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When you don’t know what you don’t know – find those who do

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December 16, 2022

Recently, I spoke at an economic development meeting in Northeast Wisconsin about the economic shift that is occurring as the baby boomer generation exits the workforce.

As I was presenting, I couldn’t help but reflect on all that has happened over the past three years since we went from what we thought was normal to what is still being defined as the “new normal.” 

This year in particular has been a roller coaster of a ride.

Both of my parents passed away within six weeks of each other.

We welcomed our first grandchild, our son got engaged and our daughter relocated for her first job as an occupational therapist.  

Does this roller coaster sound at all familiar?

While your journey’s details may differ from mine, I’m betting you’ve experienced ups and downs that have made your stomach drop more than once.  

The rate of change we are dealing with in our businesses and personal lives has not only accelerated, but the changes we are experiencing are more challenging and require us to engage other resources to help us navigate successfully.  

An example of this for me was when my dad unexpectedly went into the hospital, was then moved to a nursing home for rehab, taken back to the hospital and transferred to another hospital, all within a span of three weeks.

Not being a medical professional, I was definitely in over my head.

I needed to use available resources – the experts who were there to help guide me through this confusing and often frustrating system – to make sure my dad was taken care of the way I wanted him to be.

Shortly after, my mother went into the hospital and was diagnosed with a cancerous tumor that was terminal.

Now I needed to navigate hospice and her care.

In addition, as trustee of their estate, I had to figure out the legal system and handling of their affairs.  

Like many of you, I like to have the answers – knowledge is power.

In both of my parents’ situations, I didn’t have the answers and felt, at times, utterly helpless.

I wanted to fix what they were going through, and I wanted to have all the answers to negotiate whatever came next.
As business owners, we often think we are expected to have all the answers, but sometimes feel ill-equipped to handle what we signed up for.

Let’s face it, when we start down a path, such as starting or buying a business, we rarely think about the end game – or, if we do, we have a rosy picture defined.

Such as, “when I’m ready to retire, I’ll just sell my business to_________ (fill in the blank – my kids, my management team, a third party).”

Many times, we have no idea what that looks like or even how to achieve that outcome.  

As a business owner myself, planning for a transition at some point in the future requires that I plan and prepare today.

I don’t have a crystal ball that predicts what will happen tomorrow, next month or next year, but I can prepare for the unexpected to secure my future and the future of my family.

We know the majority of business owners focus on running the business and don’t focus on building a transferable business in the future.

We also know most business owners don’t know where to start.

What should you be doing today to prepare for tomorrow?

Here are a few ideas:
Understand your current situation – Have a valuation done on your business. Know your starting point.Define your future state – Meet with a financial planner to determine what number you need to support your “next chapter.”Incorporate the value of your business in your financial plan – Identify the gap between your current state and what you need for retirement.Set your timeline and close the gap – If you already have what you need to fulfill your retirement, you have options, as you are financially ready to exit anytime. Now you just need to make sure your business is ready and you are personally ready to exit. If you have a gap, you need to define the financial gap and the timeline to close the gap.Build value – To close the gap, your business is going to be the largest contributor. Focus on building value as part of your strategy and culture.Identify your exit options – There are many options to exit, including intergenerational transfers, management buyouts, Employee Stock Ownership Plans (ESOP), sale to a third party and recapitalization. Understand the options.
Utilize experts
When I needed to navigate my parents’ health care, funeral planning and estate settlement, I knew it was essential to utilize the experts and available resources that could best assist me in this process.  

In the same way, navigating the planning and preparation for a business exit requires expert advice and resources to be successful.  

As a business owner, we may know how to run our business, but many don’t know what it takes to build a salable business and eventually exit on our own terms.

You built your business based on a skill or talent.

Engaging a team of resources to help you plan, prepare and execute an exit is just good business.

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