Business Exit… have you thought about it?

Many tech entrepreneurs think about their business exit from day one. Acquisition is central to their business model. But most small business owners don’t think about it… they are too busy getting into business! An exit plan should be a part of every entrepreneur’s business planning process — though this is the least understood part of the business plan, and often ignored.

Don’t wait. Think about a business exit now.

No matter how successful you are in business and how much you love our work, you should think about what will happen to your business when you no longer actively manage or run it. At some point down the road—a couple of years or decades from now—you will leave your businesses (or your businesses will leave you). Personal circumstances might change or burn-out could happen. You may be ready to pursue a new endeavor or want to retire. Or someone could approach you about buying your business.

Business exit options

You may not be able to predict your business’ success, your future interests, or the direction of the marketplace. But you can start thinking about the business exit options that could be a good fit for you.

There are a variety of ways to exit your business. You could pass it to a family member, partner, employee or other business stakeholder. You could sell it to an outsider. You could liquidate it and sell the assets, or you could file for bankruptcy.

How will you figure out what is best for you and your business?

Envisioning the future

We encourage you to think about the future of your business and what it might look like when you are not at the helm.

Is your goal to create a legacy business that will last forever?
Do you ultimately want to pass the business on to a family member?
When you are ready to stop running the business, do you hope to sell it?
Would you want the business taken over by an employee(s), partner or other internal stakeholder or would you want to sell to an outside party?

The vision for your business will change as your business develops and circumstances change, but thinking about your business’ trajectory, including your exit, is a key part of strategic planning and business growth. (If you are in a business partnership, it is important that you have an ownership agreement, from the beginning, that spells out what will happen if one or more partners wants to exit the business.)

Planning your transition

When you are ready to think seriously about transitioning away from your business, you need a business exit plan. Just as a good business plan is an important part of business start-up, a good exit plan is key to a smooth transition away from the business.

We help our clients through the transition planning process. This includes identifying or clarifying your motivations and goals, assessing the current strengths and weaknesses of the business, and creating a role transition or business sale timeline with clear benchmarks. We then help business owners stay accountable to their plan.

Our goal is to help small business owners feel ready for their next steps, with a feasible and straightforward plan to guide them through their transition. Learn more about our ownership transition consulting services.

Launched!

January 17, 2015
Business Start-up, Current Climate for Small Business, Trends in Small Business
PTA
1 Comment

There are many small businesses that launch every month in the San Francisco Bay Area. Each launch is proceeded by months (if not years) of hard work, detailed market research and fundraising before the new business owner can “open the doors”. A number of our business planning students at Renaissance Entrepreneurship Center launched their businesses in 2014. Show your support by visiting them and spreading the word!

Calibur

Sean Patrick and his business partner opened a new burger and fries place in San Francisco’s West Portal neighborhood featuring burgers, fries and milkshakes made from 100% organic ingredients sourced primarily from California. (They even have a veggie burger for me!) Check out their recent San Francisco Chronicle review.

Pinhole Coffee

JoEllen Depakakibo just opened a new coffee shop on Cortland Street in San Francisco’s Bernal Heights neighborhood. The curated space features a variety of coffee roasters and other locally made goodies. Check out this recent profile of JoEllen and her new business.

Kinda Fancy

Lindsey Hoell and her brother and sister have launched a line of surf bikinis! They are made in America of strong, stretchy material …and include zippered pockets. Check out their fun website and online store.

The Good Hop Bottle Shop

Melissa Myers opened her bottle shop and tasting room on Telegraph Avenue in Oakland, offering hundreds of craft beers from around the world, with mostly local beers on tap. You can enjoy your brew on site or take away, and attend their classes and monthly events.

Hoi Polloi Brewpub and Beat Lounge

Viet Vu opened his brewpub with his brother and wife on Alcatraz Avenue in Berkeley. The pub features a variety of beers, including their own creations, and all beer comes with popcorn drizzled with truffle-oil. Check out this recent San Francisco Chronicle review.

Rilla

Courtney Cummins has launched Rilla, an online style boutique featuring select clothing, accessories and textiles from independent designers, as well as highly curated vintage pieces.

