Posts tagged with: exit planning

Key Defects in Your Business (Oversights) Part 2

The problems, excuses and barriers to achieving big hairy audacious goals boil down to three underlying defects. Dozens of other reasons can be collected under the umbrella of these three primary reasons.

  1. Self-sabotage
  2. No strategic focus
  3. Risk averse

We continue here with the second reason.

No Strategic Focus

Ninety-five percent of all owners don’t have a strategic focus for their business. They don’t know what they should be doing as the leader of their enterprise. They are more than busy, scrambling hand to mouth or from fire to fire, with no time for anything more. They believe there’s no time left for planning, strategy, scheduling, budgeting, forecasting, contingency planning or succession planning – never mind exit planning. Their priority is always tactics and today; the future can wait. For example:

  1. They don’t know what it will take or cost them to achieve their goals. They are running blind. Either they don’t know it or they avoid thinking about it so they don’t have to see their risky behavior.
  2. They are still stuck being the technician, the expert, the professional in their business. That’s a great place to start your business but based on that paradigm, you can’t build a business that will produce the wealth and financial freedom you need in the long run.
  3. They are very good at what they do but never took time to set up the business to support that expertise/offering. When your time is consumed in delivering product or services and there’s no time to structure the business to run independently, you haven’t built a business, you’ve simply hired yourself for your technical prowess. Without a strategic focus and a systematic plan to work yourself out of a job, you can never retire and you can never maximize the valuation of the business.
  4. They have no clear focus on what they should be doing. They are comfortable in the everyday “busy-ness” working in the business. Their effort has no larger, longer-term objective.
  5. They have no clear focus of what they are driving the business to achieve. When you don’t have a long-term goal, you will never know when you get there. And you can easily drift in any direction that a “new shiny object” takes you.
  6. Even if they have an overarching goal stated, it’s not broken down to meaningful and achievable milestone goals. Thus, no one takes action to achieve them. owners have the business in their head. Their team doesn’t. So even if they share their big hairy audacious goals with their team, unless they can break it down to what that means for each department and each team member, these people don’t know what action to take to achieve the owner’s goal, because it wasn’t explained in terms on which they could take direct action. Therefore, nothing happens.
  7. They have no tracking and measuring in place. Without tracking and measuring tools to monitor results, the CEO has no information on which to make decisions, develop a strategy or set even bigger goals. Without the reports and data, no decisions are made and no actions are taken.
  8. They don’t have metrics or key performance indicators in place. Every business has metrics and key performance indicators. But most owners don’t know what they should be or even ask for them. Without a dashboard of key performance indicators to focus on, the owner is left blind in making decisions to move ahead.
  9. They still run their business as a hobby, not a business. When this is the case, the marketplace treats them as a hobby business too. Sadly, too many owners excel at creating and selling their products but neglect building out the foundation for their business. By not focusing on the business as a business, they stumble forward by luck with no plan, constraining growth and minimizing the company’s value.
  10. They never accepted the mantle of ownership and leadership. Entrepreneurs who won’t lead, should not claim the title of owner of a business. Even with the best product in their market and great team players, they can’t maximize profits because they lack the business acumen to grow or sell the business. Their narrow focus prevents them from achieving the financial freedom they wanted their business to produce.
  11. They lack, or never learned, the skill sets required for leadership and team building. Not everyone is a born leader. Not everyone has an aptitude to learn these key social skills. Owners who are not interested in developing key leadership and team building skills struggle in the role, resisting what it takes to excel.

It’s natural to focus on what you know and what you do best. However, it’s irresponsible for so many owners to avoid, sidestep and procrastinate about laying a business foundation and a strategic focus that could totally prevent their demise.

“You must remain focused on
your journey to greatness.”
— Les Brown:a top Motivational Speaker and Best-Selling Author

A Wealth of Information About Exit Planning

Here’s another review for HARVEST Your Wealth

HARVEST Your Wealth

“Kerri Salls’ new book, Harvest Your Wealth, is a clarion call for owners of small and medium sized privately held businesses. It might have been titled; “Don’t Leave Your Money on the Table When You Sell Your Business!” The author clearly knows her stuff. The book is chock full of lists: things to do, things to avoid, things to think about. Reading the book, I felt like I could have used a “List of the Lists” to help me navigate through the content, because there are so many useful lists of tips and techniques for the exit planner-I counted more than 75 different lists in the 235-page volume. The book has lots of very useful material, and I can imagine business owners dog-earring pages and writing lots of notes in the margins. I found the organizational design to be a bit vague, but that’s a trifling complaint when balanced against the wealth of valuable information that is made available to the reader.

