creating an exit strategy for the solopreneur-final filebuilding a practice around the construction...

Building a Practice Around the Construction Niche

© 2017 The ShinerGroup. All rights reserved. 1

Leslie Shiner, Owner of The ShinerGroup, @LeslieShiner

Creating an Exit Strategy for the Solopreneur

10/15/17

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In order to receive CPE credit– Be sure to sign in or scan your badge for this session– You must stay in the session for the duration of the training– This session is eligible for 1 hour of CPE– CPE certificates are emailed directly to you within 4 weeks of the

conference date to the same email address you used to register

CPE Process

CPE credit administered in coordination with




Leslie Shiner

• Financial & management consultant for over 25 years– MBA in Accounting and Finance from U.C. Berkeley– Advanced QuickBooks ProAdvisor

• Columnist, Remodeling Magazine• CPA Practice Advisor Top Thought Leader• Author:

– A Simple Guide to Turning a Profit as a Contractor– (www.MoneyMazeBooks.com)

Owner of The ShinerGroup


• Create a list of personal issues to help decide between the two primary strategies

• Create a personal timeline for your exit strategy

• Determine key steps to take once an exit strategy has been chosen

Agenda




A business owner who works and runs their business alone • About a third of the American workforce comprising

freelancers and consultants fit under category• Just because you work alone, doesn’t mean you

don’t collaborate with other entrepreneurs

What is a Solopreneur?


You can grow your business through hiring employeesBut there are other ways to grow your business

• You can outsource work• You can increase your rates• You can do fixed price work• Etc…

Have You Hired Employees? (Or Tried to?)




Have you thought about an exit strategy?

Are you planning for the future?

But What’s Next?


Not everyone can sell their business• Hard work does not guarantee success

Have you been sold a bill of goods?• Work hard, build your business, sell it for lots of money and retire rich

and early!

You are not Mark Zuckerberg• Are you coming up with something new?• Or just training or using existing products?

The Entrepreneur Fallacy




How Do You See Your Retirement?


Three Exit Strategies

• Improvisation

•Liquidation

•Continuation




Spend all your time with the day-to-day business concerns without considering the future

Or is it just blissful ignorance?

Improvisation


Build a personality-based business

Use corporate dollars to grow personal wealth

Know that when you leave the business, the business ends

Liquidation




Continuation

Create a business that will provide income after you leave

Build a ‘saleable’ business

Build a ‘scalable’ business

Build a business based on process


Three Choices

Improvisation• No strategy

Liquidation• Build a cash cow

Continuation• Create a process




Ask yourself:• What if I get sick?You need a backup plan • Insurance?• Health, disability, long-term careSuccession?• How will my clients’ needs be met?

No Matter What Strategy You Choose:


Also called a “Lifestyle Business”• Nothing wrong with a lifestyle business

The business will end when you retire• Or die at your desk

Liquidation – Understood




Easier to build a personality-based business

Focus on building your business to build your nest egg

There is less need to reinvest dollars to build business equityYou can avoid the hassles of employees

Liquidation Isn’t a Bad Thing


If you cannot gain economic benefit from your company beyond your working years, all you’ve done is bought yourself a job But having a job where you get to be boss may be your goal• You control your destiny• You create your schedule• You set the rulesDo you enjoy the freedom of being your own boss?

Do You Have a Company or a Job?




Creating a job is a good model if fills your needsWhat Are Your Needs?

• Helping people• Learning new things• Enjoying being skillful

Emotional needs

• Support your lifestyle• Support you and your family

Financial needs

• Fund your future?Long-term needs


Buy a job to create a cash cowPillage and plunder your company to build yourpersonal equity

Create a Cash Cow




Have you sacrificed your life for your business?• In a competition between your lifestyle and your

business, who wins?

Are you able to build enough personal equity?• Is that good enough for you?• Is it good enough for your family?

Disadvantage of Buying a Job


Succession can only come from creating a business, not a jobThe business must be more process-based and less personality-basedDo you have enough time to create a continuation strategy?

Continuation – Understood




Ask the Tough QuestionsWho can I sell the business to?

