Business Advice

In a recent research study by The Value Builder System™, they analyzed data from 20,000 business owners who completed a Value Builder assessment of their business and discovered that owners who have businesses dependent on them, known as Hub & Spoke owners are facing a 35% discount on the value of their businesses and part of the problem may be the degree of customization they offer. For the purposes of the study, a Hub & Spoke owner is someone who answered the question “Which of the following best describes your personal relationship with your company’s customers?” with the response, “I know each of my customers by first name and they expect that I personally get involved when they buy from my company.”  One reason customers want the owner to personally attend to their project is the degree of customization Hub & Spoke owners offer.  In fact, the study shows that Hub & Spoke owners are more than twice as likely to say they offer a complete custom solution for each customer.  Since the owner is usually the person with the most subject matter expertise inside their company, it’s not surprising customers want the owner’s full attention on their job. The secret to making a business less reliant on its owner is to stop offering a custom solution for every customer.   How Ned MacPherson Built More Value By Doing Less   Ned MacPherson is a digital marketing guru, so it’s not surprising that when he first started offering his time, it was in demand.   In the early days as a consultant, he offered all sorts of growth hacking services. But when demand outstripped his supply of time, Ned had a decision to make. He could either turn away prospective clients or build a team of consultants underneath him.  As a growth guy, the idea of treading water didn’t appeal to Ned, so he opted to build a team. However, to ensure his team could execute without him, Ned decided to focus on one service offering: post-click analysis. Rather than help optimize a website for the entire customer journey, Ned’s company would become one of the world’s leading firms on optimizing a customer’s journey after they opted in to a website.   Most digital marketing consultants offer a wide range of services, but Ned knew it would be impossible to remove himself if they offered help in too many areas. By specializing in post-click analysis, Ned and his team were able to streamline their offering. Demand for Ned’s time started to diminish as his employees became some of the world’s leading experts in a narrow slice of the analytics market.   Within seven years of starting Endrock Growth & Analytics, Ned had 70 employees, more than $2 million a year in EBITDA, and multiple acquisition offers.   

By Eric Segal The banking landscape has consolidated in the last three years. Maybe it was runaway inflation that caused cost-cutting branch closings. Or it was bigger banks gobbling smaller banks for quick market share. And let’s not forget the industry’s ongoing march toward digital transformation, which grabs more traction each month. Whatever the cause, several data points tell us that we may have reached an inflection point in the business cycle. Earlier this year, the Federal Reserve Bank of Philadelphia issued a report that found the closures of bank branches in New Jersey, Pennsylvania and Delaware has more than doubled since the pandemic. The three states lost a combined 627 branches during that time period, increasing the number of “banking deserts” to 63 areas in the region. Recent bank and branch consolidation have created some pockets of opportunity and could trigger the next wave of de novo banks. But here’s the catch: You may only need to raise $30 million of capital to open a bank, but you will need a lot more to make it successful. Crown Bank Vice Chairman Paul Fitzgerald says “due to ever increasing compliance costs, banks need to reach a critical mass sooner rather than later.  The first target is usually $100 million in assets.   Banks will not need a branch on every corner, but a well-defined branching strategy is still important.  Technology can help reach the target critical mass right from the start.” For startup banks, it’s not a straight line to success. Here are four factors a de novo bank needs to be part of the next wave: The Right Team If you have the right senior management team, they will hit the deck with existing relationships. Stocking the board with experienced directors who believe in the mission, however, could be the factor that turns a startup bank into a major success. Fostering unity on the board—with everyone on the same page supporting the business plan—would create a constructive environment. There is a period in the beginning when banks are on “probation.” When you give regulators a business plan, they view it as a contract. You are communicating to them that you will do in the first three years, which means you will have to explain every variance. If the board is not aligned on the plan, then you will have a problem. A supportive board can be the X-factor. Engaged board members will open doors and share their business relationships, which can give a de novo bank instant credibility within the community. And that’s an important thought when you consider the history of de novo banks driven by local business owners who felt their community was ignored by mergers that left their region without access to banking decision-makers. The Right Area Location. Location. Location. To be successful, you will need to launch your de novo bank in an area with attractive demographics for both consumer and commercial business, and that also has an abundance of experienced talent with industry experience. When it comes to winning over your new customers, make operations revolve around them. “When I started a bank in northern New Jersey, my office was visible from the main lobby” Fitzgerald said. “People could talk to me when they wanted. In large banks many of the credit decisions are now made out of state by anonymous back-office people. There are a significant portion of business owners who appreciate access to senior management.” Successful new banks don’t really start from scratch. The right relationships with other banks in the market could also yield participation loans, which are funded by multiple lenders to reduce risk and manage liquidity. These facilities can help startup banks generate interest income on the first day. Access to the right lending, operations, and senior management team also plays a large role in selecting the right trade area for a startup bank. De Novo banks can benefit from outsourcing some finance, accounting, balance sheet management and credit administration tasks until the core team has the bandwidth to take them on. One of my colleagues, Larry Davis, who has more than 25 years of senior financial management experience in commercial banking and manufacturing, has worked to train and mentor a de novo bank finance team with virtually no bank experience. “The regulators didn’t believe they had enough banking experience on the accounting team, so they called us,” Davis added. The Right Technology In today’s digital, on-demand world, banks must give serious thought to the right array of fintech providers, a daunting task. CFO Consulting Partners is part of the advisory board for

