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Peter Mehit is the COO of Custom Business Planning and Solutions. Today, he will discuss the most important times to have a business plan.
Questions Answered: 1) What are the three times you need a business plan?
2) Why is it important to focus on your exit early?
3) What can people do if they are nearing the time they want to get out of their business and they haven't planned? Contact Info: Website: www.custombps.com
Email: pmehit@custombps.com
Exit Coach Bill Black interviews Top Advisors for Tips, Ideas & Precautions for Business Owners who want to grow and protect their company value and plan for a successful Business Sale or Transfer. Listen daily so you can be well-planned!
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Oct 2026
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April 10, 2024 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 exitcoachradio.com. And now here's your host, the exit coach Bill Black. Thank you so much for joining us. It's always a pleasure to have guests return, and my next guest is Returning from custom business planning and solutions, he's Peter Mehit, the CEO of that company here in Irvine, California, and we've talked a lot in the past about what goes into a business plan and and really why most business owners don't have business plans and why they should. Today we're going to talk about the 3 times that you need a business plan. So Peter, welcome to the show. Thanks for joining me today. Bill Black, thank you for having me on. It's always an honor. I appreciate it. Well, it's always a pleasure to have you on because you bring so much information to our, our guests, our listeners who are saying, I know I should have more of a plan put together, but I'm not sure how to go about it, what goes into it and why I need that. So tell them a little bit about custom business planning and solutions and how you got started in this world of of planning. Well, we've been in business since 2004. Uh, it started because my wife wanted me to come off the road, and I had been traveling all over the world doing high-value outsourcing for Computer Sciences Corporation, and she said, you know what, I've had enough of you traveling, let's do something different. And we came off the kind of struggle with what we were going to do, and, and I, I wrote a lot of proposals and really a proposal is just a business plan for a start. And somebody asked me if I could write a business plan and I said, yeah, I think I can figure that out. And so I wrote a plan and it worked good and I did another and another and now here we are in 2015, we've wrote close to written close to 600 of them and uh with the deal that's going through probably this week in Louisiana, we'll be at $136 million that have been raised. Using those business plans. And so, um, we've seen just about every situation you can imagine, and we've seen about every business that you can imagine. We've done them for SBA guaranteed loans, we've done them for commercial loans, we've done them for venture capital. We've done them not so much for angel investors, because angel investors is an entirely different breed, but, uh, and we've done them for private equity firms. So, um, we've got a ton of experience and, um, that's our story. Now, now Peter, when you go out and meet with the business owner for the first time and and they're saying, well, yeah, we have a plan but we may need to refresh it and you take a look at what passes for their business plan, what is your, what's your impression on what they where they missed the mark most of the time? Well, my thinking has evolved quite a bit about what a business plan should be because I think they're so necessary and the way that they're taught and talked about is such a drag nobody cares about them, and I get that nobody cares about them because they're a drag to do. So the thing that I look for in anybody's playing, I don't care if you've got it in a 3 ring binder or a spiral notebook or you've done a full business plan with beautiful graphics and color. The things that I want to understand are did you pencil this business out? Do you understand how it's going to work financially, not only just the revenue side of it, but do you have all your costs captured? You understand what your variable costs are, you understand all that stuff so that you're not blindsided by something or you didn't leave something out. That's number one. Number 2, and most important, even more than the financials, although you've got to do them first to see if it's even worth doing, is who's the customer? Who am I selling to? Why would they buy what it is that I need and what's my contingency to stay on top of that so that when the market moves to a different place, I can evolve to that new and different place with my customer. So that's the second piece I look for. And then the third piece I look for is, how do you get out? Your business bill, the exit. What is it that you're looking for as an exit because you're not going to run this business forever and a lot of small business owners get trapped in that mindset of, hey, it's great. I got a new boat. Hey, I got a new jet ski. Hey, I got to go to Europe. I did a bicycling trip in Bordeaux. Life is great, but at some point you're going to want to get out. You're going to want to leave a legacy for your family, for your children. And, and so you can never start thinking about that too early. And so those are the things that I look at. I'm not so much hung up on form or function. I'm more looking for what does the business owner know and how much of that have they committed to some kind of paper or some kind of memorial so that if they get hit by a potato chip chip truck, somebody can pick that business up and keep it going and it doesn't just die. And really that's, that's the crux of it is that you ask a lot of questions that they may not have thought to ask because they may not want