The Exit Planning Peer Advisory Board (PAB) provides a safe place for business owners to discuss their challenges and offer support and insights to their fellow members, not only as they relate to exit planning but to their businesses today. A look back at the past year brings to light three significant areas in which – as a result of their participation in the PAB – our members saw positive differences in their companies and in their growth as business owners.
Ownership Thinking
The philosophy of Ownership Thinking asserts that businesses can build wealth by instilling a mindset of ownership among employees, unleashing their potential by providing the training and tools to develop “ownership thinkers.” These are employees who think and act from the perspective of an owner and become active participants in their company’s financial success. This mindset is based on a conviction that most employees truly want to engage and contribute, that they build self-esteem when they are enabled to achieve and are more fulfilled by their work in an environment that cultivates these opportunities.
The members of the PAB embraced this concept and took steps throughout the year to introduce and develop this mindset within their companies. Some introduced it generally, others picked one or two key employees with whom to work first. But the sharing of ideas, challenges, solutions, and successes compounded the effectiveness of each PAB member’s efforts. Cultivating this mindset and practice clearly benefits the business now but makes it a better candidate for sale when the owner exits, by making it more solid financially, but also positioning it to continue to perform well when the current owner steps away.
Value Drivers
One of the first steps in exit planning, after choosing a target date, is to determine what a company must be worth when the owner exits in order to meet their financial objectives and assess its current worth. The exit strategy is built around closing this gap and reaching the ultimate value goal, which means optimizing the company’s value drivers. These are business systems that generate either recurring revenue or financial efficiencies from an established, growing customer base and those internally controlled activities, capabilities, or qualities that add worth to the company. Enhancing the performance of the business in these key areas will increase profitability, reduce risk, and ensure the sustainability and growth of the business, which will help get top dollar when it sells.
PAB members invested significant time and effort this year into identifying the value drivers that most affect their companies, determining which ones to address first, and developing plans to optimize them. Managing those factors that affect the value of a business is an ongoing process, so having a foundational understanding of how value drivers impact your company is critical. Again, our members found great value in the observations and insights of their peers as they all turned attention to value drivers. Their work this year has equipped them to move forward, confident in their abilities to manage those factors that drive the value of their businesses.
The PAB as a Lifeline
Events of the last few years, and the accompanying volatility of the business climate, have put businesses and their leaders to the test – and still are. PAB members have found that their peers have dug deep to find and offer business solutions as well as personal and moral support.
Board members have together found creative solutions for issues related to:
- Pivoting to adjust to changes in the business climate
- Retaining business value
- Working remotely
- Changing technology needs
- Retaining employees and when/how to bring them back
- Helping with the added stress that employees may be experiencing
- Best ways to implement health and safety protocols
- Maintaining connections with clients
- Finding new products to offer and new ways to serve customers
- Changes that were intended to be temporary but may benefit the business long-term
- Reassessing their companies’ preparedness for events beyond their control
- Cultivating changes in company culture
- Taking a fresh look at when to sell their businesses
- Adjusting their exit planning strategy
- Newly discovered opportunities
- Finding hope and gratitude
The Peer Advisory Board has grown in membership during this time – a testament to the value that is found in the support and insight of peers. This support benefits members not only in planning and carrying out their own exit strategy, but making their businesses better now, and finding a lifeline to get through challenging times.
Like all business owners, you’ve likely dealt with changes that have required digging deep into the details of your business and how you operate it. You may have also discovered that it’s a good time to re-evaluate your long-term goals and exit strategy. The earlier you start to plan, the greater your chances of success at exiting on your terms, and the greater the opportunity to prepare for unexpected changes that can most certainly happen. We invite you to be a guest at our next Peer Advisory Board meeting and see for yourself the value in ready access to the wisdom and support of your peers. Contact me for details or for a complimentary consultation to discuss starting or revising your exit plan.