From The Blog

Choosing An Exit Strategy

A few years ago, three partners of a local CPA firm sat around the table talking. All of them were Baby-Boomers in age and they talked about what would happen to their 20+ person firm after they retired.

Two choices seemed logical. One, they could entice a larger firm to buy them out or, two, they could hire and train staff to replace them. Either choice required work to build value in the firm and maximize the anticipated “sale” of the business in the future.

At some firms, seasoned Baby-Boomer partners are preparing to exit within the next ten years. They may have children (or grandchildren) in the family who are being groomed to take over the business.

(Eighty-four percent of multi-owner firms surveyed in 2016 by the American Institute of CPAs said they believe succession will be a big issue for them in the next decade.)

Plan

Planning your future exit from the business can differ depending on the size of the business.  Regardless of the industry you are in, training future partners in advance is important for Baby-Boomer entrepreneurs to plan for.

Some businesses include mandatory requirements in written agreements, describing how an outgoing partner must transition clients to work with their replacement.  Partners or co-owners who opt to sell their part of the business may encounter roadblocks because the market is saturated in their area of expertise. This poses a challenge for soon-to-be retirees and their firms.  Planning in advance will increase the probability of a successful sale for those who hope to sell their career-long business at an acceptable price.

Young professionals who are looking to buy in to an existing business must be sensitive to business founders approaching retirement, as many have spent their careers building their firms and may be hesitant to step away.

Opportunities

If you are a young Millennial looking to buy out the owners or you’re a partner or co-owner who is planning on retiring soon, open and ongoing communication is a key element to successful transition.

At some firms, particularly those providing professional and technical services on things like taxes and financial matters, owners can decide to expand their firm now to avoid a leadership gap when they retire. The business might establish specialties in specific areas so that the founder can appoint younger talent to lead in those niche services.  Existing owners may think about when to strategically give notice of retirement to co-owners, so that younger leaders have a firm timeline for when they’ll become partners.

In one business, with a staff of about 10, the co-owners re-organized to have multiple people serve a single client.  This makes a client more likely to stay with the firm when the founder or co-owner leaves the firm.  Ten percent of multi-owner CPA firms surveyed by the AICPA in 2016 reported that they’ll likely look to merge with another firm after their current senior owners retire.

In a merger situation, large firms may shop for specialty expertise in smaller businesses, related to their industry.  They’re likely to ignore a firm without a strong niche. Firms who avoid technology, like using paper instead of cloud-based systems, may drive away interest from a potential buyer.

Ten years ago, small firms most often merged with larger organizations because they lacked a succession plan.  That’s changed, with many firms now merging as a strategic move. Large firms may offer pricey technology, for example, that small firms need so that they can compete and reduce costs.

Summary

As Baby Boomers retire, younger entrepreneurs have immense opportunities to buy into a solid firm.  However, generations may clash. For example, a retiring founder may choose to meet with clients face-to-face, while on the other hand incoming partners could pick email communication.  There is a huge opportunity for multi-generations to learn from each other on those fronts.  However, buy-out deals can fall apart because of different philosophies on how to do business.  Planning in advance will mitigate fall-out and maximize returns for the founder(s) when they are ready to exit.

Experience success!


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

Baby Boomers are those born between 1946 and 1964, making them 54 to 72 years old, and the U.S. Census Bureau indicates an estimated 74.1 million of them in the U.S.

Photo:  Carolyn Michael-Banks
CEO/Founder of A Tour of Possibilities, LLC
www.ATOPMemphis.com ~ at the LevelUp Conference 2018

The estimated number of Boomer women is 38.44 million. In addition to their existing assets, Baby-Boomers are set to inherit $15 trillion over the next 20 years. Add to this the fact that women drive 70% or more of all consumer purchasing.

Despite these figures, Nielsen estimates that less than 5% of advertising dollars are targeted to adults aged 35 to 64. According to the report, “Typically, once a group of consumers reaches the so-called ‘cut-off’ age of 49, marketers ‘go back to go,’” the report says.

