Posts tagged with: reinvention

Transition to Your Reinvention

If exiting your business does not need to lead to retirement and death, what’s next? It’s your choice, both because you’re the exiting owner and because your opportunity is not your parents’ retirement expectations.

What’s next can and should be your reinvention.

Our parents worked 9-5 jobs for large companies with a pension and retirement benefits built into their compensation package. They were loyal to the company for 20, 30 or more years and were rewarded with a secure pension to rest and relax for the rest of their lives.

That model has all but been wiped out. In its place every working individual has to plan, save, and invest over a lifetime of jobs, career moves and other changes to create the wealth to provide financial independence. As the owner of your business, you have been working long hours for many years to build the business to provide an income, while benefiting from and enjoying some tax-advantaged benefits of ownership (e.g., company paid and/or tax deductible health insurance, use of a company car, paid vacations, etc).

When you sell or pass on your business, many of those benefits become expenses instead of deductions if you want to maintain the same lifestyle.

Your reinvention in the 21st century will look very different from your parents’ retirement. Some general observations:
1. The actuarial tables for the second half of the 20th century forecast life expectancy to be retirement + 3 years.
2. Our parents left a job or career to go home and read, knit, cook, play golf or play with the grandchildren.
3. There was no expectation they would pursue gainful employment, start new businesses, or make major contributions as ‘old, retired’ people.
4. They were sidelined by society.

None of that is true for today’s BabyBoomer business owners, the primary audience for this book. As BabyBoomers, we:
1. Expect to live decades into the retirement years
2. Have the health, vitality, wisdom and creativity to reinvent ourselves, our lives and start over if we want to
3. Have no intention of retiring by any definition
4. Have more plans for the next three, four or more decades of our lives
5. Have the wealth, financial independence and education to expand our options and choices in reinvention.
6. Are choosing and planning our reinvention to be some combination of:
a. a new venture – for profit or not, a spinoff of the business just sold, or something entirely new – whether the liquidity from the exit transaction will be used to fund it or not
b. an adventure – whether that means moving to the coast, to the mountains, to a resort community, to a 55+ community, or moving to Panama, Belize or Singapore, or sailing around the world for a year
c. an avocation – a cause or organization to contribute more time and resources to
d. a hobby – whether it’s learning golf, a musical instrument, or a new language or spending more time on an activity you love like horseback riding, scuba diving, sailing or skiing.

You must plan your transition to reinvention in the same systematic way you approach the sale of your business. One is closing out a chapter of your life. The other is setting up, structuring and preparing for the next chapter of your life. It is essential that these two projects progress in tandem to achieve a smooth handoff from one to the other when you exit your business.

Seven Keys to Success

Before you can implement your transition to reinvention, you have to plan it starting with some quiet time to reflect on you, your life purpose, and your outstanding Bucket List of goals, dreams, and adventures; the accomplishments you wish to pursue or complete beyond your business. Journal about the following “Seven Keys to Success,” in terms of the quality and richness of your life that you want to build after you exit your business. This should become an ongoing exercise early in your business right through the exit transaction and transition to your reinvention.

1. Awareness: It’s important to know who you are, how you got here, and what kind of decisions you’re making. We all get programmed as kids, but that doesn’t mean we have to live our whole lives with that programming.

2. Vision: Imagine the details of the life you want to live. We each make our own roadmap – consciously or unconsciously – and having a vision lets us know where we are going.

3. Purpose: Understand why you want to get to the destination. There’s more to life than hard work and grubbing after money. Finding purpose in everything you do puts a fulfilling life within your grasp.

4. Belief: We all believe in ourselves to some extent. Increasing that personal belief – your confidence – is a major component for being able to move forward.

5. Action: There are different types of action we take based on our awareness, vision, purpose, and belief. The momentum we build with our actions serves to propel our growth and development.

6. Gratitude: This is a deep and personal thing. I’m thankful every day for Uncle Tony and my dad. Being able to have gratitude for what we have in life – no matter where we’re at – is the hallmark of success.

7. Forgiveness: This is the hidden key to achieving and keeping success. Setting aside “what has happened” in favor of “what can be” means you’ll have your hands free to hold your success when it comes.

Is Retirement the Same as Death?

Entrepreneurs in the US for the most part are stuck. They are working hard long hours to create an income stream. If they stop working, there’s no income.

The fallacy is that there is no exit, and never will be, if you only focus on generating an income stream to pay your salary or to meet payroll. Without a wealth plan in place, a wealth plan established from profits, then retirement might as well be death because those same hardworking CEOs have no assets to walk away with, no assets to invest for their future.

