Lisa Walker - Planning Your Exit Pays Many Dividends (E222018)

Hi everyone, it's Bill Black, the exit coach from the Exit Coach Radio show. You know, one of the biggest questions I get on the show is what exactly goes into a business exit plan and when should I start creating mine? Well, I always tell people that the best time to start was 5 years ago, but the next best time is now because you never know when you might need it. So we put together a free report that describes what an exit plan is and what you should know. You can get it free by texting exit plan with no spaces to 44222. That's exit plan to 44222. Again, text exit plan to 44222. 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. And now here's your host, the exit coach Bill Black. Hey everyone, thanks so much for joining us. It's always a pleasure to have you with us, and my guest today is going to help us understand about something called performance strategies. It's a great organization. Lisa Walker is the executive business coach and senior partner of Performance strategies here in Santa Ana, California, and this This performance strategy's coaching and consulting team, they bring focus to small to medium sized businesses in the Orange County, California area. They take a holistic view of a business looking at every functional area from HR to operations, leadership development, scalability, systems, financials to sales, marketing, and customer service, and they find opportunities to improve performance, and we can all use that. And then they help business owners map out their exit strategy with an expert team of professionals. So let's get Lisa on the line here. Lisa, welcome to the show and thank you so much for joining us once again. Good morning. Thank you, Bill. My pleasure. Yeah, well, Lisa, you know, we talked a few years ago, right, on this, on this show, and you shared some great tips and ideas and precautions for our listeners, and today I want to learn more about what you're doing through performance strategies. So tell us a little bit about you and your background in the firm and uh and uh what we should know about about you and the firm. Sure, um, so for me personally, uh, my background is in business and, uh, technology industries. I kind of grew up down in, uh, San Diego in, uh, technology, and imaging, um, industries and product management, uh, for a number of different tech firms, and I then, uh, worked for Canon for several years in product management and evaluating business opportunities that were brought to them. Um, and then I ran a company myself, and an imaging technology company for about 14 years, and in that role I worked with larger companies, um, uh, HP sorry, don't know where the P came P got lost anyway, um, Microsoft, Intel, um, Apple, Google, some names. You might be familiar with and I worked with those companies on solving business problems. What what were what were problems that they were facing collectively and individually that um that we could come up with solutions for. So we did that um looked at things like, you know, saving costs, growing markets, um also did some marketing activities with them. And so I got to the end of that and and decided that I needed something different and spent a lot of time because I'm an analytical researching myself to figure out what what my next thing was going to be and I was actually at a weekend retreat, so I was doing a lot of personal growth work and talking to a friend of mine who wanted me to come to work for him. In his business as his CEO or COO and his particular business was like an online recruiting business, and it wasn't really, you know, the industry wasn't really floating my boat, but I went out for a run the next morning and this thought of business coaching came into my head as a way where that I could help him. Because he's really passionate and excited about his business, and I wanted to help him, um, but I didn't really want to be in his business, so I, I discovered business coaching, um, you know, looked up, uh, how to get into it, got the certification and training, and it's been awesome since then. I get to learn about all kinds of different businesses and, you know, really have a great. Impact on a smaller to kind of midsize business where I'm working with the owner or the CEO directly and I can really see the impact of what I'm doing much more so than say working with Microsoft, you know, it's sort of a small cog in the wheel um at that level so it's just very much more intrinsically uh rewarding um to to do what I do now. Yeah, and there are so many, there's so many of these businesses that that really are underserved um and they really need the same, the same help as some of the bigger companies maybe on a smaller scale, but it's nice to be able to talk to the owner and hear their, their story, how they got started, where they're heading, and have more of that personal relationship, right? Exactly, yeah, it's just, it's much more interpersonal, um. And, and that, and that just makes the reward, um, much more gratifying, you know, when, when you see, you know, when I, when I meet a client's spouse for the first time and they look at me and they realize who I am and they go, oh my God, thank you. You know, it's like that's OK, that's why I'm, that's what I'm doing, you know, um, it, it, it impacts, um, you know, everybody that that business owner touches, so it's just, uh, it's just a very rewarding, uh, thing to do. And of course we live in such an area of entrepreneurship. There's