Whatever happened to the original 11 companies Jim Collins featured in his 2001 book Good to Great? As part of a review I recently Key Findings. The research team discovered many lessons along the way, but one “giant conclusion” stood above the others. Their research confirmed that “almost any organization can substantially improve its stature and performance, perhaps even become great, if it conscientiously applies the framework of ideas they [the Collins team] uncovered.” Additional lessons learned from the companies that went from good to great: Celebrity Leaders. Famous leaders with larger-than-life personalities who ride in from the outside were negatively correlated with taking a company from good to great. Executive Compensation. There is no systematic pattern linking specific forms of executive compensation to the process of going from good to great. Strategy. The strategic planning process did not separate the good-to-great companies from the comparison companies. Both sets of companies had well-defined strategic plans, used similar planning processes, and spent comparable amounts of time on long-range strategic planning. What Not To Do. Good-to-great companies focused less on what to do, than on what not to do, and what to stop doing. Technology. Technology-driven change has virtually nothing to do with igniting a transition from good to great. Technology can only accelerate a transformation but cannot cause a transformation. M&A. M&A plays virtually no role in igniting a transition from good to great. Merging two mediocre companies never make one great company. Focus on the business. Good-to-great companies create alignment and motivation by focusing on running their business rather than getting distracted by large-scale change management initiatives. No Launch Event or Revolutionary Process. Good-to-great companies had no name, tagline, or launch event to signify the start of their transformation. Most were evolutionary, not revolutionary. Greatness is primarily a matter of conscious choice. Good-to-great companies were not, by and large, in great industries; some were in terrible industries. Greatness is not a function of circumstance (i.e., sitting on the nose cone of a rocketship). What I Found Interesting. Few people realize that as unfortunate as Collin’s only high-profile bankruptcy was of his original 11 Good To Great companies, a rise-from-the-ashes story emerged shortly before the Circuit City bankruptcy happened. The Circuit City management team accelerated the spinoff of another one of their start-ups, called CarMax (NYSE: KMX), which has since grown into a juggernaut that today employs 32,647 people and generates $31.9 billion in annual revenue. It’s interesting to note that even when the original Circuit City business model was failing to keep pace with their larger rival, BestBuy, their leadership team had the foresight and was able to fund and launch the next great idea – while continuing to build both businesses for a few years until they were able to safely step off the sinking Circuit City ship and onto the CarMax lifeboat they had launched. Summary – The book organizes a highly complex, multi-year research project into groups of insightful examples using a framework that supports and explains their findings. The case studies were well-researched and easy to follow, and I appreciated the handy summaries at the end of every chapter. I was impressed with the breadth and depth of the research put forth to write the book. Based on years of empirical research, data gathering, interviews, and real-world examples, it provides an understandable path for helping companies move from good to great.