How will I find a buyer?

Will he/she have enough skills to run the business?

How will the transition work?

How and when will I be paid?

How can I guarantee payment?


An exit strategy is not just who you want to sell the company toIt’s a well-defined, long-term plan that includes:

Create a Formal Exit Strategy

Timing People Process




Types of Continuation Strategies

Outright sale

Pass on to next generation

Employee buyout

Sell to your competition

Create a partnership


If someone is smart enough to know what I know, they are probably already doing it• Little to no barrier to entry in our professionThe new owner must make enough money to support themselves and the previous owner• Does your business produce enough revenue to do this?New owners do not have ‘institutional memory’Will your clients accept the new owner?

Outright Sale Can Be Difficult




Determine • Who is interested• Who is deserving• Who feels entitledDifferentiate between “active” and “non-active” heirsRequires good communication skills strong family relationships

Pass On to the Next Generation


Only about 30% of family businesses survive into the second generationOnly 12% are still viable into the third generationOnly about 3% of all family businesses operate into the fourth generation or beyond

Family Business Facts




Emphasizes need for advanced planningDrawbacks:• Key employees often lack capital• If they could do what you do, they’d do it themselvesHowever, hiring and training for succession may help chances of successCreate a buy/sell agreement• A document that assures the orderly transfer of the business from

the owner to a key employee

Employee Buyout


Management Succession• Create a management team

• Hire and train for succession, speak to succession

• Reward employees that bring in revenue

• Pick and choose the key employee

• Make it expensive for the key employee to leave

• Monitor your own ability to “let go”




Sell to Your Competition

Quantify the value of your client base

Find a buyer that has the

desire to grow

Find a buyer that has the capacity to

grow

Clearly define a transition

plan


Create a Partnership

Find your successor

Create a partnership

Identify a buy-sell agreement

Formalize the agreement

Work to the agreement




Succession Plan Includes:

• The devil is in the detailsPlan for transfer of ownership

• Who is the boss today? Tomorrow?Plan for management succession

• Clients need to feel cared forPlan for client communication

• Are you re-investing in the company or taking money out of the company?Plan for investing


If the old owner doesn’t buy into giving up the power, then the transition will fail• Clients can’t be made to feel like traitors when

working with new owner

Old owner needs to give guidance but also needs to be willing to step back and allow new owner to stumble

Struggles




If you are using the most up-to-date technology, the value of your company is greater• Purchasers want a seamless transition without

wasting time moving to new systems• Since we live in a global world, using more cloud

based technology opens up your potential buyers to anywhere in the world.

Technology Plays an Important Role


The strategy you choose for tomorrow will determine how you run your business today!Prepare for planned succession…As well as accidental or tragic succession!

The Clock is Ticking!




Personal goals:• Is there life after work?• Can you separate work from home?

Financial goals:• What is adequate security for you?

Business goals:• Do you know what you actually sell?• You work for your clients, but did you realize that a good client base can work

for you?

Set Your Goals

Depending on your goals, the way you grow your business should align with your end-game objectives


Create Reasonable Expectations

How much longer are you going to work?

What will your expenses be after you

stop working?

How much are you spending vs. saving

now?

How much is your business worth

today?

How much can your business be

worth in the future?




Liquidation (Cash Cow)

Continuation (Building Equity)

Determine Your Strategy

Improvisation


Different Actions for Different Strategies

Liquidation• Build that cash cow• Create your own financial

stabilityContinuation• Determine type of continuation• Invest in building company value




• What are your personal issues that can help decide between the liquidation and continuation?

• What is your personal timeline for your exit strategy?

• What steps do you need to take now?

Summary

Know that the skills that got you where you are today are not the skills you need for tomorrow


Leslie C. Shiner, MBA

[email protected](415) 383-6255

www.ShinerGroup.comwww.facebook.com/TheShinerGroup

Twitter: @TheShinerGroup

Questions and Thank You

Join Leslie for more sessions:

Building a Practice Around the Construction Niche• Today at 4:50

Niche Panel• Tomorrow at 11:00



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