Aleen Bayard - Planning Your Exit Should Be Part of Your Annual Planning (L2617)

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Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for their best tips, strategies, and precautions, so you. Can be well planned and don't miss our one minute exit coach tip of the day on exitcoachradio.com. And now here's your host, the exit coach Bill Black. Welcome everyone. Thanks for joining us today. I'm very excited about our next guest. She is Aline Byard and We're going to talk about her and her firm which is called Market Zing in Chicago, and Alina's a leadership development and executive coach, and her coaching approach is to help the client use the coaching process to accomplish specific business goals, and the sale or or succession plan is going to be one of the most. complex and emotionally laden business scenarios that she encounters. So we're going to talk about how she would approach that. So Aline, welcome to the show. Thanks for joining us today. Hi Bill. Thank you very much for this opportunity. It's my pleasure. Thanks for joining us. Tell us a little bit about you and your background and how you started Marketzing. Well, thanks. I'd love to do that. So currently my practice focuses working in partnership with company leaders during times of change and transition and to develop the leadership capacity to actually deal with these changes. The whole notion of going through a significant change is something that most business executives or many business executives don't appreciate that there's actually a science to it. And so my background, I actually have a master's from Northwestern in the area of change management and so I bring a Both the art and science to the practice. You think about the kind of prep you have to do if you were going to, let's say, train for a marathon. You need different kind of exercise regimen. You need a change in your diet. So when you're going through the kind of change that a business owner's contemplating of selling a business or closing a business down or divesting, you need a special kind of leadership consultant to help you through that process. So that's something that I focus on as part of my overall leadership. A development practice. Well, there's nothing but change going on when when a business owner decides to transition out. There's his life is going to change, his family's life is going to change. The business leadership is going to change, relationships with other. Suppliers and customers and uh even employees is gonna change for successor managers coming in so it's a good topic and it's one that that I think is so important for owners to address early um how do you start working with business owners? What's the first step? Well, I think the first step is that the owner, um, he or she, I'll throw a little bit in for the female, there's many, many, many businesses, as you know, owned by females as well, has to recognize that there is this emotional component as you so wisely referenced, and so really the best relationship is when you're already working with an organization on other matters of the business, uh, whether it's, uh, strategic planning, whether it's looking at how they're Working with their customers or clients, developing their leadership bench. So ideally it's not something that the owner decides just at the tail end of the business cycle. It's a practice of leadership, health, and hygiene throughout the business, but at the very least when the owner is starting to think about their future and the disposition or sale of the business, that's the best time at the Very outset. That's a great point. So you should always be working on managing change. It's going to be happening and this is just another step along the way. Yes, it's going to be a big event, but if you've incrementally planned for it along the way, it's going to be much easier, it sounds like. So what's the biggest issue that you see when you're working with business leaders, especially those in the process of contemplating this transition or exit strategy? Well, I'd say the biggest issue again is neglect in recognizing that you've got an emotional balance sheet. So there's a lot of attention paid to the financial balance sheet when a particularly a business is going to be sold, and obviously the valuation, the appraisal, the due diligence. You know, sort of coming to terms with what the business is worth the value of the business itself from a financial asset perspective. What owners fail to think about is their emotional balance sheet. What are the trade-offs that they're going to undertake? What is the business worth to them in terms of their identity? What are they going to? Next, so there's a lot of focus on selling their business that they've built up in the past, but do they have a plan for after the sale and that will that plan be satisfying? How fulfilling will that be? So this notion of the emotional balance sheet is something I think is very important. I also want, if I, if I may, Bill, reinforce something you just said with respect to my last comment. In the science of change management, there's actually a whole study around change readiness, and it's almost similar to the flexibility of the human body. If you were, uh, I started taking yoga about 2 years ago, and when I started taking yoga, I couldn't even touch my toes. After several months of yoga, I now am much