If your business performance is lackluster, take a closer look at how it’s operating. And if you’re a business owner already running your company on EOS® – the Entrepreneurial Operating System — congratulations! You’ve already taken an essential first step toward gaining clarity around your goals and organizing the milestones for how you and your team will achieve them. But where and when does marketing fit into the equation? EOS® plugs marketing strategy into a two-day Vision Building™ Agenda and seven other important topics. That’s a great start, but it only scratches the surface. A comprehensive EOS Model® provides a visual illustration of a six-piece pie chart comprised of the components it deems essential to any business, including: Vision People Data Issues Process Traction Vision Powered by Marketing Strategy & Planning Arguably the foundation for success, and the focus of this article, a company’s vision typically encompasses its core values, purpose, passion, niche, and unique value. It is designed to inspire and motivate employees to work toward a common goal. So…what happens when there’s no clarity around the vision? No focused goal and zero hopes of achieving it. EOS® corrects this by getting everyone in the organization crystal clear about where they’re going and how they’ll get there. But here’s the thing — if you only consider yourselves in this vision, you’re leaving out an essential piece of the picture — your customers. Marketing plays a crucial role in clarifying a company’s vision. Effective marketing is about understanding your target audience and communicating your company’s purpose and values to them in a way that resonates. In other words, your vision needs to align with the needs and desires of your customers. By conducting Positioning Workshop, SWOT analysis, and competitive and industry research, you will unearth existing brand perceptions, gain vital insight to determine if those perceptions will help or hinder your value proposition, and allow you to adjust your vision accordingly. What if, for example, Patagonia’s vision to “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” lacked a sizeable enough target market that cared enough about Mother Earth to pay $299 for a jacket? It would be a company without any customers and any profit. Luckily for Patagonia, the company’s vision seems to resonate with the strategic marketing plan to your operating system, and you’ll get the insight you need to realize your vision. And stay tuned for our upcoming contact Incite Creative. We have over 23 years of marketing expertise and have worked with businesses running on EOS® and welcome the opportunity to partner with EOS Implementers®. outsourced CMO services. In short, we become your company’s chief marketing officer and do so virtually and efficiently — saving you time and money. Since 1999 we’ve had the pleasure of building and boosting brands for a core set of industries. Our thoughtful process, experienced team, and vested interest in our client’s success have positioned us as one of the Mid-Atlantic’s most sought-after marketing partners for those looking to grow their brand awareness and bottom line. Stop paying for digital and traditional services you may not need. Our retainer, no markup model means our recommendations don’t come with any catch or commission. Our advice aligns with what you need and what fits within your budget. For more information, contact us at 410-366-9479 or info@incitecmo.com. 

RSG is excited to announce our new workshop titled “Professionalizing the Family Business,” which is initially available to MA-based family businesses.  Generous state funding is available since our workshop is approved through the MA Workforce Training Fund – specifically the Express Program. If you have existing MA clients or others in your network that might benefit from the workshop, let’s discuss further and/or please feel free to share.  Thank you!  Below are a few workshop highlights and the link to my workshop summary page. Workshop Summary Page: Overview: Through our workshop, we interact one-one one with your family business participants, teaching you how to further “professionalize” your organization, while preserving the company’s unique attributes, culture and history.  Our instruction covers your current state of professionalism, improvement areas, prioritization and a change roadmap, as well as important considerations for the family dynamic. Defining Professionalism: An approach to managing your operating rhythms that is organized, clear and repeatable in order to effectively execute upon your company’s big picture objectives. Benefits: Improved organizational effectiveness A more sustainable business model A healthier organization and culture Course Structure: 9 hours of interactive instruction, broken out over 3 sessions Available for up to 8 of your employees At your office and/or virtual sessions available Pricing: $6,000 flat fee with generous MA state funding that could very well allow for quick full or partial MA state reimbursement. Know your state funding eligibility and approval status quickly (typically within 3 weeks) and before you decide whether or not to take the workshop.    