to know the answers number one, they may not want to have to deal with what the answer is, right, right, or they, or they just have, they just haven't really thought that deeply through it because they, this is not their business. Their business is their business, not the business of writing the business plan. So when you start talking about the 3 times you need a business plan. Uh, what are, what are those three times? The 3 times that I think you need a business plan all the time. I think it's a living breathing document. I think it's the, uh, or however you decide to do it. I mean, you could use an online tool to do it. There's all kinds of different ways you can do it now, but I think it's a living breathing thing that you're really looking at as almost like a navigator looks at a map when when they're trying to sail from one port to another. You're looking at, you're looking at where you are. You're doing position checks against your plan. That's how it should be. But most people, for some reason, entrepreneurs are people who like to take risks. A business plan is one of those things when you want to look at risk, and sometimes it's better not to look at a risk to be able to take it, if you know what I mean. So entrepreneurs, I understand that. I get that about entrepreneurs that they don't necessarily want to plan things out. But the three times that you really need to have a plan is when you're starting your business, when you foresee a change either because you're going to change the business or because you think the market is going to change, and then when you're getting ready to exit your business, and I don't mean the year you're going to exit your business, but at least 5 years before you're going to exit your business. And you need that business plan for different reasons. OK, so in the first part, in the starting part of it, you need that to figure out first of all, pencil out where the business is going to make enough money not only to sustain itself, but to give you the lifestyle that you want to be able to do the things you need to do financially in your life. Will the business be able to do that? Then do you have your customers sufficiently identified that when you roll out, you commit this treasure in time and emotion into creating this business? That they're gonna show up and reward you with their treasure is, is, is if you figured that piece of it out. So, that's the first time that you need it, and it's probably The most important time because most startup businesses fail, that's no mystery, and most startup businesses fail because they fail to really look at all the factors and risks. I mean, fail to plan is a little too simplistic. The whole reason to write a business plan is to manage your risk. It's to manage your risk. So that's the first time. The second time you need a business plan, the second stage is if you see by looking at your sales that you're marketing, your market is starting to change. You're getting less sales or you're getting more sales, or you can see in the news or by reading information about your industry that it's about to change. Maybe the legislation around it's going to change, the regulation's going to change. Then you need to take that into account and say how is that going to affect my model? What do I have to do to my business to keep it sustainable? What do I have to do to make sure that I maintain profitability? And so this is why I think you need to have a business plan all the time, because if you're doing that course correction, you're going to do that naturally. But if you're, if you, you're going to ignore it, when you see changes coming, then you need to have it. And then the third time is the second most important time to have it, the exit. The reason to do a do a business plan when you're doing an exit from a business is to manage the due diligence. In other words, you choose the information that you're going to relate to the potential buyer or acquirer of your business so that you give them solid information that's rock solid because here's what happens in due diligence, and this is why most businesses fall out of due diligence, is the documents that they're that are given to the seller don't match the reality of the books and the business. So when somebody turns over a rock and they found they find something they don't like, what do they do? They start turning over more rocks. You have a business plan or a confidential memorandum of sale where you detail the business operations, you detail the financials, you detail the customers. Now you're telling the buyer where to look and people by human nature will take the path of least resistance. So if you say my customers, my top 5 customers are such and so, and here's the revenue and here's the concentration I have, and they go to your books and they find out that wow, that's exactly right. Now they ask less questions and the more questions they ask based on your business plan that match up what you tell them. The more happy they are, the more satisfied and safe they feel about the actual purchase. And so a lot of people skip on that when they go to sell their business. They don't get a confidential memorandum done. They just throw a big stack of documents at the buyer and, and so what they're doing is they're saying, Here, here's my stack of stuff, start figuring out your questions by looking at my stuff instead of giving. You're giving them with a business plan or a confidential memorandum at sale is you're giving them a roadmap of how to analyze your company. If you give them the roadmap, they're likely to follow it. Guess what? You are now managing the due diligence and you're controlling the questions you're going to get back from them by doing that. That's great input and Really what you're doing is you're building the trust because what the buyer is buying is your future cash flows and the reliability of those cash flows. They're buying a story that uh uh they they