there's businesses everywhere and there are business owner problems everywhere. One of those big problems, as you as you stated, is people are getting a little older and a lot of people are starting to say in a big wave, you know, someday I've got to get out of my business one way or the other transition, sell, hopefully I do it while I'm living and everything works out that way. So this, this whole theme of exit planning is becoming more and more of a practice here, kind of like I think of it kind of like elder law was not a big deal 10 years ago, right? But because the population's aging at such a tremendous rate, there are a lot of people moving into that zone when they're starting to think about this stuff. So why do business owners need to plan their exit? That's a great question, and it's really, it's not just that the population is aging, it's that we have this enormous, you know, tsunami of baby boomers that are approaching now this year for the first time. They are, they are beginning to be in retirement age and the whole history of of baby boomers is really interesting. You know, when, when they were, you know, young, it was they were, they were subjected for the first time to consistent media exposure, you know, TVs, right, and consistent advertising, and so they grew up with this, um, idea of, of entrepreneurship and this idea that, you know, you can have whatever. You want if you just work hard enough and so they all went to college in record numbers and they got out and the the the corporations in America could not absorb them. There there was too many of them, so they had to go start their own business and, and that has created this, you know, 50 to 60%. Uh, of businesses are, are these small businesses that were start and run by by baby boomers, and they are entrepreneurs. They work hard, they have values, um, that are, you know, are different than the following, uh, generations. So, but, but now they're at the place where, OK, there's this, this glut of, of there's, there's going to be 11,000 more businesses up for sale every month than the market can absorb and the bad news is the next generation, which are Gen Xers, they're. There's, you know, there's half as many of them to begin with. They don't have the same values. They have no interest in working 60 or 70 hours a week. Um, they, they want a lifestyle. They, they want a job where, you know, they, they can go and work the number of hours they want to work and then go get what they want to get. And so not having thought about how you're going to exit your business is going to leave you at the bottom of that pile. On the top, you know, cream. Of businesses where the owner has prepared, they've looked at their valuation and increased it. They've, you know, done the work that they need to do to get the business, you know, their, their IEA to multiples that are very attractive, etc. There's just, you know, the market for these businesses is just going to be, it's going to be a buyer's market and so it's critically important that Um, business owners now begin thinking about, um, how, how am I going to get out of this thing, what am I going to get for my business owners don't have any idea how much their business is worth, um, you know, and they, they just, they're not prepared for it and so as a result of that, you know, I I. I honestly, I am not a gloom and doom person, but this glut of businesses that employs a lot of people, um, in this country, you know, is potentially going to be a trigger for uh a a downturn when all those people lose their jobs because the, you know, the businesses haven't been, uh, run well enough or optimized for them working with the, the owner not there. Yes, yes, you have very, very good points. And again, the baby boomers, if you're a baby boomer, if you're born between 1946 and 1964, so you're right now you'd be in your in your mid-50s to your early 1970s, and again, a lot of people are thinking, well, I feel pretty good. I'll keep doing it for a few more years, but we're moving into more and more of this glut of all of these owners heading for some kind of a transition or exit and like you say, Lisa, there's going to be a big A beauty contest with a lot of contestants and if you're not standing out, you're going to get passed over. So what keeps a lot of these owners from from starting their planning and getting their, their, you know, their business ready for transition or sale? Yeah, um, first of all, they just, they, they, they're so busy working in their business that they, they don't, uh, they don't see it coming. Right, they, they don't think about the fact that, you know, there's this tsunami of, of, uh, baby boomers looking to, to get out of their businesses in the next 10, you know, 20 years, um, so they, they don't see, they just don't have awareness that that it's coming, so they don't realize how competitive that market is going to be, um, they also just, you know, plain old don't, don't want to think about it. You know, it, it's sort of like, well, they, you know, their, their whole identity is wrapped up in the business this is who I am and so. It's not just even a question of, you know, structuring the business and, and looking at, you know, am I, am I going to sell this to to a third party? Do I have employees, um, you know, do I have a succession plan for employees or, or family members, um, you know, or, or am I going to just shut it down and walk away, you know, um, they, they don't, um, they don't want to think about it