If you are thinking about exiting your business, this is a book that you’ll want to add to your business library.”

By David Franzetta author of Changing Places

HARVEST YOUR WEALTH — Exit Essentials for Your Business


This Way Out Group LLC announces the release of HARVEST YOUR WEALTH – Exit Essentials for Your Business by exit strategist, author, speaker, and radio host, Kerri Salls to help business owners cash out of their business so they can cash in on their future.

FRAMINGHAM, MA (January 21, 2013) – This Way Out Group (, the break-out boutique services firm providing comprehensive collaborative exit planning services announced today the release of HARVEST YOUR WEALTH – Exit Essentials for Your Business (This Way Out Press $17.97 on Amazon) by CEO and author, Kerri Salls. HARVEST YOUR WEALTH – Exit Essentials for Your Business educates and prepares business owners to monetize their business on their terms when they plan to get out, instead of simply shuttering the business and walking away. Only when an owner prepares the business for a clean, solid, and profitable exit can they expect to cash out of the business to cash in on their future. Written by expert exit strategist Kerri Salls, HARVEST YOUR WEALTH reveals the secrets the transaction experts want entrepreneurs to know before selling a business, but no one has been telling them until now.
In HARVEST YOUR WEALTH, Salls introduces the 95% of all entrepreneurs and owners who do not have an exit plan for their business to the decisions, choices, options and opportunities they need to know about years before they decide to get out of their business. She advocates for early exits, especially over the next five years for baby boomers.

Salls says, “HARVEST YOUR WEALTH gives the owner/entrepreneur more control and leverage getting out. Plenty has been written on starting and growing a company. Very little has been written on exits, on monetizing that investment to be able to get out. What has been written has focused on the financial and legal side of the exit transaction or from the advisor or the buyer’s perspective.”

Less than 10% of business owners who put their companies up for sale actually get the deal done. (2010 Survey of Brokers and Buyers by MidMarket Capital) “[Exiting small business] owners are preparing for the deal of a lifetime with possibly zero experience.” (MorganStanley SmithBarney publication, 2011) [via Blackbridge Newsletter 2011]

They think they’ll be able to sell when they want for what they want with no lead-time or preparation of the business, the team or the business owner. That’s a diet of hope and promises that will satisfy no one. Because of a lack of pre-planning, 95% of all business owners are leaving up to 50% of the value of their business on the table when they exit.

In this book, Salls focuses on the needs of owners to make their business buyer ready and buyer attractive; on exit planning from the seller’s perspective before the transaction experts, or the buyers come into the picture. The urgency for baby boomers to act now cannot be overstated.

HARVEST YOUR WEALTH provides steps, checklists, assessments, questions and exercises all business owners must consider in order to take control and achieve their goals in the business and beyond. Salls provides the resources, tools and insight to encourage entrepreneurs and business owners to, as she says, “Plan their exit from the outset.”

Salls started her career in the Peace Corps in West Africa and then spent a decade accumulating multi-million dollar corporate achievements before launching her first business in 1988. She has been active in business strategy and exit planning for 40 years.

This Way Out Group LLC [] has been refining and applying a holistic system to assist business owners since 1999 specifically to help owners transform an income generating business into a wealth-producing machine so they can sell or scale the business on their terms on their timeline. Partnering with the business owner 2-5 years before their expected exit, we help established and hyper-growth companies prepare for and achieve their optimum exit strategy. We help owners to accelerate sales, optimize growth, and maximize value to make their business buyer ready and buyer attractive so they can get out and move on to the next venture, adventure or avocation.

HARVEST YOUR WEALTH – Exit Essentials for Your Business is available at Amazon and other outlets or at


Exit Planning for Your Transition to Reinvention

Ideally, exit planning occurs before action in every area.

Too often business owners/CEOs assume that because they want to exit the business soon, that they just have to act to make it happen. In fact, they are often surprised by how extensive the planning is that they must work through before they can get out and transition to reinvention.

Exit planning must include each parameter on this list.

Exit Objectives – Before you proceed, you must identify your exit objectives for the business and for your life beyond the exit.

