whats at the end of your yellow brick road-defining your oz-for … · 2019-10-02 · –mba in...

What's at the End of Your Yellow Brick Road? Defining Your Oz

© 2018 The ShinerGroup. All rights reserved. 1

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Leslie Shiner

August 22 - 23, 2018 | Boston, MA

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© 2018 The ShinerGroup. All rights reserved.



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Leslie Shiner


• Financial & management consultant for over 25 years– MBA in Accounting and Finance from U.C. Berkeley

– Advanced QuickBooks ProAdvisor

– Sage Certified Consultant

• Columnist, Remodeling Magazine

• CPA Practice Advisor Top Thought Leader

• Author:– A Simple Guide to Turning a Profit as a Contractor

–( www.MoneyMazeBooks.com)

Owner

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Learning Objectives


•Create a list of personal issues to help decide between the two primary strategies

•Create a personal timeline for your exit strategy

•Determine key steps to take once an exit strategy has been chosen




The Entrepreneur Fallacy

• Not everyone can sell their business– Hard work does not guarantee success

– Have you been sold a bill of goods?

• Work hard, build your business, sell it for lots of money and retire rich and early!

• Are you coming up with something unique?– Or just training

– Or using existing products

– Or selling the same thing others sell?


Are you a Solopreneur?

• A business owner who works and runs their business alone

• About a third of the American workforce comprising freelancers and consultants fit under category

• Just because you work alone, doesn’t mean you don’t collaborate with other entrepreneurs




Have You Hired Employees? (Or Tried to?)

• You can grow your business through hiring employees

• But there are other ways to grow your business

– You can outsource work

– You can increase your rates

– You can do fixed price work

– Etc…


Are You Planning for the Future?

Have you thought about an exit strategy?

Is it realistic?




Warning!

This session doesn’t have all the answers

Ideas to consider are also free


How Do You See Your Retirement?




Three Exit Strategies

•Improvisation

•Liquidation

•Continuation


Improvisation

• Spend all your time with the day‐to‐day business concerns without considering the future

• Or is it just blissful ignorance?




Liquidation

• Build a personality‐based business

• Use corporate dollars to grow personal wealth

• Know that when you leave the business, the business ends


Continuation

Create a business that will provide income after you leave

Build a ‘saleable’ business

Build a ‘scalable’ business

Build a business based on process




Three Choices

Improvisation

•No strategy

Liquidation

•Build a cash cow

Continuation

•Create a process


No Matter What Strategy You Choose:

Ask yourself:

• What if I get sick?

You need a backup plan

• Insurance?

• Health, disability, long‐term care

Succession?

• How will my clients’ needs be met?




Liquidation – Understood

Also called a “Lifestyle Business”

• Nothing wrong with a lifestyle business

The business will end when you retire

• Or die at your desk


Liquidation Isn’t a Bad Thing

• Easier to build a personality‐based business

• Focus on building your business

to build your nest egg

• There is less need to reinvest dollars to build business equity

• You can avoid the hassles of growth and adding employees




Do You Have a Company or a Job?

• If you cannot gain economic benefit from your company beyond your working years, all you’ve done is bought yourself a job

• But having a job where you get to be boss may be your goal

– You control your destiny

– You create your schedule

– You set the rules

• Do you enjoy the freedom of being your own boss?


What Are Your Needs?

Creating a job is a good model if fills your needs

• Helping people

• Learning new things

• Enjoying being skillful

Emotional needs

•Support your lifestyle

• Support you and your family

Financial needs

•Fund your future?Long‐term needs




Create a Cash Cow

Buy a job to create a cash cow

Pillage and plunder your company to build your personal equity


Disadvantage of Buying a Job

Have you sacrificed your life for your business?

• In a competition between your lifestyle and your business, who wins?

Are you able to build enough personal equity?

• Is that good enough for you?

• Is it good enough for your family?




Continuation – Understood

• Succession can only come from creating a business, not a job

• The business must be more process‐based and less personality‐based

• Do you have enough time to create a continuation strategy?


Ask the Tough Questions

Who can I sell the business to?

How will I find a buyer?

Will he/she have enough skills to run the business?

How will the transition work?

How and when will I be paid?

How can I guarantee payment?