Communitē Table

Michele LeProhn opened the doors to her neighborhood restaurant in Oakland’s Laurel district this December — seasonal American comfort food to eat there or to take home. Check out this recent article about Communitē Table in the East Bay Express.

The ReCrafting Co.

Andrine Smith opened The ReCrafting Co. as a crafter’s resource for quality recycled crafting materials, supplies and tools. The shop also offers crafters a convenient opportunity to recycle their surplus crafting material and supplies on consignment for cash.

Liquid Gold

Tim Lee’s bottle shop and tap room opened in lower Nob Hill the Fall of 2014. The focus is on locally sourced beers and wines. In November, Liquid Gold made Zagat’s list of the 12 hottest new bars in the United States!

Urban Putt

Steve Fox and his team have created Urban Putt, the City’s first and only indoor miniature golf course in San Francisco’s Mission district. It is a playground for people of all ages with organic and locally-sourced food and drink. Thrillist calls Urban Putt “quite possibly the best thing to happen to the Mission.”

Baseball and small business… oh the similarities!

I’ve been a fan of baseball ever since Willie Mays roamed center field for the New York Giants. When I played Little League in Vancouver, Canada my teammates and I all had heroes who played our position in the Majors. I was a center fielder so Willie was my hero. I moved to San Francisco over 30 years ago and re-connected with my love for Giants baseball.

The recent Giants World Series win (woo hoo!!) has me thinking about the similarities between playing Major League baseball and running a small business…

It takes specific skills and years of practice
A baseball player must spend years in the Minor Leagues honing his craft and developing the skills, strength and confidence to perform well. He also has to get noticed.

Similarly, in the world of small business, successful entrepreneurs are those who have had a lot of practice developing the skills relevant to their product/service. By educating yourself about your industry, doing thorough market research, working for others, and starting with a pop-up or a simple business model that can grow with time, you can set yourself up for “major” success.

Success comes from trying, failing, and trying again
An excellent batter in baseball is only successful 30% of the time. Occasionally a batter might get on base with a walk or because of someone else’s error but he has to face failure with each batting experience. It is very hard to hit a small round ball hurdling through the air from 60 feet away at 90+ miles per hour!

A small business owner won’t be able to make a sale with every customer or client interaction. Being successful means putting yourself out there and reaching out to customers and clients over and over. You may have to contact a potential client 5 to 10 times before they are convinced to “take as swing at your pitch”. Yet with every business “failure” you will gain experience and confidence.

It is a team effort of stakeholders
The pitcher needs to throw fast and get the ball over the plate, the catcher needs to catch the ball, and each infielder and outfielder needs to be ready for every pop-up, fly or ground ball. Everyone has to work in coordination to keep a runner from scoring. That coordination and synergy is central to success—both for the offensive team and those on defense.

As a small business owner, your most important asset is your team. First it starts with you as the leader. Then there are the people you hired and trained who work hard alongside you to make the business a success. Most business owners can’t do it all themselves. Even if your business is too small for employees, there are professional support people, vendors, investors, clients and customers that all have a role to play. They are all stakeholders in the business.

It requires fans
Nothing feels worse than going to a baseball game with lackluster support in the stands. The fans are the 10th “player” on the field. Their enthusiasm and encouragement (and sometimes discouragement) can make a huge difference in the course of the game.

Businesses don’t just need customers and clients, they need enthusiastic and loyal customers and clients. They need fans who will “cheer loud” and spread the word—write positive testimonials, refer the business’ products or services to friends and family, and get others excited, too. Consistent contact and positive messaging to your fan-base is needed in both baseball and in small business.

You need a great coach or advisor
Bruce Bochy is an amazing manager—coaching the Giants to three World Series in five years! As a coach, he decides who plays each position, the batting order and when the pitcher will change. His attention to detail throughout the game can affect the outcome. Players on the team also take on the role of “coach”—helping to keep their team members motivated and working together. Hunter Pence or Buster Posey play this role with their constant encouragement to their teammates.