they hope it's gonna come true and certainly you hope it'll come true for them and to to uh. Offset that most of the time you will not in a small business get a lump sum check to buy out. You'll have to earn that in what's called an earn out, right? And that is going to be based on all of the all of the fairy tale story that you told coming true over the over the years to come. Yeah, and what builds what builds more trust than than saying I care enough about this deal to, to guide you through it, to give you a roadmap where, because I have literally seen this, this happened actually on a deal that was was a $20 million deal this year. I've seen both sides of it. I saw one side where The, the, the company that hired us said, look, you know, it wasn't an acquisition, but it was an expansion, this particular one, and they said we want you to be unsparingly honest in this, and we're going to tell you where all the warts are and we're going to tell you the storyline behind that and we exposed it and when they went in to do the due diligence, they basically stopped halfway through and they go, Well, everything we've tested has been right, so we're, we're, we, we think you're honest guys, right? Now the flip side of this was an acquisition where there were some kind of sketchy stuff, and the owner really kind of sandbagged us about what was going on with the business. So we told one story and then when they got into due diligence, they went, we don't believe this, and we're not going forward. And so, You've got to be careful about how you do it, and you've got to understand that the number one thing that you're trying to do is build trust. You're exactly right, Bill. You're trying to build trust. So the way you do that is being fully disclosing everything and giving them a map of where to find the stuff. And by the way, when you do this plan, when you do this memorandum. You're going to have to deal with where the bodies are buried, and you might find out that it's not time to sell the business. I've got some stuff to clean up. Better to find out now while you have time than when somebody's sitting in your office, they've got their checkbook in their back pocket and they're, they're getting frustrated with you because they're finding stuff that's not true. Yeah, and there's nothing worse I don't think, than than having invested the time and energy into preparing all of the documents and proving all of the minutia that's asked for when you're heading for exit while you're still managing and running your business, by the way. This is this is spare time activity and pulling all this stuff together because you weren't planned just to find out at the 11th hour that they're not comfortable because of something that you put in that that now you you've lost trust and that that deal falls apart. It happens all the time. And yeah, and that's the, yeah, and that's the value of somebody like you and somebody like me because we've been through enough of these that when the owner who has never been through this. Looks, we look at them and we're gonna go, this is not going to look good, this looks great, we need to talk more about this and less about that. Here's how we need, we need a story to explain this, that is true, right? That's the value that we bring both of us, to our clients is the perspective of having been through all these deals that you just know what you just, there's just some things that are a third rail, you can't touch them or you're done. Yeah, I agree with you. Yeah, good point, good well put. Now I understand the first part. The first timing is starting a business, and the third one is and when you're preparing for your exit. The second one, when you see a change, of course that could happen many, many times during a business's lifetime. So how often should they, how often they should they be pulling out the plan and revisiting that plan for for the uh the the change that they're gonna manage? If you actually have a plan like we do, if you actually have a plan, we seriously Take a position check about every 45 to 60 days. I mean, we know every month whether we're hitting our projections. So if we're not hitting our projections, that immediately puts us into, you know, uh, some, some forensics. Why, what's going on? Is our marketing not working? Where are people dropping out that kind of stuff, tactical stuff. And then once a year we take a look at, we go out and actually survey the the uh the market, for example, We used to, when the business was originally started, our main business was taking people to the bank to get SBA guaranteed loans. Well, there are very few banks doing guaranteed SBA loans for startups, very few. So every year we call a couple 100 banks and we talk to them and say, What are you doing? And they'll tell us because they'll say, yeah, we'll say, do you do startup loans? And they go, Yeah, just bring in 2 years of financials. Well, you're not a startup if you have 2 years of financials. We don't say that to the bank because there's no point in picking a fight, but we know that they go on the list of these are banks that do not fund startups. So now what we've found in we've called about 120 banks so far this year, what we've found is there are about 6 banks that are actually doing pure SBA guaranteed startups. Well, guess what? Since we know who they are, we're really valuable to somebody that wants to do that. So we do those kinds of things to survey the market. And by the way, it was doing this survey last year that made us move more toward trying to get the attention of private equity firms, of venture capital firms, and we've had success in writing business plans for them, and it's actually a better market for us. It's a better client for us. We like working with them because we don't have to educate them. They understand the value of what we're doing. And so, but we would never have made that shift had we not first said, hey, we've got to go. Our sales are falling