Coming Up With a Business Plan to Enjoy Life for When You Exit
How to Unlock the Hidden Wealth Inside Your Business
This is, in fact, about exit strategies, and it’s about how to unlock the wealth that’s hidden inside your business and it’s about creating your perfect exit strategy for your business and the life after business. My biggest challenge here today was what to leave out because this is such a big area to cover.
So, most business owners only get one chance, that’s it. The single largest financial reward that they get is when they actually leave their business. You might get great cash flow along the way, you might get a bit of lifestyle along the way, but usually, the biggest reward that you get, and the biggest fulfillment and bucket load of money that you can get, is when you actually exit your business.
So what I’m encouraging you to do is, in fact, to start thinking about it now because the process can take two to five years. I know from my own experience, what I did with my first business, I’m going to share that with you later, if you do give yourself some time, work through the processes over that period of time, you will, in fact, find yourself very satisfied.
Just for those of you who don’t know perhaps as much about my own background, I started my business career at the rough age of 16, and unfortunately my parents passed away quite early so I was out in the workforce at 16. But I then educated myself and I worked my way through lots of opportunities until in 1983, I was recruited to a business called Freight Management International, which is actually part of Mayne Nickless, a large public company, and I reached the heights of being the general manager of that business in 1986. And I’m, to brag a little bit, yes, I was the first female general manager of Mayne Nickless, so that was a bit of a coup.
And then they decided they wanted to sell the business along with the whole range of other businesses at that particular time, strategically looking as to where industries were going. So I put up my hand and said, “Yeah, I’d like to buy the business,” well, they didn’t want to sell it to me just then, they thought they’d go off overseas and see if they could find a buyer, when they couldn’t, they came back to me. So the rest is history, as they say.
I just wanted to show you something, this is the book that saved my life back then, because I had absolutely no idea how to write a business plan to get investors. So, you know, it’s incredible how it dovetails into what we’re talking about. What I learned from this book, back then, 1987, of course I was a spring chicken, was that I had to have an exit strategy. So if I wanted to go out and get investors, not only did I need to be able to present them with a business that was a great opportunity, but I actually needed to show them how they were going to get their money, and get a dividend out of the business and over what time frame.
As they say, the rest is history, it was a $12,000,000 business, we had 83 staff, five locations around Australia, 120 overseas agents, so quite a decent size, and it was fun, yes, we experienced every possible economic calamity that you could imagine. If anybody can remember, maybe one or two people weren’t even hardly born back then, anyway, we had the great economic skyrocketing targets that were huge in about 1989, the economy was rampaging, you might remember that Raiden, yes, we were hitting for our first million-dollar profit back then, it was absolutely fantastic. And then the good old recession we had to have came along and being in that type of business, the freight business especially, it’s a lead industry, an indicator industry so we really felt it first.
Anyway, my idea with the business was to grow it and to sell it somewhere between the five and the 10-year mark, and that’s actually what happened. In the early 90s, we implemented the continuous improvement program which was called TQM back then, Total Quality Management, we do all the ISO Standard Certifications and had all of that. And interestingly, I think it was because we were doing that, that we attracted people, attracted other businesses to us to say, “Well yeah, we know we might like to do something with you here, we might actually like to buy your business.” We had a lot of suitors along the way but we actually said no to quite a few of them.
Kerry Boulton Knows How to Run a Successful and Profitable Business
For me, it was a case of, the most important thing when I sold the business was that everybody had a job except for me, I was quite happy to go out of it, didn’t bother me in the slightest, and in fact, that’s what happened.
The only thing I didn’t think about, which is what we’ve raised this morning as well, was what was I going to do after I sold the business, I actually didn’t think about that. And then, after I had a two-year earn out, it was a case of, “Okay, now, what am I going to do?”
So me being me, carpe diem, enrolled myself, went off to university, get a Master’s Degree in Entrepreneurship and Innovation, and did that part-time, and in fact, that was where I thought about the next business that I was going to do, which was, in fact, Nexus Business Coaching. So in the mid-90s, before business coaching became all that popular as it is today, I started that business and did that for the next nine years with a group of coaches and we rapidly grew the business because it was something that the marketplace really wanted.
I decided, after that, that I better spend some time with the children because they didn’t come along. One was born the day I had to sign the contract to take over the business, 1987, my daughter France, who’s living in New York right now, and then of course my son came along in 1990 just when we had the recession we had to have. These kids, honestly, he’s off at Uni, he’s got his own fabulous business now as well, so then that’s going great guns. But I thought I better spend some time with them, so I did, and you know, leopards don’t change their spots, do they, so president of the parent’s association at school, doing all the fundraising, all that sort of thing.