In business, the owner is often the “coach”—training new employees, guiding staff and creating at atmosphere of trust so employees feel welcomed, supported and motivated to take risks to grow the business. But small business owners need their own coach, too. This could be a trusted business advisor or mentor or it might be peers who are grappling with similar business challenges and opportunities. (PTA plays this role for many of our clients.)

You must take a position and play to your strengths
Some baseball players have an outstanding pitching arm, others seem to always connect the bat with the ball, while others are super fast on their feet. Players must play positions best-suited to their skill-sets.

Small business owners must play to their strengths, too. First, it’s important to understand what skills are needed to run your business well. Then, to be honest with yourself about what you do well and what you don’t (and what you would rather not do). Others should be hired to fill any gaps.

There are the stars
The Giants had some real stars this season, like Madison Bumgarner and Hunter Pence. They performed well under pressure and made the magic happen.

Small business owners and managers need to be stars, too, by “performing” well in every customer and client interaction. You must know your products or services inside and out and consistently rise to every challenge, be they complaints, delivery issues, employees who quit, or other unexpected emergencies.

Support people make everything work
A baseball team can’t be made up of “starters” only, though. There must be a solid crew of players who can be counted on to play well and become utility players at times, pinch-hitting when there is a need. And we cannot forget about all the behind-the-scenes people who make each ball club function.

Successful small businesses also need support people to make everything tick. Even a one-person small business needs a bookkeeper, administrative services, legal and insurance help, and access to the banking community.

You must take breaks and time off to rest and recharge
For eight months of the year, baseball players practice, stay in shape and play hard. But it isn’t non-stop. They take breaks to recuperate and for intense positions, like pitcher, players won’t even play the entire game.

Small business owners are always go-go-go and do not usually get to work just eight months of the year—at least not right away. A fast and constant pace is often required to get and keep customers or clients and manage cash flow. But it is key to manage your time well, too, both on and off the job. Taking a break to rest and have creative time is essential.

When you close a deal and win, it is oh so rewarding!
Every year baseball players go through arbitration or salary disputes. Sometimes they have long-term deals for two or three years but they still have to close the deal, perform at a higher rate and sometimes move to a different team. (We will see how Pablo Sandoval does in Boston. Sometimes your competition convinces your best people to leave.)

As a small business owner, you also have to close the deal. You have to make the sale, hire or fire the employee, open a new store, bring in a new manager, and continue to meet the complexities of the business by increasing your management, marketing and financial acumen (or finding others to help). And every time you make a sale, hire a new employee, find a new location and grow, it is incredibly rewarding.

It is a lot of fun and it is hard work
Baseball players play hard and they get to revel in a great hit, catching the ball for an out, or scoring a run. After all, it is just a game!

As a small business owner, owning a business is the hardest work you will ever do. But it is also a lot of fun—you get to follow your passion, blaze your own trail, create jobs, contribute to your community, and make a difference.

Now, if only the pay rate for small business owners was in the baseball player “ballpark”, we small business entrepreneurs would have it made!

Taking Action

At Paul Terry & Associates we help small business owners build successful and sustainable enterprises. Our consulting process is focused on clear assessments, careful advice and taking action. Central to our approach is business action planning.

Your passion and a strong vision for your enterprise launched you into small business ownership but a great idea alone won’t make you a successful business owner. You must turn your initial ideas into realistic goals with a specific plan for action.

Whether you are an emerging entrepreneur or an experienced business owner entrenched in the complexities of running a business, business action planning can help you identify measurable goals and create specific steps to reach your desired outcomes.

Every area of your business – customer/client relations, marketing and sales, business operations, ownership expansion, and your eventual exit from the business – can benefit from action planning. So how do you begin?

DEFINE YOUR GOAL

Put it in writing. Writing down exactly where you are today and where you want to be in the future will force you to think concretely. Taking the time to write down your goals may spark some new ideas, too.

Be S.M.A.R.T. – that is, specific, measurable, achievable, realistic and timely/time-bound. You need to be able to clearly state what you want to achieve and your goal needs to be concrete and doable. Initially, steer clear of goals that might take you three to five years to achieve. Once you get comfortable with the action planning process, you can use it to tackle bigger, longer-term goals. For now, stay focused on something you can attain within a year’s time, or even less.