Value Drivers – You must identify your value drivers, the value drivers that will make the business buyer attractive and the value drivers that secure the future growth of the business and protect your employees.

Transfer Control/Ownership/Management – Control, ownership and management are not the same thing. So planning how to transfer these different skill sets to successors is essential. You need to break them into distinct skill sets before you decide who you will train to succeed you in each area.

Contingency Planning – When things are running smoothly, owners think contingency planning is irrelevant. But if illness or an accident incapacitates you, your valuation will plummet unless you have a contingency plan/continuity plan established, documented and ready to activate.

Wealth Management/Preservation – You have to decide how much of the illiquid wealth of your business you want to leave in the business, to maximize valuation and secure future company success vs. how much do you need to liquidate to achieve your exit criteria and the financial freedom to pursue your reinvention.

Successful Exit – Defining and planning what a successful exit means to you is important. There is no vanilla answer. It’s unique to you, your family, your goals, your business, the lifestyle of your dreams. If you can’t describe it, you will never know when the package on the table meets your needs.

Exit Options – The earlier you start exit planning, the more options you have, the wider range of exit vehicles, wealth vehicles and reinvention options you can have.

Value of Your CRM in Exit Planning

What is CRM?

Your CRM system is about how you/your company do business with someone else/some other company. It’s about nurturing the relationship between you and the customer/prospect. It gives you a 360 view to better retain every customer. CRM is a tool to cultivate relationships between people.

Effective use of your CRM system as well as the data reports you can generate from it – both add value to your business that a buyer will pay for. Keeping your CRM system up to date and using it for all sales, marketing and support communications provides substantive, client-specific data to back up the forecasts you use in negotiating a price for your business.

  1. Choose the CRM tool that is right for your business – customize it so that it fits your company’s needs/objectives. There are many tools out there like ACT!, SageCRM, Saleslogix, MS CRM
  2. You have to use it to get the ROI from this tool like any other.
  3. Make sure that the data in the CRM software is as up to date as possible – garbage in is garbage out
  4. The relationships are key!  -Really get to know your customer so that you have a 360 degree view of their needs, likes and dislikes

Why use a CRM system and why study the tracking and measuring reports a CRM system can generate for you?

It helps automate and streamline:

  • Building your list
  • Building relationships with prospects
  • Keeping relationships with clients
  • Integrating marketing strategies, such as
    • Email campaigns
    • A-B testing
    • Newsletters/offers/incentives
    • Telephone outreach

Tracking and measuring data can be exported from a CRM system and be used in many systems to build a strong foundation for massive growth.

You Need:

  • Systems
  • Strategy
  • Processes
  • Structure

Do you want to stay a little business, Without a strong, deep foundation?

Do you want to grow a much larger, robust business, With a strong, deep foundation.

Your Business Foundation MUST Have all four:

  • Systems
  • Strategies
  • Structure
  • Processes

in order to grow into. You want to buy, train, install, and apply systems and tools that your company will not outgrow in the next 5 years.


Is It Possible To Achieve Both Business And Personal Goals In Exit Planning?

You may ask if it is possible to achieve both sets of goals. I say you must achieve both in tandem to achieve either one well.

There are many commonalities to balance both business and personal goals in exit planning. To achieve your business and personal goals in parallel, here are a few core strategies to use:

Document Your Exit Plan – to include the growth strategies that will maximize valuation on your timeline. Get the plan out of your head. This will make it tangible and real for everyone. It takes the decisions to be made out of the realm of emotions and dreams and makes the concrete actionable tasks.

Protect And Maintain The Value Of The Business that you can monetize at exit. Minimize the risk that any growth strategy you invoke will negatively impact the growth curve you are forecasting for the buyers.

Train and Delegate Move key employees into positions of operational responsibility and reward them for results. When you both train and delegate, you add immediate value to the employees directly, motivate them to stay and demonstrate to buyers that the value is in the business, not in you, the exiting CEO.

Evaluate All Your Primary Exit Options (financial or strategic sale, employee or management buyout, transferring ownership within the family) thoroughly, not just to fulfill your dreams but also to ensure the ongoing success of the business and job security of your employees from the growth trajectory you’ve put in place.

