you’re goingYou could end up someplace else.

Yogi BerraAmerican Philosopher and Hall of Fame baseball player

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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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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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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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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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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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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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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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Don’t get Stuck in a maze without a growth and exit plan


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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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Your hard-earned wealth can be diminished by:

Changes to your business

What is at stake ?

Income & Estate Taxes

Lack of a Successor

Changes to the global economy

Deal Structuring & Advisory Fees


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The average business owner spends 80 hours preparing a business plan and only 6 hours preparing for their

exit.

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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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2007 ROCG Survey of 502 business owners in U.S. and Canada


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Provided by Rob Slee

Sales of businesses occur in cycles


Big Picture Advisors llc www.bigpictureadvisors.com 20

• How many businesses exist in the United States today?

Non-Employee Firms: 17,646,062

1 – 19 Em’ees

20 – 99 Em’ees

4,320,290

508,249

100 – 499 Em’ees 82,334

500 – 999 Em’ees 8,326

© 2010, Pinnacle Equity Solutions


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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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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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It Starts with Creating a Plan and a Process

Financial Readiness

Identify Type of Exiting Owner You Most Resemble

Learn & Choose Your Exit Option

Execute Your Exit Strategy – Protect & Extract Your Wealth

Understand the Value of the Option You Choose

Set Exit Goals

Mental Readiness

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3.

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5.

6.

© 2010, Pinnacle Equity Solutions www.pinnacleequitysolutions.com

Business Readiness

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What do I want to achieve with my business exit ?

The “Why” questions

Step 1: Setting Exit Goals

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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

Step #2: Mental Readiness

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• 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?

Step #2: Mental Readiness

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• Can you afford the Exit Option that I most want ?

• What % of your total net worth is tied up in your business?

Step #2: Financial Readiness


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“84% of business owners stated that the proceeds from the sale of their business were important to their retirement plans.”



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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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What is a Value Gap?Asset Base Required

Current Level of Savings

Value Gap


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What are your assets?Liquid • Retirement Savings (IRA’s, 401K’s, Simple, SEP)• Cash• Non Retirement Savings • InsuranceNon-Liquid• Real Estate (Primary & Investment R.E.)• BUSINESS VALUE

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Fixed Income Private

Company90%

Equities

Fixed Income

Equities

PrivateCompany

20%

Typical Owner Allocation

Desired Financial Allocation

Beach House / Boat

How will you achieve diversification ?


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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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• 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?

Step #2: Business Readiness

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Step #2: Identify if your business is ready


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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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What is your Business CORE?A Business has 3 componentsA. Skeleton (Business

Structure/Operations)B. Muscle

(Products/Services/Processes)C. Skin (Brand Equity, Public Presence)


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What is your Business CORE?

CORE =Comprehensive

OperationalEfficiencies &Resources

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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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•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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Step #4: Five Primary Exit Options

4. Management Buyouts

5. Gifting Programs/Family Succession

3. Employee Stock Ownership Plans (ESOPs)

2. Private Equity Group Recapitalizations

1. Sale of the Business

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Exit Options and the Exit Quadrant Chart

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Owner Readiness and the Exit Quadrant Chart

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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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Gifting

Management Buyout

Employee Stock Ownership Plans

Recapitalization

Sale to an Outside Buyer

Synergy Value

Investment Value

Investment Value (structured)

Fair Market Value

Fair Market Value

Range of Values

Liquidations Asset Value

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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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Step #6: Execute/Implement Your Plan

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Business Owner

Exit Strategies

Advisor

Legal Advisor

C.P.A.

M&A Advisor

Insurance Advisor

Deal Structuring / M&A Process

Legal Agreements, Estate Planning

Taxes, Financials

Estate Planning, Wealth Protection

Business Growth

Business CORE

Growth

Consultant

A Typical Exit Advisory Team

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“It’s never too early to begin this type of planning, but it may certainly one day be too late.”

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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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Learn More

Download the White Paper

www.bigpictureadvisors.com

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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) 216-2493www.BigPictureAdvisors.com

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