I’m having a lot of client dialogue on Cash Balance Plans (CBPs).  A CBP is the third sleeve of a Retirement Plan – following the standard 401k and Profit Sharing sleeves of traditional plans.  The contribution limits are substantial allowing participants the ability to contribute significant $s pretax and to grow those contributions tax deferred. The plan is particularly attractive to organizations that are top heavy with highly-compensated employees or partners, but can also be relevant for sole proprietors.  Contact me if you would like to learn more.  michael.schodrof@ubs.com    

Managing Today’s Reality of Excess Inventory:   The Domino Effect of Having Out-Dated Software Systems.   Not having real time information on the fast-moving products. Not having accurate information of the inventory level in multiple locations. No method of tracking Vendor Reliability of ON-TIME deliveries.   What are the Results of Excess Inventory? Late shipments will result in production disruption. Order cancellations will result in excess inventory. Reduction of Profit from reduced sales price to move excess inventory. Cash on hand reduced as funds are tied up in unsold inventory.   How to Manage the above issues! Replace the outdated software with real time software needed to: Better manage everything related to sales and inventory   The Benefits Resulting from Real Time Software! Understanding inventory turns to maximize inventory at item levels. Knowing Vendor Reliability to achieve better product availability! Understanding the inventory availability when managing multiple locations.   For additional information visit our website 

As a business owner, have you ever thought about whether you should own or rent your company building? It’s likely you have since it’s one of the top most-Googled financial questions in the U.S. Every business has a big dream for their business and wants to make it happen. But, along the way many business owners question the money they’re paying in rent for their company building. Further, the combination of increases in rental rates coupled with lower-than-normal commercial mortgage rates (until recently) have caused many CEOs to ponder this question. Continue reading:

One of the topics I talk about most with business owners is accountability. Each situation is different, but rarely do I have a client that doesn’t struggle with accountability at some point over the course of owning their business. One client right now has run a very successful company for over 48 years. But when I asked the CEO who was accountable for sales, she told me that the business had always been run with no one accountable for sales. Recently, I was talking to a staffing firm and the CEO was accountable for everything. If no one else is accountable in an organization, then it all falls to the CEO. And then sometimes there’s split accountability where two people are responsible for the same thing. When this happens, each person typically assumes that the other person is accountable for that area. In an ideal world as a CEO or business owner, it’s really important that there be one person each accountable for the three main functions in a company: sales, operations, and finance. Continue reading:

Loans from the U.S. Small Business Administration can help businesses “start, build, and grow” but can they also be used to cash out? If you are a small business owner, chances are you have heard of SBA loans. If you haven’t, SBA loans are a means of funding for small businesses through the U.S.’s Small Business Administration. These loans give small business owners the chance to get financing with the backing of the federal government. The federal government guarantees the loan so if something happens, they will pay back the bank if the loan defaults. Say you invested $500,000 in the constructing and building of your business and you wanted to cash out. Could you actually cash out using an SBA loan? One couple came to Wallace Capital Funding, LLC with the same question. The couple had a long history of coaching local kids in basketball and wanted to have a basketball facility of their own as a way to give back to their community. But not just any basketball facility, they wanted to have a world-class basketball gymnasium for kids to come and train. Without taking out any loans, the couple invested $3 million of their own money and brought this multi-million dollar facility to their community. The facility turned out to be a large success and amassed millions of dollars in value. The couple wanted to see if they could cash out their investment through an SBA loan. The answer is it depends. Currently, we are looking into the method of how they invested into their business. Under SBA guidelines, there are regulations on ways and how much you cash out? Every transaction is different, and unique rules apply to your specific opportunity. The benefit of working with Wallace Capital Funding, LLC instead of a bank is that we will work with you to ensure the structure of your loan application under SBA guidelines from a business owner point of view. WCF consultants will use the Business Funding Analysis to help structure the deal properly so you can get the cash your business needs. You can also join WCF’s mailing list, which can be found on our website or give us a call at 1-800-809-5629 to learn more. For all of your business financing needs, Wallace Capital Funding, LLC can help. Whether you need funding for new equipment, financing commercial real estate, or to cover staff expenses before your contract payment comes through, Wallace Capital Funding, LLC can create a custom funding solution that’s right for you.