Activate Your Team Seek out and build a powerful team of experts, multi-disciplinary advisors to help you achieve your goals. Whether your business value is $2M or $50M, you’ll face the same issues along the way. Start with an exit strategist who can look at the whole business, not just the exit transaction right through to implementing your next steps, your reinvention after a successful exit. Your exit strategist should be a masterful quarterback and facilitator for your team of experts, allowing you to focus on building value in the business.

What’s Required on the Legal Side of Exit Planning and Execution?

Just like exit questions we have discussed before, there’s a whole set of legal elements, preparation, documents, asset/stock/cash mix trade-offs for buyers/sellers, the process sequence, real estate, closing, agreements and the Closing Package that you need to prepare and work through to make your business buyer ready at the closing.

I’ve compiled a simple list of documents, decisions and pieces you need before you can transfer ownership of your business.

I’m not an attorney. This list of what’s needed  is just to get you started when you seek out appropriate attorneys for your exit planning team. You may need to hire specialists in each area, depending on how unique your situation is. The attorney who helped you start the business, the attorney who prepared your divorce, the attorney you use for real estate transactions is likely not the specialized attorney you need to prepare your business for exit.

Agreements including every confidentiality /non-disclosure/non-solicitation agreement with everyone, including:

  • Customers
  • Vendors
  • Employees
  • Competitors

Advance Preparation checklist:

  • Confirming asset ownership
  • Identifying intellectual property
  • Protecting intellectual property
  • Check for liens
  • Corporate entity definition, location and status
  • Review, Complete, Update all corporate documentation including:
    • Annual reports
    • Corporate minutes
    • Tax filings
  • Assess, revise and develop continuity contracts covering:
    • Key management and employee contracts
    • Vendor contracts
    • Key customer contracts

that extend beyond your exit and that add value to the business.

  • Deal with any legal skeletons that are there. If they are there, you must resolve them because the buyer will find them during due diligence.

Explore and translate the asset vs. stock deal in the actual exit option you choose.

  • What is good for one party is not always good for the other party
    ex: in a stock sale, the buyer is buying shares of a company along with the liabilities – which will require more due diligence
    ex: in an asset deal, you as the seller may retain ownership of the company while the buyer buys specific assets required to run the business.
  • Define the agreement and understanding on the use of the name, brand, use of a name – especially if the brand is tied closely with the use of a family name
  • An asset deal  may require contracts, other documents and due diligence in order to transfer ownership

Processes to bring your business sale transaction to closure:

  • Non-binding Letter of Intent (LOI)
  • Purchase Agreement – including
    • Representations and warranties and survival of those representations and warranties
    • Indemnification
    • Arbitration provision
    • Allocation
  • Due Diligence
  • Contingency dates
  • Closing event and the transaction itself

Due Diligence Review will include:

  • Importance of other members of the exit team
  • Current, pending or potential litigation
  • Skeletons – if they exist, the buyer will ferret them out
  • Environmental issues and implications
  • Regulatory restrictions
  • Non-compete agreements
  • Employment agreements with key management and employees and the impact/implications for the seller

Real Estate – owned, leased, mortgaged, contracts, are they part of the sale or a separate deal

Closing Event/Closing Transaction Package Preparation

  • Ensure seller’s security in any earn-out, employment agreement or promissory notes
  • Non-compete agreements clear, agreed, up to date and countersigned
  • Employment agreements clear, agreed, up to date and countersigned
  • Documenting the conduct of business pending the exit event

This is just one area where it is apparent that you just can’t work through all this alone to attain your ideal exit. Note the scope of what the attorneys can do. It is important to recognize that  even with the right attorney at your side, the two of you can’t do it all. You need a whole team of trusted advisors, not just one.

Your Stakes Are High! Can You Afford Not To Get This Right?

stakes are high

You know the stakes are high – the highest, since your business is likely the most valuable asset you have and intend to monetize.

Then why do over 90% of all businesses avoid exit planning and do not have their transition plan documented? There is a mythical belief that business owners are invulnerable. There is an apparent universal belief that you can always do it tomorrow, that it’s too early to plan your exit.

But without a plan, you are leaving everything to fate, when time takes its toll. The statistics bear out what I’ve been seeing for years; brilliant successful, industrious business owners are frozen in inaction on this one area of their business that they do not want to address. Even knowing how much is riding on the result (taking care of a spouse, children, grandchildren, other family members, partners, employees, customers, suppliers, and others),  they still leave their legacy and their future lifestyle to chance.

