Don Burzen - Empowering Owners by Challenging Assumptions and Mindsets (B1218)

Time is precious and so are our pets, so time with our pets is extra precious. That's why we started Dutch. Dutch provides 24/7 access to licensed vets with unlimited virtual visits and follow-ups for up to 5 pets. You can message a vet at any time and schedule a video visit the same day. Our vets can even prescribe medication for many ailments, and shipping is always free. With Dutch, you'll get more time with your pets and year-round peace of mind when it comes to their vet care. 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. Coachradio.com and now here's your host, the exit coach Bill Black. This segment of the show is brought to you by Wired Card and features Don Burzon, founder of Positive Exits, located in the Greater Chicago area. Our discussion today is going to be on empowering owners by challenging existing assumptions and mindsets. Don, welcome to the show. Well, hi Bill. Thanks so much for having me. It's my pleasure. Thanks for joining us from Chicago. And before we get into the empowering owners, can you tell us something about your professional background? Yeah, I can definitely say I mean my business passion today is providing exit planning assistance to owners of closely held businesses, but it has been quite a journey to get here. Uh, starting out initially as a plastics engineer a few years ago. I made my way to executive leadership positions within two different consumer products companies, and in those roles, I was directly involved in a number of acquisitions, both large and small, and so that experience allowed me to work side by side with the owners of many closely held businesses and to see firsthand the challenges they were facing as they went through the process. Uh, you know, as you know, is typical that these were the first times that these owners had ever sold a business. And so following those experiences, I co-founded a business brokerage firm almost 20 years ago with a partner who shared my commitment to helping owners get a clear understanding of all their options, and that did mean that we educated them on some alternatives that did not involve our services. Ah, looking back, much of the assistance we provided at that time, ah, would today be considered exit planning, although that term really wasn't broadly used at the time. Ah, later I started consulting with strategic buyers to help them organize and execute operational due diligence before the purchase, as well as integration of the businesses following closing. So with that hands-on background on both sides of transactions, I definitely appreciate the difficulties that owners face in preparing for a transaction, and I draw on that experience to help them view their businesses from the perspective of potential buyers. So, so Don, does that mean that you're focused solely on external sales to third parties? Uh, not at all, Bill, and thanks for suggesting I clarify that point. The very same risks that might cause an outside buyer to discount their price would also exist for internal successors as well. And most owners have a vested interest in their transition being successful, whether that's a financial or an emotional connection. So it's critical for them to remove those risks regardless of who will be taking over ownership. It's just easier to illustrate the points in the context of an objective buyer who is typically more diligent in his or her critique than an inside insider might be. And so Bill, you, you've had many terrific guests on the show who've given a lot of details about the elements of an effective exit planning process. So I'm not planning to repeat that here. Instead, I'm really focusing more on the thought processes that can help owners move forward. And I would say in the market out here is probably no different than the market anywhere else. The majority of business owners that I've spoken with recognize the benefits of advanced planning. And yet since it relates to an events out in the future, you know, many of them allow day to day issues to take priority and they simply push planning off to another day. And and that's really what gets us to today's topic. So my question is, how do we in the field help business owners take a fresh look at the many assumptions and mindsets that leads so many of them to be unprepared for their inevitable transfer of ownership. And from my perspective, while each situation is unique, there's definitely a common element, and that is that just the sheer number of key decisions that are made on the basis of the owners' assumptions about the process and their mindsets as to how they look at their businesses. And as I said before, most owners will only transfer one business in their lifetime, so they don't have personal experiences to draw upon. So, Don, you've said assumptions and mindsets a few times, and I'm intrigued. Can you provide us some, a couple of specific examples? We only have about a minute till break, so let's just start with one. Absolutely, Bill. Yeah, I mean, one example is just the fact that many owners assume that they have plenty of time to worry about planning sometime later on. Um, you know, stuff not viewed as an immediate issue like day to day business demands, but you know, here's an assumption that fails to recognize just how much time will be required to plan and implement the steps necessary to maximize their after-tax returns, transfer ownership to a buyer of their choice, and ensure continuity of the business after they leave. And as you know, these things can take literally years to accomplish. And beyond that, almost every step of the way there are assumptions being made about their financial needs, the current value of their business, their options of internal versus external needs or sales, as well as how long it would take to execute an external sale. So I mean the list really does go on. And so our job is to replace those assumptions with facts that reflect current reality and future potentials, and that's what it really takes to empower business owners to make informed decisions. Makes a lot of sense by taking away the assumptions and replacing those with facts, you really give the owner a good foundation to stand on as they plan for their future and as opposed to