A valuable asset with guaranteed income without paying a dime After reading the headline, you might be asking yourself — “How can I really afford a million-dollar, multi-family property without paying anything?” With the help of Wallace Capital Funding, LLC, one client was able to make it into a reality. However, he first needed to guarantee his own financing so we could then use the Business Funding Analysis (BFA). This client originally owned ten single family homes in the Birmingham area but wanted to own his first multi-family property. The type property of interest was a rarity. With 36 apartment units, the whole property had a HAP Contract, was classified under Section 8 housing, which guaranteed our client would get monthly income directly from the government. It is like buying a business with guaranteed income. Vacancy rates are also much lower for those investing in Section 8 properties. This is because renters are more likely to stay and renew year after year. And in many markets, Section 8 properties attract a long waiting list of interested tenants. We have established how great this opportunity is but how do you get into a property with no money down? The first step is to determine if you and your business can qualify for additional funds using the BFA. If you don’t remember from our last

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I once had the thrill of interviewing Jerry West on management. He was “The Logo” for the NBA, although back then they didn’t advertise him as such. Only the Laker followers knew for sure. In 1989 the “Showtime” Lakers were coming off back-to-back championships.  Pat Riley was a year away from his first of three Coach of the Year awards. 

Can you Offer Too Many SKUs to Your Customers? The short answer is YES! A SKU, or Stock Keeping Unit, defines each different product version that you sell and keep inventory of.  There may be different SKUs of the same overall item based on size, color, capacity (think computer or cellphone memory), features, and many other parameters.  For build to forecast businesses, that number of variations can quickly explode and become difficult to manage. Your customers are busy and want ordering simplified. Of course, they may need (or want) more than one variation of a product. That is reasonable and a common aspect of business – one size does not fit all! But there is a point where too offering too many SKUs is not value added either for your customer or your business.  In his April 30, 2013 article “Successful Retailers Learn That Fewer Choices Trigger More Sales” in Forbes, Carmine Gallo discusses his experience and a study about “choice overload” by other authors. He writes about a retailer that “has discovered that giving a customer more than three choices at one time actually overwhelms customers and makes them frustrated…when the customer is faced with too many choices at once, it leaves the customer confused and less likely to buy from any of the choices!” Choice overload is well-documented in consumer studies but can apply in B2B as well. While customer satisfaction is important, another key concern is the often-hidden costs associated with a business offering and managing a large number of SKUs for a given product type. These costs include holding inventory, S&OP (Sales and Operations Planning) team time, small production runs, and scrapping inventory. Holding inventory takes up space, which may come with a cost or utilize racks that could be used for other products. Scheduled inventory counts take up employee time and may result in blackout periods when the warehouse is not shipping product.  The more SKUs there are, including extra SKUS, the greater the potential impact. The Sales team’s forecasting and the Operations team’s purchasing reviews that are part of the S&OP process can occupy more of their valuable time if they need to consider these times. If small orders or forecasts require a new production run, this could be costly and create excess inventory. Whether from this new production or past builds, eventually it will make sense to write off and scrap old inventory, another cost impact to the company. How do you know which SKUs to focus on if you wish to look at reducing your total number of SKUs? Start by examining SKUs that have: Low historic sales over a period of time Small variations between SKUs that customers do not value Older technology or model when newer option SKUs are available This requires a true partnership between Sales and Operations. It starts with educating both teams on the costs involved – neither group may be aware of the money and time impact to the company. Periodic (such as quarterly) reviews of SKUs that meet the above descriptions should become a fixed part of the calendar. A review of the data and other available for sale options should result in the identification of SKUs which may not be needed. At that point, it is helpful to have a customer friendly EOL (End of Life) Notice process by which you inform customers of last time buy requirements for this SKU and alternates available. It is usually best to provide some time for the last time buy in the interest of customer satisfaction, although that may not always be necessary. At a company that designed and sold electronics, a robust SKU rationalization process was implemented to help address these issues. A representative from the Operations team analyzed SKUs that met a version of the above criteria and suggested candidates for the EOL process. Next, a member of the Sales team reviewed them and, where appropriate, issued product change or EOL notices to customers, providing them time for last time buy orders when needed. These steps helped reduce the work involved in maintaining these SKUs while not leading to any customer complaints. A final note – sometimes it makes sense to continue offering low selling SKUs – to support customers buying other items (hopefully in larger quantities). It may be worthwhile to encourage them to keep coming back to you for all of their product needs and this may be a way to accomplish that. But it helps to understand that this is truly the case and not assume that this customer would not be equally happy with another, more popular, SKU.   Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive.  He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.