more flexible. I still can't get my, my, uh, my elbow around my, my ankle, but I can at least touch my toes. There's a similar kind of phenomenon with a business that's invested in a leadership and employee engagement process over time. That makes the business more agile when you're dealing with the kind of very disruptive change that happens at the point of sale. That's another reason why integrating these practices. As good business health along the way will make it much easier for the business and the business owner to digest the change involved at a sale point. Well, that's those are some great points. So, so what we're hearing is that you need to start somewhere and work your way, and you'll get better at change the more that you work on managing. Changes that are happening and so uh that's a great point. Now when I like the concept of the emotional balance sheet um what might that look like for individuals as you're describing it because balance sheets have you know uh uh assets and liabilities on them generally in the financial sense what would some of those assets and liabilities be on the emotional balance sheet? Well, it's, it's very similar to the whole pros and cons thing that we've all been trained to do when we're, we're we are facing a major life decision, um, back to even I remember in college when you two guys you're wanting to date and your friends would say, OK, what are the pros and cons? or you're thinking about a job, what are the pros and cons? So in this case it's a reflective exercise and unfortunately as you, as you know from your the good work you do with with your with your show and all the interviews you do with your for your for your subscribers and your listeners, the sale of the business is extremely time consuming and it takes an enormous amount of energy. It's very busy, it's a very busy time and so the antithesis, what I'm talking about is stepping back and investing in some. Reflection time where you actually think about and oftentimes by yourself, what am I really giving up here? What does this mean to me? How do I feel about this? And we're trained in business often to ignore our feelings and make very rational decisions. That's why the appraisal seems to be so critical on a business sale. What does the bank say? What does the investment banker say? So in this case is you have to Your own investment banker and think about the valuation of what does this mean to you and ultimately, even if it's quote unquote irrational, if you're not ready to sell, even though the numbers look really good, if the numbers on your emotional balance sheet do not look good, you will sabotage it. You'll end up costing a lot more both in time, money, and your feelings and emotions by not being honest with yourself about whether or not you're ready to pull the trigger. Now, listeners, what Alina is saying is absolutely true. The exit planning groups that I talked to, the leaders of those groups say the biggest obstacle is the owner not having the um they don't have a good reason. Exit so they don't start their exit plan. And so if they have that that here's where I'm going from and here's where I'm going to if they have that clarity, then it makes it a lot easier to make this transition and decision. Ain, would you agree with that? Absolutely. And the other thing that's tricky about this is that, you know, until you get very close to the actual exit, people don't think about this in terms of a quote unquote exit strategy. What I would suggest is you start thinking about exit strategy more in terms of your overall business strategy, um, because that's something that we're accustomed to doing on a yearly, you know, usually for most businesses on a yearly basis. We do a strategic plan, we do a business plan, we do a financial plan. So part of that would be thinking about yourself, what is my overall individual plan for my hopes and needs with respect to the business and make that more explicit, whether you share that with your team or not is a very personal choice, but you're actually, if you, if you get into that practice, you're creating your exit strategy planning much earlier in the cycle, and it's not quite as um insurmountable as it is when you're getting close to the actual transaction part. Great advice. And if I could impart some wisdom, we heard from an earlier guest today who's a mergers and acquisition specialist. He said in the smaller businesses, more businesses are sold because of unplanned events than because of a planned strategy, a planned event, and you really have to be prepared. For instance, you may say I want to sell in 5 years, and then your spouse becomes ill or you become ill or your priorities change and shift very quickly. And so that's why you need to be planned and and on. The path at least towards being ready to execute your plan no matter if it's a planned or unplanned event. That's a great example. Yeah, and so uh when do you suggest that the clients hire someone like you personally or or do you work with a larger executive team? How do you work with business owners? Um, well, I work in a couple of ways. When it's a company with already has a lot of these pieces in place with respect to a very solid strategic plan, a business plan. Um, in many cases, fortunately, if the, if the owner has already done some work with the organizational development field or they've got a very astute and involved human