The Business Transition Coach

Your guide to succession planning, exit strategies, and preparing for the big handoff

Wayne Vanwyck

• Publisher: Self-Counsel Press
• Year: 2020
• Print ISBN: 9781770403291
• eBook ISBN: 9781770405127
• Topic: Business
• Subtopic: Management
• Index: Business

Millions of business owners intend to move on from their businesses in the next several years yet only a small percentage of them have a written succession plan. Those who don't plan their business transition ahead of time may have to kiss all their creativity, passion, and hard work goodbye as they face a market soon to be glutted with businesses for sale.The Business Transition Coach: Your guide to succession planning, exit strategies, and preparing for the big handoff is your guide to transitioning out of any business. Author Wayne Vanwyck shows you through experience and case studies how planning this transition can increase the value of your business, increase its profitability, and keep your options open. His practical advice explains how you can:• Sort out your personal and professional transition options.• Prepare your business, your employees, and yourself for transition.• Create a business plan that makes sense now and multiplies the valuation later.• Leave a legacy that you can be proud of.Let this book be your helpful companion on the road to transitioning out of your business and into the next phase of your life.

Chapter 1

Plan for Transition

Here’s a story about letting go.

“Good afternoon, folks. I’m Ralph Thornton speaking to you from sunny Atlanta and I’m here with sportscaster and former Olympic track athlete Bill Nichols reporting on the 1,000-meter relay. The four teams are already running and right now John King from ACME Group is in the lead. He has run an amazing first leg of the race and is at least two strides ahead of the next runner from XYZ Corp.

“King is closing the gap on his team member Les Prince, who you can see is champing at the bit to go. Closer, closer, and there’s the handoff! Prince has it now, but wait, wait, King is still hanging on! Sweat is dripping from him and his hands must be slippery. He’s now holding on with both hands! I’ve never seen anything like it before! Prince is looking confused and uncertain but he’s trying to pull the baton away. They’re arguing and wait, you can see the other three runners are pulling ahead, looking back with big grins on their faces.

“Oh no! What is this? Bill, have you ever seen anything like this before? King has now taken back the baton and he’s beating Prince with it! Whacking him about the head! Prince is down with blood pouring from his wounds and King is running again! He’s at least a half a lap behind the others, he’s obviously exhausted, yet he’s trying to catch up!”

“Yes Ralph, I have seen this before, and tragically, it’s not as rare as you might think. We see a lot of this in the minors. King is displaying an insidious disease called “incompacete-hangerongus,” the inability to let go. Unfortunately, he’s failed the team and himself. He’s just cost ACME the race and at the same time he’s lost his reputation, his pride, and millions in future sponsorships. It’s a terrible shame. He worked so hard to get to this point. If only he’d spoken up earlier, his coaches could have cured him before this race.”

Some entrepreneurs find it painful to plan for transition and follow through on that plan. They founded the business and regardless of how much it has expanded or changed, it is still their baby. They imagined it, created it, nurtured it through tough times, and proudly watched it grow. They are intimately connected with its daily ebb and flow. They can’t imagine what they would do if they couldn’t continue to lead the organization.

Why should you plan for your transition? Because it is your responsibility to do so and you are the only one who can.

Transition will occur regardless of whether it is planned or not.

If you don’t deal with succession and transition for your business, who the heck do you think will?

Some owners take the coward’s way out. Perhaps at a subconscious level they hope they’ll die before they have to deal with their transition. It’s such a foreign, threatening process that they don’t know where to start.

I’ve interviewed and worked with many former business owners. When I asked how they felt just before selling, I heard, “I was terrified,” “I sweated bullets, ” and “I was scared to death” from individuals who had courageously built very successful enterprises. Oddly enough, when I asked how they felt afterward, I heard, “I felt relieved, ” “I felt a tremendous weight drop off my shoulders, ” and “I felt at peace.”

In other words, the anxiety and fear was much worse than the real thing and ultimately the payoff was worth the effort. One owner confided that when he couldn’t get around the store to meet his customers and staff without being pushed in a wheelchair, he knew it was time to make the move. Once he had done so, he admitted he should have sold his business years earlier. He learned that he liked being retired.

Planning for transition is definitely one of the most important things you can do for your business. Why?

• It puts a strategic plan in place for the next stage of the business.

• It enables talented employees to step forward, grow, and take on more responsibility.

• It increases the value of the business by replacing you, the founding entrepreneur, with a team that can manage, instead of leaving the business vulnerable by having all of its eggs in your basket.

• It can be invigorating for you, leading to a new and exciting chapter in your life.

• Loyal family members or existing leaders may be rewarded with more responsibility. This prevents them from leaving because it is taking too long or they have no definite timeline. (Think how long Prince Charles has been on the sidelines.)

• It creates greater stability and retention of key employees in the business when employees know what to expect and how things will evolve.

• It prepares and positions the business to be sold at the right time for the right price for the least amount of taxes and minimal business disruption.

• It enables you to set up a secure income outside the business that is not vulnerable to downturns or your diminished capacity.

• It makes suppliers and clients feel more secure, which means they’re less likely to transfer to competitors.

In addition to all of these benefits, the stakeholders in the business as a whole benefit when you take the responsibility to guide the transition process to its optimal conclusion. To not do so is foolish, thoughtless, and destructive — not the kind of legacy you want to leave.