because it sort of means, you know, OK, if, if this business is my identity, all of a sudden my identity is, you know, who am I? And so it's there's there's an emotional aspect to it as well where you know that's it's a big it's a big question that it's very easy to, you know, it's like planning your, your funeral right? or you're no nobody wants to talk about it. Yeah, no, you're there you're, you're dying in one way or your identity might be dying. You're right. That's a good analogy, I think, you know, who am I, who am I if I'm not in my business because that's been my life. Yeah, and a lot of them are just unprepared for making that transition, even, even if they don't plan for it, you know, I mean if you plan for it, obviously you can, you can have much more control over over the outcome and and it it can be done on your, you know, on your terms and, uh, on your schedule, um, but it that's not going to happen unless you, you know, take action now. You know, I think a lot of people think of their business as a property in some ways, and it's like, well, if I want to sell my house, you know, yeah, I'll get the windows cleaned and I'll put some paint on the front door and there'll be a buyer there in no time. How is, how is this so much different than that? Yeah, that's a great question. Um, they, um, a lot of um business owners don't. Don't take the time um to really institutionalize what they do, so creating structure or process systems, getting the stuff that's in their head, out of their head, and into the fabric of the business, that's not something you need to do when you're selling your house. It's just a, you know, it's a, it's a physical structure, yeah, you know, you, you, you know, you paint and you carpet and you, you know, fix things and put some new flowers out in front. But that's, that's a very different scenario than transferring a business to other people as an ongoing entity. So there's a, there's a lot of things to do, and this is, this is a lot of what we do as a coaching firm is we, we take that piece of the exit strategy and planning that is involved in increasing the valuation. What are the most, you know, look at the financials, increasing the valuation. Um, there's also the succession planning, right, if you want to pass it on to employees or, or, uh, or, or family members that there's a long term planning cycle for doing that in order to minimize the tax impact, um, and I'm, I'm not a tax professional. I don't I bring in other people to advise on that, um, but, but it's important and it takes time and so they're, they're just because they've sort of had their head in the sand about it, um, they're just not prepared to, um. To to do those kinds of things and they don't, they're not looking at it, so it's, it's really a, you know, much different transaction than um than selling a house. There's just a lot more work to do. Yeah, yeah, I hear what you're saying. So if it's not transferable, and you're talking about processes and systems and things that need to be, need to continue on, if it's not transferable, it's less valuable, and it may, it may not be valuable at all if you're trying to sell to an outsider because another company is. I put together well, has good processes and systems, and the other side of it is the human element. If it's not managed well, then it probably won't survive into the future and the value is, is going to be less. So critical, critical areas, and they're all complicated. So how do you help, um, how do you help your clients overcome their obstacles? Yeah, the, the, the first thing is to just, you know, take, take one small step, right, just, just do something, um, we have a, um, an assessment that um that folks can come to our website and, and take, um, and it's, it's there it's called Exit map and so so that's just an assessment of where you are now it it's just it's a. Easy, you know, 15 minute, um, thing to, to do to, to just take one small step. A lot of what, what keeps up is it's a huge thing, right? You, you look at this, oh my God, exits, you know, there's so many moving parts to that, and, uh, I just, I don't know how to even approach it, um, you know, it's, it's, it's a big thing. So and that interestingly I'm kind of into the brain science of, of some of this stuff and. Uh, the, the, the amygdala, which is your, you know, fight fight flight freeze, uh, control center, when, when it, it gets triggered when, when you think about a, a big thing like that. So this is, you know, Kazan one small step theory, right? So if you, if you think about it in terms of this big thing that I don't know anything about, you, you, you know, they go into freeze mode and when that happens you're Your amygdala cuts off access to your prefrontal cortex, which is where the creativity and the thinking and the action can take place. So, so people just freeze up because they think of it as a huge thing. So, so the first, you know, kind of point of advice is, is just make it one small step. You, you don't have to do, you know, just, just think, just think of what is the, the next one small step, um, that you need to take, and I, I would recommend taking the assessment um as a, as a small step. Um, second thing is you can calibrate, you know, go get a real valuation, figure out how much your business is worth, um, triangulate where, where am I, how much money do I need to retire, and what's the gap, and then see how go get a proper valuation done and, uh, we've got lots of good resources for getting that