Create a Formal Exit Strategy

An exit strategy is not just who you want to sell the company to

• It’s a well‐defined, long‐term plan that includes:

Timing People Process


Types of Continuation Strategies

Outright sale

Pass on to next generation

Employee buyout

Create a partnership




Outright Sale Can Be Difficult

If someone is smart enough to know what I know, they are probably already doing it

The new owner must make enough money to support themselves and the previous owner

• Does your business produce enough revenue to do this?

New owners do not have ‘institutional memory’

Will your clients accept the new owner?


Key to Profitable Sale

• Your business must increase the revenue of buyer

– More than what they paid!

• What can your company offer to the buyer?

– Expanded services, projects or locations

– Increased client base

– Technological expertise

– Unique position in the marketplace




Pass On to the Next Generation

• Determine

– Who is interested

– Who is deserving

– Who feels entitled

• Differentiate between “active” and “non‐active” heirs

• Requires good communication skills strong family relationships


Family Business Facts

• Only about 30% of family businesses survive into the second generation

• Only 12% are still viable into the third generation

• Only about 3% of all family businesses operate into the fourth generation or beyond




Employee Buyout

• Emphasizes need for advanced planning

• Drawbacks:

– Key employees often lack capital

– If they could do what you do, they’d do it themselves

• However, hiring and training for succession may help chances of success

• Create a buy/sell agreement

– A document that assures the orderly transfer of the business from the owner to a key employee


Management Succession

•Create a management team

•Hire and train for succession, speak to succession

•Reward employees that bring in revenue

•Pick and choose the key employee

•Make it expensive for the key employee to leave

•Monitor your own ability to “let go”




Create a Partnership

Find your successor

Create a partnership

Identify a buy‐sell agreement

Formalize the agreement

Work to the agreement


Succession Plan Includes:

•The devil is in the detailsPlan for transfer of

ownership

•Who is the boss today? Tomorrow?Plan for management

succession

•Clients need to feel cared forPlan for client communication

•Are you re‐investing in the company or taking money out of the company?

Plan for investing




Create and Review Paperwork

• Shareholder agreements

• Buy‐sell agreement

• Employee agreements

• Non‐competition agreement

• Non‐solicitation agreement


Struggles

If the old owner doesn’t buy into giving up the power, then the transition will fail

• Clients can’t be made to feel like traitors when working with new owner

Old owner needs to give guidance but also needs to be willing to step back and allow new owner to stumble




Technology Plays an Important Role

• If you are using the most up‐to‐date technology, the value of your company is greater

– Purchasers want a seamless transition without wasting time moving to new systems

– Since we live in a global world, using more cloud based technology opens up your potential buyers to anywhere in the world


The Clock is Ticking!

The strategy you choose for tomorrow will determine how you run your business today!

Prepare for planned succession…

• As well as accidental or tragic succession!




Set Your Goals

Personal goals:

• Is there life after work?

• Can you separate work from home?

Financial goals:

• What is adequate security for you?

Business goals:

• Do you know what you actually sell?

• You work for your clients, but did you realize that a good client base can work for you?

Depending on your goals, the way you grow your business should align with your end‐game objectives


Create Reasonable Expectations

How much longer are you going to work?

What will your expenses be after you

stop working?

How much are you spending vs. saving

now?

How much is your business worth

today?

How much can your business be worth in the future?




Liquidation (Cash Cow)

Continuation (Building Equity)

Determine Your Strategy

Improvisation


Different Actions for Different Strategies

Liquidation

• Build that cash cow

• Create your own financial stability

Liquidation

• Build that cash cow

• Create your own financial stability

Continuation

• Determine type of continuation

• Invest in building company value

Continuation

• Determine type of continuation

• Invest in building company value




•What are your personal issues that can help decide between the liquidation and continuation?

•What is your personal timeline for your exit strategy?

•What steps do you need to take now?

Summary

Know that the skills that got you where you are today are not the skills you need for tomorrow


Questions and Thank You!

Leslie C. Shiner, MBA

[email protected](415) 383-6255

www.ShinerGroup.comwww.facebook.com/TheShiner

GroupTwitter: @TheShinerGroup

Join Leslie on Friday at 9:00 am:

Understanding the Needs of Contractors

whats at the end of your yellow brick road-defining your oz-for … · 2019-10-02 · –mba in...

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