"If you don’t know where you’re going, then any road leads you there." — Lewis Carroll

This saying holds true for business owners who lack an endgame plan. Without a plan, you are simply reacting to events as they happen. A better approach is to create those events through thoughtful planning. From this perspective, I have developed the Business Succession Journey series.

My goal in this series is to help owners view their businesses differently, focusing on building an asset rather than merely operating a business. Ultimately, I want the business owner to achieve "freedom of choice." This freedom is attained when the owner has created an optimal business that is not dependent on them. At this point, the owner can decide whether they still enjoy running the business or if its value is optimal for sale. Those are the two opportunities I want every business owner to reach.

I have a methodology for business succession that begins with the owner. The owner must be ready to transition and implement their endgame. They should know how they will spend their newfound time after selling the business and feel confident that they will be financially secure. If their non-business assets are insufficient to cover their lifestyle expenses, they face a wealth gap. This gap must be addressed by the sale of the business. Thus, I start with the owner to determine their readiness.

If a business sale is necessary to fund the wealth gap, the owner needs to know the current worth of their business. If the business's current value is inadequate to fill this gap, they face a value gap. We work with business owners to determine their current value by preparing rule-of-thumb valuations, which help establish a planning-phase business value. With this knowledge, the owner can better understand what needs improvement.

So, how do we enhance business value? First, the market establishes multiples and key performance indicators (KPIs) specific to each industry. With this information, owners can identify where their business may be lacking compared to market benchmarks. Additionally, there are eight core drivers of business value. We utilize the Value Builder System to help owners identify areas for improvement concerning these drivers.

With this information, the owner can begin enhancing their business's value. They need to focus on the intangible aspects of their business, which derive from four capitals: human, organizational, social, and customer. By working through the eight core drivers, owners can improve the intangible value of their business, thereby increasing its overall value.

Harnessing human capital can be challenging. However, there are strategies to retain key employees and management. After all, buyers seek a highly skilled and trained workforce, so retaining these key employees during and after the sale will enhance the value for the buyer. We collaborate with business owners to discuss various employee incentives to ensure that key personnel transition smoothly and become valuable assets for the new owner.

As the owner focuses on an endgame plan and strives to build a business with transferable value, what good is this planning if unexpected events occur? There are four significant events the owner

must consider: death, disability, divorce, and disagreements among partners. The impact on business value from the unexpected death or disability of an owner can be mitigated through an estate plan known as a business continuity plan. Disruptions caused by divorce or disagreements can be minimized through owner agreements, such as management or buy-sell agreements. In either case, we discuss these concepts with the owner to ensure they receive proper guidance from their legal counsel.

With the business in optimal condition, the owner is prepared to explore their endgame options. The most important factor in selecting a business endgame option is that it must align with the owner's terms and timeline. The owner must determine whether the endgame option presents an opportunity to leave a legacy or maximize financial gain. With this understanding, the owner can better decide between an internal transfer (to family or key employees) or an external transfer (to strategic or financial buyers).

The succession or endgame plan is a team effort. The owner's financial advisors, CPAs, insurance brokers, attorneys, and bankers all play a role in developing and designing a unique succession plan. We work closely with the owner's advisory team to ensure their goals and objectives are met.

I have created the Business Succession Journey seminar series to help owners understand this process, which can take 3 to 5 years to achieve their endgame. Join me on this journey to develop your endgame plan!