done, um, and then, you know, putting, put a team together, um, to, to make it happen. This is not something that. Um, you know, any one individual, um, you know, even yourself, I know you, you know, this is, this is what you do as well, um, from a, from a business coaching standpoint, um, what, what we provide is just a holistic view of the business that's what performance strategies does is, you know, we take a holistic view, um. We identify the other resources that we need to bring in there, you know, CPAs and attorneys and financial folks and insurance, etc. you know, so we, we take care of the thinking about the big picture and we can just present to you just the small steps that that you need to take individually. Yeah, exactly, it's like a, it's kind of like a football team. There's a head coach, but there's also a lot of other coaches that need to come in and everybody collaborates to create the playbook and then uh and then you, then you have your playbook and you and it's it it. It is a daunting process. A lot of owners think, Well, I'll just, when I'm ready, I'll just go talk to somebody and they'll sell it and that's that and it's, that's that, you know, and and we both, we both hear from a lot of, a lot of business brokers and owners that almost 8 to 9 out of 10 people that go to those types of brokers walk away thinking, I thought it was worth a lot more than they tell me it's worth.um 2, I thought my business would be easy to sell. Look what, look at all it provides me. Um, and number 3 is if I leave, there's nobody left behind that can really run this thing and that's that's all problematic stuff. There's there's a lot of work for us out there, isn't there? Yeah, there sure is, and, and you know, and that's, and that's sort of what keeps people stuck right at the same time is like I'm like it's a it's a big thing. And so you know again my advice is to just break it down into taking the first small step and then you know get get some professional help and and let you know let the professionals worry about you know how we're gonna make this happen and and the details and it's just a matter of. You know, finding the right people to to help you, but it also, you know, a good point that you made with, with, um, you know, business brokers out there, right, right now the, the professionals that are doing, you know, business brokers and M&A type folks, their capacity is about 9000 a year, uh, right now we're we're talking about, you know, 11,000 a month more than that, um, in terms of the business that are coming for sale for sale, so that just gives you. You know, uh, uh, an idea of the size of the issue that's that's coming down the pike. Yeah, and a lot of owners are going to say, well then that's OK. I'll just turn it over to my kids. God help you and God bless you, but you need a lot of work to figure out and work with those successor owners, and that's the other area where performance strategy comes in strategies. In to basically, you know, well, let's figure out what they know about running a business and what they should know and what their strengths and weaknesses are because that could be, you know, the goal of that type of planning is happy Thanksgivings forever and if you don't do a lot of planning, you're not going to achieve that goal. So Lisa, you have on your site, you have a free online assessment. Of a business owner's readiness for their eventual exit from their business, and you alluded to this earlier, the exit map. So let me tell you, listeners, write this down. You can go to www.ps for performance strategies, PS-MC MCG PS dash MCG, got it.com. And you'll find that and look for exit map from the menu. You can link to that page and select Lisa Walker as your adviser from the drop down list and hey, bingo bingo, you've got a good initial first step to figure out how ready you are and tell you what you might need to be doing now to start getting ready and then Lisa, they can get in touch with you, I would imagine at that at that website as well and find your information if they have other questions. and we would like to, if you're listening to this on the recorded link, we'd like you to ask you to share this interview by LinkedIn so that Lisa gets exposure with some of your friends and contacts who desperately need her help. Lisa, is there a better way for people to get in touch, or did I cover it all? Uh, that, that'll work. Uh, my, my email is easy as well. It's Lisa at ps-McG.com, so same same URL, um, and just Lisa at the at the front. So, uh, and my number is 949-607-8180. So and my, my information is is up on the website as well. And I'll tell you what, in the circles that I run in, your name is regarded very highly as an expert in this area. So I really thank you for coming on and sharing such great information for listeners, and I hope you will take advantage of getting in touch with Lisa and getting started on your planning. It's never too soon to start. Like I say, 5 years ago would've been a great time to get started, but the next best time is now, is now, yeah, exactly. And it takes 15 minutes to take the assessment and and we're off and running. That's terrific. So Lisa, thank you once again. I will see you around in in the circles that we run in, and I look forward to that. And I also look forward to the next time we talk because I think we're just scratching the surface here. Yep, absolutely. Thank you so much, Lisa, for joining me today. Thank you, my pleasure. Thank you for listening to Exit Coach Radio.