Gord was finally ready to sell his business. He’d had enough. He was 63 and felt time ticking away. Not only had his children grown up while he was working, but now his grandchildren were also missing his attention.

The truth was, Gord was exhausted. By the time he finished his normal ten-hour day, he just didn’t have any energy left to play with his grandchildren. Even his weekends were taken up with work that he couldn’t seem to get done otherwise.

He had thought about selling his business on many occasions, but he liked his printing operation. He had started it 33 years earlier and it was his baby. He waffled between his desire to let it go and his need to hang on. That and the day-to-day momentum of old habits were powerful currents. The thought of quitting was like paddling upstream.

Was it irresponsible to quit or not to quit? Was selling the business really quitting? Conflicting emotions paralyzed him. As a result, he never got past the thinking-about-it stage.

In the quiet moments of a Sunday morning when his wife was off to church and he had the house to himself, flashes of insight made him acutely aware that he had to do something. It was his business. He ran it. It was his responsibility. If he didn’t take charge of the situation, no one else would.

Then doubts would flood in. “What do I tell my employees? Will they be able to carry it on? Who will buy this business? What’s it worth? Is it worth anything without me there to run it? If I tell my suppliers, will they stop giving me credit? Will the bank pull my line of credit?”

The questions didn’t end there. “Will my managers start looking for other jobs? Will my customers start dealing with that new place around the corner? Who knows anything about selling a business and what will their advice cost? My lawyer has been on my case for a couple of years to get started on this. I’m sure he’s licking his chops at the fees involved. What about taxes? What about my kids and their interests? What will I do if I’m not working? What about … ”

The complexity and enormity of the change seemed overwhelming. With a shake of his head, he would return to reading the news, effectively shutting down the logical side of his brain that knew he had a problem.

Gord attended one of my seminars and I spoke to him afterwards about his situation. After explaining what was going on, he told me he was planning to call me about this soon.

One morning a couple months later, he rolled out of bed, started toward the washroom, and collapsed on the floor. He had suffered a debilitating stroke. He couldn’t speak. He couldn’t move. He could still think, though, and one can only imagine the things that were going through his mind as his wife called 911 and he was taken away in the ambulance. Unfortunately, no one will ever know for sure what he was thinking, because Gord died a week later without regaining his ability to communicate.

As a typical tough entrepreneur, you’re probably thinking, “Yes, that could happen to others, but it won’t happen to me.” Well, I’ve got some bad news for you: It can happen at any time, at any place, when it’s least expected. By all means, hope for the best and expect the best, but plan for the worst, just in case.

1. The Financial Benefit

Think of it this way: Suppose for the moment that you had the time and the opportunity to spend 36 months or more to prepare to sell your business. Imagine that you took a deliberate action every month to move toward its sale or transition. One month, you might speak with your accountant, lawyer, business coach, financial advisor, or banker. Another month, you might meet with your management team and talk about the future. Another month, you might work on cleaning up your inventory and freshening up your facilities. Still another month, you could get started on gathering your employees’ experience and historical knowledge about company systems, complete with binders that detail every step of each process.

With all other things being equal — the market, your product cycle, the economy — can you see how a thoughtful, planned approach to systematically preparing your business for transition will make it go so much more smoothly? Can you see how taking these steps will help you sell all or some of your shares for more money?

Scott in Fort Meyers sold his company for millions and shared that he got a much higher multiple for his business than anyone else he knew in his industry.

“It was because of the systems we had in place,” he said. “When the prospective buyer walked into my office and saw the bookcase filled with binders that detailed every aspect of the business, he was impressed. We detailed how the receptionist would answer the phone, how we went through the screening and hiring process, how bonuses were structured, how the bathrooms were cleaned, and what we would do if our profit margins ever dropped below a certain number.

“And we were very profitable! But what really impressed him was that he saw that our people followed the system. It wasn’t just a nice platitude and fancy words on a page; we did what we said we should do. We got almost seven times earnings in an industry that averaged about three and a half to four.”

Because he had created a business with systems underpinning it, Scott was able to double the value he received when he sold. As a result, he was also able to share the wealth. He gave more than $3 million to employees to show his appreciation for their part in a highly successful transaction.

Similar results could be yours if you begin to make the time to methodically prepare your business for sale over the next three years.

Now take a moment to imagine continuing to run it as you have over the past three years and then having to sell one day because of disability, death, or some other catastrophe. This exercise brings up several important points.

• You can take various steps to improve the salability, attractiveness, and value of your business.

• Good luck has been defined as the place where pre...

Table of contents

• Cover
• Title Page
• Contents
• Preface
• Introduction
• Chapter 1: Chapter 1: Plan for Transition
• Chapter 2: Get Your Life on a Roll
• Chapter 3: Transition Means Change
• Chapter 4: Choose Your Best Option for Transition
• Chapter 5: Get Your Business Ready for Transition
• Chapter 6: Build an “A” Team of Advisors
• Chapter 7: Work on the Business, Not in the Business
• Chapter 8: Effective Delegation
• Chapter 9: Create a Business Plan for Transition
• Chapter 10: Leverage Your Assets in Succession Planning
• Chapter 11: Success Is a Process
• Chapter 12: Test the Waters with a Sabbatical
• Download Kit
• About the Author
• Notice to Readers
• Self-Counsel Press thanks you for purchasing this ebook.