resource manager, in fact, I'm going to make that that as another important tip, particularly in mid-sized and smaller privately held companies, sometimes the owner does not give enough credence to the person who's involved in the HR role, and people become such a critical part of the transition plan. If the owner feels that they've got a good team that they're leaving their business in those good hands, it's like birthing a child, you know, you, you've or having a child go off to college. You want to make sure that that that that child's well taken care of as it moves into adulthood. So having involving your HR person early on, um, or actually involving your HR person as a full executive member, team member, I think is another place that you'll be more change ready. With that with that in mind, if you've already got those pieces in place, you know, having a person come in at the end of that life cycle, a single person or resource is usually adequate. If you really have not done a good job over time and you have as you've mentioned, more of a crisis sale where you just haven't felt it's been important then I would say you want to bring a bit of a larger team in so you've got a holistic approach um I tend to work, you know, I don't specialize I don't consider myself a specialist in succession planning. I consider myself a specialist in managing significant change and so to that end, I have a team of people that I've worked with over over the years that are like myself, a lot of gray hair. You can't see me right now, but trust me it's there um been through the wringer, been there, done that, both in fire drills and in more planful events. That focus on uh recruitment because sometimes you need to actually if it's not a family or you don't have a family member that the business is transitioning to you need to hire a professional so someone who's um executive an executive search professional. I work with someone who does full time succession planning and and has more of the subject matter expertise in the nitty gritty that gets into more of the financial details. And then someone who's an expert in strategic planning because you want to have a strategy story and a good narrative uh for the sales event and then I come in and do the kind of coordinating as the leadership expert, the capacity builder, and the, you know, in some cases kind of like a therapist. Mhm yeah, so what you're saying is it it takes a team of specialists to come in. And it's always good to have those people selected on the bench ready to go so that you're not searching at a time when, when you could have, I mean, I just recently have a client that had a very emotional situation where the owner passed away suddenly unexpectedly, and now everybody's scrambling the business. Here's here's the tip, listeners, the business does not take a day off. The business doesn't give you time to absorb what might be. Happening in your life, the business keeps going day by day, so you need to have these things ready to go to pull out and say, Here's our plan that we worked on when things were calm. Now we're ready to execute that plan. Is that, is that fair to say, Eline? Yes, and you know, one thing that I would guess you're going to ask at some point is about cost of these kinds of services, and I'd say relatively speaking investing in leadership development, OD organizational development. Uh, employee engagement type of consultant is you you pay now or you pay later. If if you don't do it along the way and, and keep up that that readiness that, you know, that exercise we talked about, it'll be you're going to have terrible tendonitis when you try to run that marathon. So relatively speaking, the cost of these services is in line with if not less than. The other professionals you work with your accountant, your attorney, your banker, you know, those are all areas that most business owners have no problem investing in, and they pay a little bit short shrift to this area of leadership and the sort of executive health of the team. And I would, my experience is when you, when it's a bit self-serving, I admit that. But when you invest in that over time, you just have a healthier system to sell and you are in better shape as the owner to know what's gonna be your triggers and if you're really ready to do so. Great advice. Now tell us what's what's the most important lesson that you've learned that you could share with our listeners? I'm going to actually answer with 21 is this whole notion of actually having an emotional balance sheet and doing that work so you really know yourself, you know what your own hot buttons are, and what's going to be important to you in addition to the financial piece of the sale. The second is, if you're going to, I think you're going to ask me about a case study, so I'm just going to go ahead and because the second piece of advice relates to that. One of the more fascinating client engagements I was involved in around succession planning and sale involved a huge privately held company, which shall go unnamed for confidentiality purposes, and it had its largest client was a company that probably was responsible for maybe 60% of its revenues. And as part of its leadership transition plan, we interviewed its top client to find out what the outside client or customer was looking for in the succession plan. Usually that's something that company owners feel that they should not