off. Why are we doing this? Let's call all these banks and find out who's really doing it because they all say they do it, but like I said, right now there are 6 for sure that will do that. And so it's that kind of thing is that you have to be proactive and look at your market and try to understand the dynamics in your market, how it's changing. So that you can stay ahead of that, and that's the value of having a plan, because even if your plan is 100% wrong, you'll figure out it's 100% wrong. You'll adjust it, then it'll only be 80% wrong. It'll only be 60% wrong. And the best accuracy you can expect 70, 80%. So you push it that way and you keep understanding that there's going to be corrections and errors to fix and things you've got to do, but that is the whole power of having it and you're light years ahead of somebody who doesn't. What are the top things you could tell a business owner who would love to call you and have you do a business plan that that they should have be thinking about before they call you and have ready for you? The the things that I'm gonna, I harp on them because over the years, having done hundreds of these, and we also do general business consultant, we've got hundreds of other clients. The thing I would say is, is I want to understand your numbers. So if you don't understand your numbers, that's good. Come in, but be prepared to tell me you don't understand your numbers. But if you do have books, if you're like you've got QuickBooks or some accounting software that will generate a profit and loss and a balance sheet and those kind of things, bring those in. If you're doing a pure startup, then just come in with your ideas about what your revenue is going to be, and we'll, we'll walk you. We have a process to walk you through that so that you'll be clear on it. And then the other thing is, and I cannot say this enough because this is to me the number one reason why people go down, who are you selling to? If you're selling to anyone or everyone, you're selling to no one. So I need to understand who are the two or three top customers that you think your business. That you're going to focus on because it's, it's counterintuitive and it almost seems like inverse logic, but the tighter that you make that spectrum that you look at and the more energy you pour into it to get a specific customer to buy from you, the more you'll get everybody to buy from you. But if you try to sell to everybody, It's too diffuse. Nobody, people have to see themselves in your product. They have to see themselves in your service. They have to see themselves benefiting from what you do because it's all about them. It really bummed me out when I learned that. It's all about them. It's never about me. So what is it that I can do to get them to see themselves in my business? And when I can do that, that's when I start to make sales. So those are the two things, and especially in existing business, maybe one that's struggling or maybe one that's looking because if you're looking to exit a business, is the customer you're selling to now going to be the customer's there in 5 years? And you've got to have an answer to that story because I guarantee you anybody worth their salt that's buying your business is going to ask that question. That's great, great information and again, uh, Peter, we love to have you on the show because you give so much great advice and so succinctly and uh I took a ton of notes here. I'm sure our listeners did too and you have, you have something called the Killer business plan and ebook that anybody can go to your website and send you a contact form with the word killer in the comment box and you'll send them a copy of that. That's great. That's great. So how does the league complimentary where should they go to do that? Uh, they need to go to www custombpsct Ombps.com. Also, I'll take phone calls if they want to call me at 800-741-8444 and say the word killer. I will give them an e-copy of the book because the fact of the matter is is that I want everybody to have. The, the understanding of how important this is, because it can change your business, it can change your life, and it really isn't as much work as you think it is once you get into it. Well, obviously a lot of people out there might, might say, well, I'll do a self-help or whatever, and they just never get around to it. They didn't do it right. They don't understand the format that that your lenders are looking for, that your your venture capitalists that the people are going to make a difference in your life will be looking for and and you do. So Peter Miha, thanks so much again for joining us, and it's been a real pleasure to have you on again, and I look forward to our next conversation. Bill Black, I've said it once. I'll say it again. You rock. Thank you for having me on. All right, thanks, Peter. All right, take care. We're gonna, we're going to call it a day. We, we've had a tremendous show today. A lot of fantastic guests have joined us. We've learned so much and I really appreciate you joining us because we're here for you, the private business owner, our hero, so that you can be well planned. I want to thank Julie Tabazon for helping me through the production as she. Always does makes things so easy for me. And I want to thank all of you for listening and I hope you'll also take time to tune into a new show for women called Tell Janice, T E L L J A N U S dot com. First interviews launched yesterday. It's a tremendous production. Hope you'll take time to listen in on that. Thanks again, and we'll be back again for you, um. Oh, somewhere down the road we'll check with you back in a in a week or so and uh and hope that you'll join us uh weekly and go to our audio library to learn more about uh. Advisors, authors, and thought leaders sharing their wisdom so that you can be well planned. 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. 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.