When I talk to some CEOs and the subject of retirement comes up – you would think I was talking about their mortality. They equate any form of leaving the business as death. They live for the business. They have become so immersed in the business; they’ve lost sight of the purpose of commercial enterprise, their commercial enterprise.

The purpose of all commerce is to make a profit. When a CEO can turn a profit and exit on their terms and timeline, that’s a successful exit.

My assumption is that every CEO wants to liquidate their position in the company they built/own at some point, whether to fund their next step, even if it’s not a classic retirement; secure the future for their family and loved ones; or fulfill the terms of a will or trust. Even those CEOs who resist planning their exit, often procrastinate because they don’t know what to do or how to do it. No one intends to leave their business feet first without a plan for its continued success; but in epidemic proportions, they just don’t initiate and implement a timely exit plan.
When a CEO can walk away from the business with liquidity to fund their reinvention on their terms, instead of a rocking chair, knitting needles or fishing pole, that’s not retirement or death. That’s freedom and financial independence. You can too.

Before you can implement that transition to reinvention, you have to plan it starting with some quiet time to reflect on you, your life purpose and your outstanding Bucket List of goals, dreams, and adventures, accomplishments you wish to pursue or complete beyond your business. Journal about these seven keys to success, in terms of the quality and richness of your life that you want to build after you exit your business.

Baby-boomer Sellers’ Opportunity

Here’s the recipe you need to set up in order to have the licensed transaction experts at the end, competing to sell your business and to have buyers eager to buy on your terms on your timeline:

  • Start succession planning early
  • Maximize valuation
  • Accelerate growth
  • Plan an early exit
  • Make your business buyer attractive

It’s worth the time invested all along the way for you to be able to exit with the financial freedom to pursue your reinvention.

Business Exit Planning Is Easier Than The US Military Exiting Iraq But More Complex Than Selling A House

It’s true. Business Exit Planning Is Easier Than The US Military Exiting Iraq — But More Complex Than Selling A House.

The majority of business owners avoid, procrastinate, deny, and postpone any discussion of business exit planning. The statistics consistently report  95% of all CEOs find excuses to not plan their exit.

The anticipated fear and overwhelm are exaggerated. When you put it in perspective, exiting your business is far easier and produces many more reasons for you to celebrate, than the recent US military exit from Iraq.

No CEO Can Do It Alone.

Just like it took large teams of experts  and years to plan and implement the US military exit from Iraq; you need to surround yourself with a team of experts who know more than you do about exit strategies and achieving your exit objectives.

I concede that your business exit is not as straightforward as selling your house or buying investment property. But, with a little help from your exit strategist and your transaction experts, you can focus on what you do best in the business while your team streamlines the process of exiting your business on your terms and on your time line.

No Planning

The absence of planning is one of the deadliest oversights a CEO can succumb to. CEOs know better. They just don’t invest the time and effort to plan their exit. The default option is that you will exit your business feet first or worse, – close up shop with nothing to show for all your time, effort, expertise and resources invested. Too many CEOs resign themselves to never monetize their business, never fulfill their dreams or live their legacy.

Business exit planning is easier and much more inexpensive than the US military exit from Iraq. In fact, exit planning actually will make you money, make the business stronger and more valuable, and provide a plan for your next steps, your reinvention after you exit.

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.

What Is An Exit Skill Set?

Remember the campfire story of ‘going on a bear hunt’ It’s told as a round with everyone slapping their knees and pounding their feet to the rhythm. The refrain at each obstacle encountered is a version of: ‘Can’t go over it, can’t go under it, can’t go around it, gotta go through it.’

For every challenge and adventure the hunters face, they overcome it and find the bear.

The lesson applies to your business as well. Instead of settling, you need to equip yourself for your bear hunt, to maximize the value of your business so you can transition to your reinvention.

Your exit skill set must include mastery of the following:

  • Emotional Intelligence (EQ) skill set
  • Leadership
  • Time Management
  • Productivity
  • Planning and Strategy
  • Implementation
  • Delegation
  • Automation

If your goal is to get through the day, meet payroll, go home at night and enjoy the perks of ownership as business deductions , you could continue on with business as usual.

But if you want to accelerate growth, maximize the value and make your business extremely buyer attractive and buyer ready, there are other skill sets you must master starting now. Your exit skill set takes 2-5 years to learn, evolve, refine, implement and master.

You might say these are soft skills, that these skill sets are not essential to how you run your business now, and conclude that they are not essential. That may be. However, unless you are content to walk away with only 50-70% of the value you know is in your business (the value you are planning on liquidating to fund your reinvention plans); you need to apply each of these skill sets across every department, product line and your entire team.

Consider how each skill set once learned will benefit the business, your team, the buyer, your own exit and your reinvention.