Anyway, along the way as well, we had another business that had been growing great guns which was, as the franchise partner at Hocking Stuart in Albert Park, my husband worked that business directly, of course, and in 2007, we actually sold out of that business. He stayed on, that was an absolutely fantastic time to be in the real estate industry. He stayed on for a couple of years as lead in sales, salesman, and unfortunately, 2010, he was diagnosed with bowel cancer so he resigned and left, went through surgery and chemo, and I must say, he took 10 months off, you know, just to get well again. I’m very pleased to say, he’s completely clear, happy, and really well these days, he’s got the big tick from everybody.
Then, he was in Tyson in 2011, we started another business called Greg Hocking Holdsworth this time, another real estate agency in Albert Park and here we are four years down the track, and that’s actually going really well. So as I said, just back then, you know, I retired, spent time working with the schools, there we are, couldn’t help but show the picture of the family, and what are we holding? The Premiership Cup from 2012, we’ll be holding it forever.
So we were fortunate to have it at home for 24 hours in our custody, which was amazing. So, why am I sharing this background with you, it’s simply to be able to show you that I’ve actually been there and I’ve done it. So, I’ve been through what everyone else is going to go through as well, and I’ve had the chance to do it more than once, which is, as I say, pretty unusual.
So who’s the workshop for today, we’re here for every business owner. It really doesn’t matter when you started your business, even if you’re just starting it now. What I want you to do is to think about beginning with the end in mind, that’s really, really important. So if you happen to be thinking your business is your nest egg for the future and where you want to go for retirement, then, you need to know the information that’s here in this workshop today because there’s an awful lot of competition coming your way for the future. And if you haven’t even thought about an exit strategy, and you don’t know what you’re going to do with the business, then I’m hoping that today is actually going to give you some thoughts and be the catalyst for you to be able to consider that more closely and especially if you’re actually considering handing the business over to somebody, whether it be to management or even the next generation or some other third party, then this is really important for you to consider.
So, what we’re going to cover today is the number one business commitment that you need to make in order to significantly improve your business and enhance your business value, that’s really important. We’re going to talk about the five key shifts in terms of your thinking that you need to make both before and after you sell your business, and we’re going to go through seven life-changing questions and those are going to be able to transform your business over the next few years while you’re thinking through this process. And lastly, I’m going to share with you a four-step process that’s going to be able to maximize your business faster and give you your ultimate payday.
So today, as I said earlier, my promise to you today is that you are going to know exactly what you need to do to create the best possible exit strategy and enjoy your life.
The 5 D’s You Need to Look Out for in Business
First of all, let’s have a look at what we call the five D’s. Over the 25 years that I’ve been in business, I’ve either experienced or had clients who’ve experienced every single one of these, every single one, and you may have heard of them before, you may not, and it’s not in your work book, okay, because I didn’t want you cheating.
So first one is Death, this is about the contingency plans, having in place mechanisms that are going to help you if any of these things actually happen if you confront it within your business. In my freight business, the first three months in, my Victorian state manager was killed in a car accident, what did we do? Well, it was an upheaval, so we actually had to face it.
One of my investors, who was in fact the signatory on our bank account, was diagnosed with liver cancer a couple of years later and within three months passed away. The bank froze our accounts overnight, we had no money, that was something we had no idea was going to happen. We learned of course, luckily our relationship with the bank was good enough, we were able to get things sorted within 24 hours but you know, we could’ve been out of business. So it’s about asking questions and finding out whether any of these things may impact you in your business.
Divorce, hasn’t happened to me, but it certainly happened to one of my clients. Unfortunately, they had a lovely business, a $2,000,000 business running along very nicely, five children involved, things went haywire, they ended up just simply closing the business down in the end, not getting anything like they needed to get for the business, they were just able to sell off, liquidate a few of the assets that they had there. They did own a building which gave a bit of money but other than that, the business that they’ve been working for 20 years just gave them nothing. So thinking about these sorts of things.
Disability. I’ve told you this story about how my husband was diagnosed with bowel cancer, so that’s something that can impact you. Luckily, we had our own personal contingencies in place, but had he been in the business, still being in the Hocking Stuart business, there was an agreement and insurance policies were set up so anything like that actually, if anything like that happens to you in a business, they were set up with policies that were going to cover it. So they didn’t have to worry in terms of that person not producing the income that the business needed, that’s happened as well.
Disputes, now, what happens when you have a bit of a fight with partners? All I’m suggesting is for you to think about this, this is all part of your contingency planning. If there are disputes in the business and someone says, “That’s it, I’ve had enough, I’m out of here,” what are you going to do?