being, uh, unpleasantly surprised when the timing comes up. We are talking with, uh, Don Berzon, founder of Positive Exits. We're gonna take a short break and when we come back we're gonna ask you for some more stories and tips and ideas for our listeners. Don, thanks very much. We'll be right back. Want to grow the value of your company? Start with the values of your company to stand out in today's overly commoditized world, your company must stand for something bigger than what you make. That's the work of Values Institute, our social science model of. Values-based culture development will help you grow the value of your company by growing trust, your most valuable corporate asset. To learn more about our proprietary process, visit the Values Institute.org and start growing the value of your business today. At Exitcoachradio.com, we're interviewing over 100 top advisors to get you one minute tips, ideas and precautions so you can be well planned. We upload new content daily at 6 a.m. and 1 p.m. Exitcoachradio.com. Come listen for us. Welcome back friends. Just a reminder that we've interviewed dozens of advisors on a wide variety of topics, and you'll find all of their interviews and highlights online at exacoachradio.com or on iTunes. I'm talking with Don Burzon of Positive Exits who's giving us some great food for thought here and before the break, Don, you were talking about, uh, replacing assumptions with facts, and it's that's a critical part of the planning process because a lot of owners are a little bit, um, Confused about what is reality and they really need to know that to move forward. So could you expand on that a little more for us? Well, absolutely. I think you know we talked about the assumptions. The other element that goes hand in hand with that is their mindsets. I mean, many of us in the field, you know, encourage owners to look at their business as an investment. You know, some owners understand that concept, but many do not. I mean, for a number of them, they see their business as either a job, a cash machine, a passion, or an extension of who they are. And the term investment sounds a little too removed for them to relate to. And we also let it be known that a business is actually easier to sell when it has a passive ownership. And you know, I mean an owner who is not personally critical to maintaining future cash flows. But let's face it, Bill, I mean one of the last terms that ever come to mind when we think about most entrepreneurs is passive. You know, these people are doers. They make things happen, and sitting on the sidelines is not something that many of them want to do at any stage of their career. So I take a slightly different tack to address those issues together. I encourage owners of mature, successful businesses to transition from the position of president to that of CEO. And I'm just talking about a title to put on a business card. I'm really talking about the mindset. I mean, if we think of CEOs and public corporations, you know, they're tasked with growing shareholder value, and the presidents that work side by side with them are the ones who run the day to day portion of the business, you know, focusing on shorter term issues, be it products, services, orders, deliveries. And you know, while these things are all part of driving value, there are so many other considerations that the CEO focuses on. They're much higher level view of the business, which tends to be much more strategic, you know, are we in the right markets? Are we, should we get out of certain markets? How do we expand? Should we look at acquisitions and on and on? And so given that we're talking about transitions from these closely held. Businesses that are some years out into the future. This is a perfect time for owners to drive initiatives that can enhance value significantly, and these are not passive positions, you know, they're simply positions with a different focus. That's an attractive picture for a lot of people is to go from overtime president to part-time CEO, isn't it? Exactly. And that's what that's some of the things that they're good at and a lot of people, I think, think, well, if, if I stop doing all the president work, then you, you know, what am I gonna do? And it's, it's drive, you're gonna do things that really drive the value of this business. You can spend a lot more time working on that. And how do you, uh, uh, could you summarize some of the benefits of taking on that CEO role, Don? Well, I think there's 3 that come to mind. I mean, it clearly puts the owner's focus exactly where it needs to be in this phase of the business life cycle, as well as the owner's personal situation, and that is focus them on enhancing the transferable value of the business. And 2, it allows the owner to remain actively engaged in the business, but now with the stimulating new strategic perspective to take on new challenges and opportunities. And the third item is the fact that that initial step to starting that transition. You know, necessitates passing on some of the responsibilities and corresponding authorities, delegating these to other individuals, and as you know, this in and of itself reduces the greatest concern of most buyers, you know, and that is the dependence on future cash flows on the involvement of the current owner. It also lessens the risk of disruption should an unfortunate event occur. So the key here is that it sets a target that some owners find more appealing than having to become that quote passive owner that they don't see themselves being. And with an appealing target in mind, it's easier for someone to get motivated to develop their management team without the fear of putting themselves out of a job. But I should point out, I mean, not every business owner has both the interest or capability to take on such a role, you know, within their company, but those who are so inclined, I strongly encourage it. And in some cases I also recommend that they work with a coach to help them through the process. When you start working with someone and you bring up this topic or this concept of moving from president to CEO, what's the first reaction you get a lot of the time? Well, Bill, you can imagine there's as many reactions as there are people. Uh, sometimes there's kind of that stare that you can tell that the