Knowing more about Baby-Boomer women can help you market to them. 7+ facts:

1. Once the college bills are out of the way and children launch their own households, the discretionary spending power of 50-plus women soars. They spend 2.5 times what the average person spends. Women are the primary buyers for computers, cars, banking, financial services and a lot of other big-ticket categories.
– Marti Barletta, Primetime Women

2. Born between 1946 and 1964, Baby-Boomer women represent a portion of the buying public no marketer can afford to ignore. With successful careers, investments made during the “boom” years, and inheritances from parents or husbands, they are more financially empowered than any previous generation of women.
– Mary Brown, Carol Orsborn, Ph.D., Marketing to the Ultimate Power Consumer—The Baby-Boomer Woman

3. Over the next decade, women will control two thirds of consumer wealth in the United States and be the beneficiaries of the largest transference of wealth in our country’s history. Estimates range from $12 to $40 trillion. Many Boomer women will experience a double inheritance windfall, from both parents and husband. The Boomer woman is a consumer that luxury brands want to resonate with.
– Claire Behar, Senior Partner and Director, New Business Development, Fleishman-Hillard New York

4. The number of wealthy women investors in the U.S. is growing at a faster rate than that of men. In a two-year period, the number of wealthy women in the U.S. grew 68%, while the number of men grew only 36%.
– The Spectrem Group

5. Women account for 85% of all consumer purchases including everything from autos to health care:

  • 91% of New Homes
  • 66% PCs
  • 92% Vacations
  • 80% Healthcare
  • 65% New Cars
  • 89% Bank Accounts
  • 93% Food
  • 93 % OTC Pharmaceuticals

American women spend about $5 trillion annually…over half the U.S. GDP.

6. Women represent much of the online market – Digital Divas by The Numbers

  • 22% shop online at least once a day
  • 92% pass along information about deals or finds to others
  • 171: average number of contacts in their e-mail or mobile lists
  • 76% want to be part of a special or select panel
  • 58% would toss a TV if they had to get rid of one digital device (only 11% would ditch their laptops)
    51% are moms

Source: Mindshare/Ogilvy & Mather

7. Women and sports. Women make up:

  • 47.2 % of major league soccer fans
  • 46.5% of MLB fans
  • 43.2% of NFL fans
  • 40.8% of fans at NHL games
  • 37% of NBA fans
  • Women purchase 46% of official NFL merchandise
  • Women spent 80% of all sport apparel dollars and controlled 60% of all money spent on men’s clothing
  • Women comprise about one-third (34%) of the adult audience for ESPN sport event programs

Source – www.she-conomy.com

Here’s what research says, as provided by Jan Marino, BoomerCafe.com:

As the unofficial spokesperson I feel compelled to let you know what I’m hearing from 10K of my closest boomer friends. Here’s a list of ten things that we Boomers want and need from service providers:

  1. Explanations and education about your product or service intelligently delivered informing us why we should invest in your product. 
  2. Options about what the trend of the service/product is … i.e. what’s its “shelf life” 
  3. Engagement with us. We really want to mentor and help others not make the same mistakes we did. We may appear arrogant, but we’re not…we just don’t want to be ignored. 
  4. We want you to know that we control over 70% of the disposal income in this country and we have lots of places to spend that money. We won’t spend it with companies that ignore us or call us aged or aging (even if we are both … you don’t need to remind us). 
  5. Use clever and well thought out campaigns for marketing. Don’t be afraid to go mobile. Offer us deals and great products especially women’s clothing. We have lots of money to spend on clothing, but not many of us can wear a size 0 or show our midriffs. 
  6. We are health conscience and not as worried about our sex lives as ads claim. Help us stay in shape and look good. 
  7. Our pets are part of our family and we think they need stuff, so we’ll splurge on them. 
  8. Our parents are a huge part of our lives and we are taking care of them. Products and services that makes life easier for them and us will sell if treated in an intelligent way…. i.e. NO cold calling…form relationships with families. 
  9. Reinvention and career services that help us stay on top of trends and technology are imperatives. We want to stay well-informed, so we can talk to our children and grandchildren. 
  10. We still care about changing the world and philanthropy. Get large numbers of us interested in worthy causes. We fully understand that the earth’s resources are limited, and alternative methods hold great returns.


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

First Down?

“Can you imagine a football game where they don’t keep score? That’s what most businesses are,” Chuck Richards, CEO of CoreValue Software says.  Running a business can be like playing a game with no scoreboard.