talk about, that should be very, very private. We don't want our customers to feel our clients any concern about the future of the business, but guess what? They know that they know the owner's getting older. They know that if it's a family owned business, they're they're figuring out that the next generation is now the VP at the. VP level, they see the person, you know, reaching their 60s, late 60s, early 70s, and they're wondering what's going to happen. It's not like you're the only company that's that's gone through an aging owner who's eventually going to have a retirement event either by a crisis like or a health issue or by cash out. So going to the customer and saying Forthrightly we're now thinking about the transition and we know that it's going to be critical to you as our biggest customer that this has done well. A we're sharing with you that we're undertaking it. B, we're going to be transparent with you about the process we're going to use. In this case they were going to hire. It was not going to go to a family member. That was a relief to the customer to be told it's not going to a family member. We're going to use an outside search firm. And they actually allowed the customer to provide some feedback on the job description and the credentials. That was, I think, an excellent strategy, one that's not obvious and probably not used enough, and I would share that both as a case study and a tip for people to consider, you know, in the right situation. Great points great points, and tell us a little bit about you have an upcoming book, um, and or is it I can't let's see, yeah, you have an upcoming book, yes, I'm I'm, I'm uh in addition to my consulting practice, I also teach two courses at Northwestern University, um, leadership principles and um change management and so over the course of the last 8 years in teaching those courses. I've had a lot of students say this has been the best class I've ever taken, you know, you really ought to write a book. This is wonderful information. So I'm finally putting pen to paper or keyboard to keyboard, and the book is called It's Never Too Late to Become a Born Leader, and the big idea, the headline here is that Answering that age old questions. Are you, are you a born leader or can you learn it? And a lot of people come into class and these are, I work with, uh, or teach working adults. They're in the school of professional studies, so they're already midpoint in their career who sometimes wonder, you know, is it too late for me if I'm not, if I'm not charismatic, if I wasn't born as a leader, can I become a leader? And the answer is absolutely yes. And so. The book is going to be giving some very practical advice on things you can do around your emotional intelligence, around team building, around your own self-efficacy to really sharpen your leadership skills regardless of what your, you know, regardless of what your genes are, you can become a born leader. Fantastic. And how do our listeners get in touch with you and find out more about the book and about working with you? Uh well, that's a great question. Um, I'm the, the book should be published this fall. You can contact me at my uh email address which is Ele A L E E N at Marzing.org. Terrific. Well, Alien, it's been a pleasure to talk with you today. I really great tips and ideas the science of change management, the emotional balance sheet, great tips on managing change or or learning to cope with change, and I'd love to go deeper on this topic with you at another time. So I hope you'll join us again in a future episode, and we can get a little deeper on that subject. Thank you so much for your time. I really appreciate it. Our pleasure. We're going to take a short break. We'll be right back after this, so please stay tuned. Just thinking about what will happen to your business if you're gone keep you awake at night. Will you get the price you need from your business to carry you through retirement? The BEI Network of Exit Planning Professions is the world's leading advisor network with the power to help business owners transition out of business on their own timeline and terms. Ask your most trusted advisor to create a BEI plan for you, or visit us at exitlannning.com. That's exitlannning.com. You're listening to Exit Coachradio.com, the information station for age 50 plus business owners, where we're interviewing top advisors for their best tips, ideas, and precautions so you can be well planned. We upload new one minute tips every day. Exitcoachradio.com. Come listen for a minute. Thank you for listening to Exit Coach Radio. Hey friend, I know how it feels, waking up exhausted after multiple trips to the bathroom and feeling embarrassed by sudden leaks. I used to be constantly on edge, searching for a restroom whenever I was out. Then I discovered better woman. I was skeptical at first, but two months in. Everything changed. I experienced improved bladder control. No more heart-stopping moments when I laugh or sneeze, less urge to go, deeper and more restful sleep. I finally felt like myself again, confident and in control. Bettero is natural, effective, and trusted by women for over 25 years. Ready to take back your control? Head over to Bebetternow.com to order your supply today. That's Bebetternow.com. These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure or prevent any disease. Users directed individual results may vary.