individual's thinking about that. Uh, other times it's just The eyes glass over because it just doesn't compute, you know, if if the business owner is really the technician that knows how to produce the product but really is not a strategist, it's a leap that's just too far for him. So I try to assess that before I even suggest this. Of course. I mean, in my experience, and let me ask you if it's in yours as well, it's, it's almost a relief that they can think that way, and they need someone from the outside to give them. Uh, they give them permission almost to take some time back for themselves and, uh, take away some of the presidential, you know, sprint duties so they can, they can jog and be productive with their vision, their thought, and their experiences. Have you had that experience as well? Absolutely, and, and you know, certainly what I try to accomplish is to help them realize that, you know, they're not just abdicating their presence's role, you know, they're taking on something that's even more important not only to themselves but to the survival of the business. vitally important to the to the business and, uh, when, uh, do you have any brief client stories you can share with us about an experience that you've had that, that might be valuable to our listeners? Well, I think specifically on on this topic, um, you know, the I had one business owner who was You know, was, was, had actually started, you know, founded and was running for many years a specialty machining business. Uh, you know, he was kind of a hands on person. My first reaction, you know, initially I was thinking this wasn't a person to become a CEO, but the more we talked about it, I mean, the reality was he, he truly understood the financials of his business. He truly understand the marketplace. And so when I suggested it to him, here was one of those that he, he got it right away. I mean, you know, he got excited about stepping out of the day to day elements of the business and he looked forward to taking on the larger challenges. Uh, you know, and, and this, in this case, it definitely motivated him to take action on developing his management team, which was something that he had repeatedly put off in the past. And by looking at the business from this new perspective, he started exploring some peripheral markets that had never even been on the radar in the past. So here's the case. The same person was looking at the market one way yesterday, and after just kind of putting on a different hat, ah, he started looking at it from a different perspective. He found an opportunity. He is so excited now about the potential in the business that he's even less inclined to leave as soon as he had originally planned. And that's a great outcome. Yeah he's added value to the business. He's having more fun. I mean, what kind of a better win-win can you have? I have similar stories and it's a lot of fun to be able to help someone and, and go back in and see them actually with a smile on their face and enjoying their business and their life, because I think for a lot of people they have this guilt feeling that if I'm not here, if I'm not the hardest working person in this factory, this office, this building, then, um, my employees are going to think less of me. Well, you know, Bill, you raised that point. I mean, it, it bothers me that I see people almost feeling guilty to even talk about exit planning. Again, it's as if they're leaving their workers behind and in reality, by taking these steps, they're looking out for their workers. Yeah, yeah, nothing, it could be a lot worse if they just, uh, if they pass away at their desk because they work themselves too hard. Don, we got about one minute left. Can you give us a, a quick business, a quick tip for our listeners, uh, tip or precaution? OK, I, I really have 3. I would suggest that an owner challenge any and all assumptions that you may have about the exit planning process. You know, most of these can be replaced with hard facts or at least educated estimates that reflect reality, whether those are good or bad, as a basis for your future decision making. to recognize the fact that your business is an investment, you know, whether it's the money you first put up to start it, the years of hard work you poured into it, or the earnings that you've reinvested over the years. It's an asset that may be the largest one in your portfolio, and it should be managed as such. And 3, to do so, consider transitioning from the position of president to that of CEO. You know, presidents run the business day to day, whereas CEOs focus on building long-term value. In large corporation, the CEO works to increase that value for outside shareholders in a closely held business, that value increases for you and your family, and what better person can there possibly be to focus on that than you? Great stuff, Don. How do our listeners get in touch with you? Uh, website address is www.positive exits.com. There's more information there about the entire exit planning process, the benefit it provides, a longer listing of possible assumptions that should be challenged, and more thoughts on the transition from president to CEO. Or they can feel free to call me at 847-340-2525. I really have enjoyed this interview, Don. I hope you'll come back and talk with us again sometime. Uh, thanks very much for joining us and thank you for having me, Bill. I've been talking with Don Burzon, uh, a business consultant with Positive Exits in Chicago, Illinois, and we're gonna take a short break, so please stay tuned. At Exitcoachradio.com, we're interviewing over 100 top advisors to get you one minute tips, ideas, and precautions so you can be well planned. We upload new content daily at 6 a.m. and 1 p.m. Exitcoachradio.com. Come listen for us. Thank you for listening to Exit Coach Radio. Time is precious and so are our pets, so time with our pets is extra precious. That's why we started Dutch. Dutch provides 24/7 access to licensed vets with unlimited virtual visits and follow-ups for up to 5 pets. You can message a vet at any time and schedule a video visit the same day. Our vets can even prescribe medication for many ailments, and shipping is always free. With Dutch, you'll get more time with your pets and year-round peace of mind when it comes to their vet care.