To Get Out of Your Business – Don’t Get Emotionally Stuck in Your Business

Most CEOs go into business because they are very good at something and/or they love it very much. They put heart and soul and an overabundance of sweat equity into the business they are passionate about. Over time, the business can and often does consume them, their life, and their identity. They become one with the business.

This emersion in the business is essential for the business to survive and become a thriving enterprise. So to an extent, it’s very very good. Up to a point.

This commitment is essential to building the business, establishing the culture, building out the team to run with and establishing a clear value for the business. But this oneness with the business can cause damage as you start to consider when and how to get out of the business.

CEOs put on blinders that can actually set them up to sabotage or murder their business. In fact, over 95% of all business owners still do this. One of the biggest blind spots for CEOs is how emotionally attached they are to the business which can make it very difficult to exit or sell the business.

You are emotionally stuck in the business when:

  1. You can’t let go enough to take a vacation never mind ‘retire’
  2. You have no identity, social life, purpose outside of the business
  3. You can’t delegate day to day operations because no one can run the business the way you do

These are just a few of the red flags that you might be emotionally stuck in your business, not prepared to move on, never mind exit the business. First recognize how you are emotionally attached to the business, then identify why. Only then will you be ready to make the changes to reposition your role so you can get out of your business. It takes conscientious, diligent hard work to make the transition to actually get out of your business.

The easiest way to start is with a plan for what’s next. Brainstorm on ideas/possibilities/opportunities of what’s next for you when you do exit the business. Do they include a new venture? an adventure (solo or with family)? an avocation, service or hobby? Then explore what has to change in the business to free you up so you can get out of your business and pursue/fulfill these latent possibilities and opportunities.

To get out of your business, you need to get emotionally unstuck from the business and emotionally charged up about your next reinvention.

Mindset

Your mindset going in to exit planning is the most critical determinant of your successful outcome. There are a number of mindset factors that you must recognize and consider. Your mindset will determine your ability  to set and achieve your hopes and dreams. You have to be able to recognize and adhere to the process to achieve them. Most CEOs have dreams and goals of the outcome they want from their business. Many fewer CEOs reverse engineer their goals into a timeline, process, and a sequence to get to that exit.

Challenges will occur that could derail your exit plan, guaranteed. Fighting or resisting those challenges is an unproductive waste of time and energy. Instead, install and master a mindset to address, overcome, resolve, and circumvent each challenge as it arises.

Attitudes/mindset are often ignored or minimized when exploring what we need to learn to achieve our goals and get to an exit.

Most CEOs trained to emphasize the strengths of left-brain thinking, resist addressing or developing the right-brain skill of mindset readiness. Mindset readiness requires the most time to develop and is not easily measured or demonstrated. But your mental and emotional attitudes are the most important of all learning components because your attitude/your mindset is the gatekeeper that determines how well you acquire, master and apply any other skill set and knowledge.

Entrepreneurs stubbornly adhere to tired outdated thinking which in turn sets up their business to continually struggle, not achieve its full potential and settle for selling their business for only a fraction of its worth. That downfall is totally preventable.

In the area of mindset, attitudes and beliefs, do you experience any of these? Make note of the ones that apply to you.

  • Have no exit goals
  • Can’t set exit goals
  • Don’t know how to set exit goals
  • No consensus on exit goals
  • Can’t delegate/afraid to delegate
  • Prisoner of the entrepreneur’s trap  – Trying to wear all the hats
  • Scared to grow – because of past experience, old belief systems, systems or staff that slow or prevent your growth
  • Scared to share control, responsibility, ownership or profits
  • Scared to lose control
  • Easily distracted – by environment, people, events, equipment
  • Minimal goals/easy goals/short-term goals that don’t stretch individuals or the organization – to play it safe
  • No personal accountability of the leadership team/ of you
  • Still running the business as an opportunist
  • Resist building a strong business foundation for growth or increased value
  • Ignore or deny the need for exit planning
  • Ignore or deny the need for contingency planning
  • Ignore or deny the need for continuity planning
  • Ignore or deny the need for succession planning
  • Ignore or deny the need to plan for your transition
  • Ignore or deny the need to plan for your reinvention

You’ve heard the phrase:

Your attitude determines your altitude.

Your mindset is the key to everything you will achieve to exit your business when you want to. When you decide each of these elements is important enough to the business and to your future beyond the business, only then will you take action and:

  • Develop the skill sets
  • Acquire the necessary knowledge (direct learning or surround yourself with experts)
  • Develop plans, strategies, and tactics to achieve everything you want for your business and from your business when you exit.
  • Apply the discipline and leadership to accelerate growth and maximize value on your timeline.

“It’s a mindset – you’re only limited in scope by your own imagination and your ability to see through problems, challenges and roadblocks to the opportunities.”

 

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