And lastly, if there’s a Disaster. I had a client who had a fire in his factory, thought he was totally covered, turned out, the insurance policy been taken out many years prior, hadn’t been kept up to date, things were not covered, his business ended up an absolute disaster, it was nearly 12 months before he actually was able to get back and restitute what he had before. So I just want to highlight that so that you know that this contingency planning is very much a part of your exit strategy plan as well.
So I just want to share some stats with you. 60% of Australian business owners plan to retire in the next 10 years, what does it mean? It just means the competition is going to be enormous in the marketplace. It’s the baby boomer generation moving into retirement, it’s a fact of life, you can’t change it at all, there’s this huge bubble that’s coming.
Creating the Right Exit Plan
Crazily, 75% of them have no exit strategy and for many of them, 20% say they’re going to shut shop so you know, that’s really sad when you’ve worked for years and years and years, and you’re not going to get anything from your business, you’re just going to shut it. I don’t want to see that happen, I don’t want to see it happen to you, I want to see you actually get the best that you possibly can out of the business.
The real issue is giving yourself time, whether you like it or not, every entrepreneur, every business owner exits. Now, whether you want to have a choice as to when and whether you want to have a choice as to how depends on how well you actually produce an exit strategy, because you will go whether it’s feet first, you will go, that’s the thing that’s not an option. And even though you might have a viable and profitable business, not all viable businesses are actually sellable. So giving yourself time, as I’ve made the point previously, is really what you need to do, plenty of time and it’s not measured in years, not measured in months, plenty of years to give yourself enough time to get your strategy ready.
You know, the median age right now of Australian business owners is 47, that’s the median age. 22% of business owners are in fact over 65 already, so you’re going to be faced with ever-increasing competition, and there’s also a pent-up wave of demand that’s occurred from the GFC, so lots of people were going to sell their businesses when the GFC hit, they’ve held back so that they could get a better price, waiting for better economic conditions, but it’s already a buyer’s market.
As of last October, there were 41,200 businesses, the highest number ever on the market for sale and it’s only going to increase as time goes on.Don’t fear, we’ve got some answers for you here today to help you through that.
A couple of people have mentioned what is that they want, that they’ll need to think about what they want for the future: imagine how fantastic that you’re life you’ll be in the future, the sorts of things that you’re going to be able to do – you’re enjoying life, you’re relaxed, you’re feeling really good about how things have gone, and you can finally step back and take some time to yourself, you can spend the time doing what you want, you can spend the time doing anything when you want to do it and with those who are nearest and dearest to you.
“I’m Noel Jones, head of business school Noel Jones Real Estate, and after 20 years of successful operation, I sold out and these days I live a very good life, and doing a lot of cycling, golfing, traveling overseas, and sharing a lot of my time with my family and friends. My advice to anybody who has a business would be to develop a plan so that they can get out and enjoy their lifestyle once they do sell out.”
Exiting your business is not an event, it’s a process, it’s a phase that you go through. Exiting your business is really on in the middle, because you’ve got to have what comes after the business, as simple as that.
What’s a successful business exit? It’s about: were people happy with the process and were they happy the way with the way it turned out? So this is the thinking that was going on behind people’s actions and what they were going to do. So good exits, as opposed to bad exits, when you’ve left the business and you know, maybe, you’ve been forced to get out of the business with one of the five Ds even that came along.
So these are actually the shifts that people had and what happened for them when they made a good exit, successful exit. They felt that they’d been treated fairly and appropriately during the process, and they’ve been appropriately compensated, they got the money that they believe that they needed to have for the business. I felt exactly that way, feeling as if you’ve been really treated fairly and you’ve got the money that you deserve is really important, absolutely.
The second thing is they had a sense of accomplishment. They could actually look back and say, “Yeah, I’m happy,” they contributed something in value to the world, and they had fun doing it which is really important as well.
Thirdly, that others were rewarded and treated fairly. You don’t build your business on your own, you have other people help you build your business. So most people are good, most business owners are good people, they want to see that others are treated fairly and that they’re not just dumped for the sake of moving on in the business. So that was an ingredient for having a successful exit.
Fourthly, they discovered that they needed a new sense of purpose and they were able to create one outside of the business. They had new lives and that they were fully engaged in what they moved on to.
And lastly, that for many of them, they had pride in the legacy that they’d left and in the achievements that they’ve made over the course of their journey in the business. And of course, they’d handled one of the most difficult issues that any business owner had, and that’s succession.
Recent Comments