Marcus DiNitto, the Contributing Writer for an article published by The Business Journals in June 2017, interviewed Richards who identified three smart ways that increase value by fixing operational elements of an organization. Click on this link to read the full article and download a free assessment tool.

The Market, The Processes, The Metrics

According to CoreValue, nine out of 10 business owners who complete the assessment program (see free assessment tool) do a poor job documenting their market.  Why is this important?  It enables the business with internal communications so every employee is on the same page.  If borrowing funds or selling the business, the information shared externally is key to the outsider(s)’ financing or purchase decisions.

When goods and services are sold, the business promises to deliver to the customer what they purchased.  There should be documented processes in place to ensure this delivery of goods and services.  Every business should have a back-up plan so that operations are not reliant on any one individual, particularly solely reliant on the owner.

“A business owner has an obligation to make sure employees understand the company’s goals and objectives and how they are helping the company reach those goals and objectives. Rarely do companies have effective metrics of performance,” Richards said.  “…employees almost never know if they are winning or they’re losing at work, so they tend to keep busy. But it’s not very productive; it’s not very targeted.”

Knowing the company’s goals and metrics for success makes the work more fun, not only for the owner but also for the staff.

Big Hairy Goals

Remembering when I first started working at a large national bank, we had lots of meetings – meetings about new loans in the pipeline, new employees and organizational changes, and the bank’s financial benchmarks.  At the time the bank’s Return on Equity (ROE) was roughly 6%.  Return on Equity is calculated as Net Income divided by Net Worth.  I distinctly remember one meeting when a new CEO and Board Chairman had been chosen.  He came right out of the chute and said our five-year target for ROE was 21%.  Yowsa!  (We thought he was crazy.)

Five years later we were right at 22% ROE, having exceeded our goal.  What an exhilarating feeling it was to work as a team and make good things happen.

Think about your business as if you were playing football.  What are the plays to make the next first down?  Does your staff know what the plays are and how to score?  For more information on how to fix operations and set metrics, contact Nita Black at (901)413-1315 or go to her website at www.NitaBlack.com.  You can also find Nita on Facebook, LinkedIn, and Google+.

Experience success!


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

What is a Steel Magnolia anyway? Let’s read what Wikipedia says.

STEEL MAGNOLIAS IS A 1989 AMERICAN COMEDY-DRAMA FILM DIRECTED BY HERBERT ROSS. IT IS THE FILM ADAPTATION OF ROBERT HARLING’S 1987 PLAY OF THE SAME NAME. THE PLAY AND FILM ARE ABOUT THE BOND A GROUP OF WOMEN SHARE IN A SMALL-TOWN SOUTHERN COMMUNITY, AND HOW THEY COPE WITH THE DEATH OF ONE OF THEIR OWN.

THE STORY IS BASED ON ROBERT HARLING‘S REAL LIFE EXPERIENCE OF THE DEATH OF HIS SISTER, SUSAN HARLING ROBINSON, IN 1985 DUE TO COMPLICATIONS FROM TYPE 1 DIABETES. HE CHANGED HIS SISTER’S NAME IN THE STORY FROM SUSAN TO SHELBY EATENTON-LATCHERIE.

 

THE TITLE SUGGESTS THE MAIN FEMALE CHARACTERS CAN BE BOTH AS DELICATE AS THE MAGNOLIA FLOWER, AND AS TOUGH AS STEEL.

As a woman in charge of her own destiny, maybe you can relate. Delicate and tough?

Ideal Leadership Traits

Have you thought about your leadership style lately and what traits you possess? How would you describe your ideal leadership traits?  Those traits that you seek and want to possess long-term.  Are you patient and calm, pushy and arrogant, somewhere in-between?  How would you describe yourself as a successful leader?  What does it take to be successful in business, or really at anything you decide to tackle?

Of course, you probably know Fred Smith or know of him. As the CEO and Founder of Federal Express, you can watch his video produced in December 2016 and read the article in Entrepreneur.  His tips for success start with “Believe.”  Believe in what you are doing, with all your might.