SET YOUR ACTION STEPS

Take it one step at a time. You are much more likely to attain your goal when you identify specific steps to reach it. Each step needs a realistic deadline and an estimate of how much it will cost you—not just in dollars but in your time and other resources.

GET SUPPORT

Everyone needs someone to lean on. Trusted advisors and people in your business support network are essential during this process. They can be a sounding board while you create your plan and they can keep you accountable once you have a plan… every step of the way.

USE YOUR PLAN

Long and pretty it ain’t. A business action plan isn’t a fancy document—it’s a usable one. It needs to be accessible and referred to frequently. It might help to set reminders on your calendar to review it so that you can stay on track and make adjustments if necessary.

Still feeling daunted by action planning? We support clients through the action planning process every day –helping them create goals relevant to their current stage of business, identify specific action steps, and stay on track. How can we help you?

Elements of effective mentoring

“The delicate balance of mentoring someone is not creating them in your own image,
but giving them the opportunity to create themselves.”
– Steven Spielberg

January is National Mentoring Month so it feels like the right time to be talking about small business mentoring — a key ingredient to success for every entrepreneur.

At some point, we all need guidance, a sounding board and a cheerleader to navigate through changes, growth and challenges in our business. Guidance can come in many forms — from a business “buddy”, through a peer support group, or directly from a trusted business adviser or a team of advisers. No matter the form, what is most important is that our mentors encourage us to look closely at issues and opportunities, and to maximize our potential. With their support, we can develop our business skills, take risks, and be successful.

Our support system must include people who have been in our shoes. We must surround ourselves with subject-matter experts and experienced small business owners who have dealt with similar challenges first-hand and can help us make sense of the clutter and make decisions with relevant, timely advice.

Though I believe that the best small business mentors are other small businesses owners, success in business does not qualify someone as a good mentor. That person must also be a skillful listener and motivator, know how to ask questions, and know when and how to give honest advice. In addition, the best mentors open doors to a wider network that can support us and our business.

To sum it up, I believe that effective mentors…

Listen carefully to what you say (and don’t say)
Understand your needs and respect your point of view
Ask questions and challenge assumptions
Guide based on their own experience/expertise
Share relevant and immediately actionable advice, and
Are accessible and supportive over the longer term.

Above all, the mentor-mentee relationship should be a partnership, based on mutual respect and trust.

As we develop our mentoring services at PTA, I have been reading many articles about mentoring and asking others about their mentoring experiences. What “words of wisdom” about mentoring have inspired YOU?

Wisdom from Melissa Joy Manning

Design Sponge recently posted a great profile of jewelry designer Melissa Joy Manning, a graduate or Renaissance Entrepreneurship Center’s business planning class. She talks about why she started her own business and she shares some of her lessons learned in running a sustainable artisan jewelry enterprise.

Melissa says that it was with my help that she learned about the importance of setting well-defined goals:

“I was lucky enough to have an amazing teacher, Paul Terry, at the Renaissance Center in San Francisco, who taught me the importance of vision. He taught me to envision my success and what it would encompass. I used these goals as benchmarks when building my brand. Every time I reached one, I would sit down and create another. As the ‘visions’ kept coming true, they emboldened me to think bigger and more creatively each time.” (Thanks Melissa!)

Here is some of Melissa’s great advice for others considering a small business of their own:

Make sure it’s what you want to do. If you really love doing something consider how it will change when it becomes a business. I meet a lot of people who loved a hobby but when they had to economize it on a daily basis, found that they lost all joy in it.

Know that your life will change: your friendships, relationships, how you view the world…everything. When you take charge of your life by forging your own path, a lot of lessons will come forward that you didn’t consider. In some ways, it’s like a veil lifts in how you see the world. Remaining true to yourself and your passion will carry you through any unexpected reaction or loss that success may bring to you.

Always, always, always listen to your heart. If you are true to yourself you will always succeed.

You can read Melissa’s full profile here.

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