In 2007, Mass Mutual did an American Family Business Survey. Their results, seemed to substantiate this lethargy. “Almost a third have no plans to retire, ever; and nearly another third report that retirement is more than 11 years away. Since the medium age of the current leaders is 51, this means that many people plan to die in office…” p44

MassMutual Financial Group, Cox Family Enterprise Center, Coles College of Business Kennesaw State University, The Family Firm Institute, Inc. (FFI), American Family Business, Survey, Study: Family businesses growing steady and strong but face future risks, 2007

Also in 2007, PricewaterhouseCoopers released a report on Canadian businesses succession plans, which found a lack of planning by owners that were 50 and over. They reported that, “many owners seem unwilling to seriously look into options to transition ownership before they are forced, by age or illness, to give up the business.”

The second overall top reason given on both surveys was ‘it’s too time consuming.’

Could this be the trigger point that will help drive owners into action?

As in your on-going operations, succession and transition planning is about business strategy. It is about creating a structure that will help you organize your systems, structure, and processes, which in turn will help you increase the value of the business, and provide you a vehicle to smoothly transition your business to new ownership while you cash out on your terms.

Building Wealth and Exiting Your Business Don’t Start on the Finish Line

Don’t start on the finish line. There are five arts to master to build wealth and exit your business. That takes time.

Strategic Planning – The Art of Direction and Decisions

Building wealth and exiting your business don’t start when you are closing in on the finish line. It’s proven that when you focus on selling your business two to five years before initiating the sales process, you will almost certainly realize a much larger return. Developing a systematic approach to growth with a focus on your long-term goals makes every decision along the way easier, even in the face of risk, incomplete information, or unexpected change.

Continuity/Succession Planning – The Art of the Changeover

A systematic approach to succession planning gives you control, choices and sufficient time to choose, train and transition management, of your business. Your job here is to maximize the value you receive when you sell or transfer your businesses. You need to identify an owner-centered approach to exit planning based on your goals, objectives and concerns.

Exit Planning – The Art of Monetizing Your Business

Exit planning for wealth is all about maximizing and preserving the transferable value of your business. It’s extremely important to integrate personal, financial and estate planning goals; and then coordinate them with the growth goals and opportunities of your business; to maximize profit and minimize tax liability on both sides. Your fiduciary objective is to transfer ownership and corporate value as profitably as possible.

Contingency Planning – The Art of Structuring Your Business For Opportunities, Possibilities And Growth

CEOs in general never take time to develop contingency plans. They are building a prosperous business not planning for a crisis or its demise. Skipping this one element of their business minimizes the value they can expect a buyer to pay for the business. You must develop those contingency plans and build the foundation elements to maximize valuation and make the business buyer ready.

Transition Planning – The Art of Reinvention

When you stop and think about it, most entrepreneurs do not measure success in terms of the financial rewards, but rather by the freedom and potential legacy that these financial rewards confer. But entrepreneurs often postpone transition planning because they struggle with how they would use their new freedom and how they want to define their legacy. You need to learn to find new purpose, community, and structure for your time; and then how to master wealth management and its new challenges and responsibilities.

Flawed Skill Sets of a Strategic CEO

In the area of skill sets struggling strategic CEOs lack, do you experience any of these?

  • No time to plan
  • Can’t stick to the plan
  • Can’t delegate/afraid to delegate
  • Stuck in systems and tools that hold you back
  • Still using systems and structures you have long outgrown
  • Trying to wear all the hats
  • No control of financials
  • Trying to be the technician and the visionary
  • Never enough time for your most important activities
  • No time for strategy and planning
  • No tracking/monitoring/measuring
  • No accountability in the organization
  • Poor time management skills
  • Mismatch between market needs and company capacity to serve and respond
  • Use/misuse/lack of automation or relevant technologies
  • Too much operational responsibility to focus on CEO oversight role
  • No development of management or grooming of successors

If any of these is a challenge, then you are still working too much in your business. Instead, you need to prioritize working on your business. You need to build up your strategic skill set. These are the core responsibilities you will be responsible for in exit planning.

To take on more strategic responsibilities and help the organization morph into a structure and business model that can grow to fulfill its true potential, you must delegate operational roles, responsibilities, tasks and control. This does not happen overnight. This transition goes hand-in-glove with your exploring your exit goals and exit options.

© 2009- 2016 This Way Out Group LLC top