Or you might research successful women and how they define success. In Forbes Magazine (July 2016) in the article How Do We Define Success for Women Entrepreneurs, Patti Greene asks the following questions:

  • If a woman organizes her business to focus at least as much on growing a successful family as growing a larger business – is that success?
  • If a woman really enjoys performing the work of the business – delivering the product or service herself and choosing not to become an employer – is that a successful entrepreneurial outcome? Let’s remember that if we didn’t have the non-employer businesses we would need to create approximately 22 million more jobs across the country to take their place.
  • However, if a woman’s aspirations are to grow a much larger company, does she have access to the resources, particularly those of capital and network, to build that type of company successfully? Research findings over the past few years are fairly robust that women have equal access to debt based funding, while still lagging substantially in accessing equity capital.

Lead for You

We can google this and research that, all day long, been there, done that, searching for the definition of success. The main thing, imo, is that we do something. We make the best decisions possible at a given point in time and then run with it.  We look at ourselves often, celebrate the wins (even small ones), and percolate the fixes every day, one day at a time.  Yes, success can be like brewing a good pot of coffee – percolating is good!

Leadership Self-Assessment

If you are a business owner or a wannabe business owner, or just want to take some time for yourself to self-reflect, answer the following statements with the answer that best describes you.  We ask you to use one of the five following answers:

a. I disagree.

b. I somewhat disagree.

c. I agree.

d. I somewhat agree.

e. I strongly agree.

There are no right or wrong answers.  This should be a quick run-through – ready, set, go!

  1. I am more of a visionary and less analytical.
  2. I am more detail oriented and less big picture.
  3. My business and personal goals have been updated within the last six months.
  4. I made money last year.
  5. I know my banker.
  6. I owe money to a bank and/or outside investor, family and friends.
  7. My financial records are in good order and bookkeeping is up to date.
  8. I have at least three written goals to attain within the next five years.
  9. I like thinking and planning strategically.
  10. I have a strategic plan in place that has been updated within the last twelve months.
  11. I am open to advice from others.
  12. I have an established customer base.
  13. I have written and current job descriptions for myself and my staff.
  14. Each of my staff participated in a job performance review within the last twelve months.
  15. I offer health and retirement benefits that cover me and my staff.
  16. Each of my staff participated in a job performance review within the last twelve months.
  17. I have identified my target market in dollars and unit volume.
  18. I have a marketing calendar in place for the current year.
  19. I know what job positions will be needed for the current year.
  20. I have facilitated a team meeting with my staff within the last thirty days.
  21. I know how I stack up against other companies within my industry.
  22. I have a tax problem with the IRS.
  23. My technology strategy and IT support are clearly identified and in written form.
  24. I know what capital expenditures are required for my business over the next two years.
  25. I have identified a specific exit strategy and timeline.
  26. I have obtained a valuation of my company from an objective third party professional.
  27. I have a clear and defined process or processes to deliver my products and services.
  28. I have a clear and defined process or processes to keep my customers happy.
  29. I have a problem changing directions, even when something is not working.
  30. I like new things and have a problem consistently finishing a project well.
  31. I totally trust all my employees.
  32. I like projects.
  33. I like continuity.
  34. I like change.
  35. I have a comprehensive communications strategy that is working well with my staff members, my customers, my prospects, and with the public.
  36. I know my competitor’s unique selling proposition and how they are successful in their business.
  37. I have a rock star management team with few gaps in expertise/experience.

If you have now completed the above assessment, total the number for each answer. Total up all the a’s, the b’s, etc.

The point of this type of assessment is to identify your behaviors and clarify what is important to you, your family, your business.  Look for common threads in your answers, where you are now and where you would like to be – in terms of your own behavior.  Identify changes that you want to occur and then sleep on it.  Next, do your research to help you set realistic goals for making these changes – by specific dates that you set for yourself.

If you want feedback, email your self-assessment results to info@NitaBlack.com.

Are you a Steel Magnolia or do you even want to be one?  To identify tools and strategies that can make you more money AND ecstatically happy with what you are doing, contact Nita Black at (901)413-1315 or go to her website at www.NitaBlack.com.  You can also find Nita on Facebook, LinkedIn, and Google+.

Experience success!


NIta Black, CEO/Business Strategist
www.NitaBlack.com

“We provide business tools to help clients monetize their ideas.”

Nita Black - Business Strategist

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