When it comes to careers, business owners are a minority of the population. In conversations this week, I mentioned the statistics several times, and each owner I was discussing it with was surprised that they had so few peers. According to the Small Business Administration (SBA), there are over 33,000,000 businesses in the US. Let’s discount those with zero employees. Many are shell companies or real estate holding entities. Also, those with fewer than 5 employees, true “Mom and Pop” businesses, are hard to distinguish from a job. The North American Industry Classification System (NAICS) Association, lists businesses with 5 to 99 employees at about 3,300,000, and 123,000 have 100 to 500 employees (the SBA’s largest “small business” classification.) Overall, that means about 1% of the country are private employers. Owners are a small minority, a very small minority, of the population. Even if we only count working adults (161,000,000) business owners represent only a little more than 2% of that population. So What? Where am I going with this, and how does it relate to our recent discussions of purpose in business exit planning? It’s an important issue to consider when discussing an owner’s identity after transition. Whether or not individual owners know the statistics of their “rare species” status in society, they instinctively understand that they are different. They are identified with their owner status in every aspect of their business and personal life. At a social event, when asked “What do you do?” they will often respond “I own a business.” It’s an immediate differentiator from describing a job. “I am a carpenter.” or “I work in systems engineering,” describes a function. “I am a business owner” describes a life role. When asked for further information, the owner frequently replies in the Imperial first person plural. “We build multi-family housing,” is never mistaken for a personal role in the company. No one takes that answer to mean that the speaker swings a hammer all day. Owners are a Minority We process much of our information subconsciously. If a man enters a business gathering, for example, and the others in the room are 75% female, he will know instinctively, without consciously counting, that this business meeting or organization is different from others he attends. Similarly, business owners accept their minority status without thinking about it. They expect that the vast majority of the people they meet socially, who attend their church, or who have kids that play sports with theirs, work for someone else. There are places where owners congregate, but otherwise, they don’t expect to meet many other owners in the normal course of daily activity. This can be an issue after they exit the business. You see, telling people “I’m retired” has no distinction. Roughly 98% of the other people who say that never built an organization. They didn’t take the same risks. Others didn’t deal with the same broad variety of issues and challenges. Most didn’t have to personally live with the impact of every daily decision they made, or watch others suffer the consequences of their bad calls. That is why so many former owners suffer from a lack of identity after they leave. Subconsciously, they expect to stand out from the other 98%. “I’m retired” carries no such distinction.       This article was originally published by John F. Dini, CBEC, CExP, CEPA on

In a recent research study by The Value Builder System™, they analyzed data from 20,000 business owners who completed a Value Builder assessment of their business and discovered that owners who have businesses dependent on them, known as Hub & Spoke owners are facing a 35% discount on the value of their businesses and part of the problem may be the degree of customization they offer. For the purposes of the study, a Hub & Spoke owner is someone who answered the question “Which of the following best describes your personal relationship with your company’s customers?” with the response, “I know each of my customers by first name and they expect that I personally get involved when they buy from my company.”  One reason customers want the owner to personally attend to their project is the degree of customization Hub & Spoke owners offer.  In fact, the study shows that Hub & Spoke owners are more than twice as likely to say they offer a complete custom solution for each customer.  Since the owner is usually the person with the most subject matter expertise inside their company, it’s not surprising customers want the owner’s full attention on their job. The secret to making a business less reliant on its owner is to stop offering a custom solution for every customer.   How Ned MacPherson Built More Value By Doing Less   Ned MacPherson is a digital marketing guru, so it’s not surprising that when he first started offering his time, it was in demand.   In the early days as a consultant, he offered all sorts of growth hacking services. But when demand outstripped his supply of time, Ned had a decision to make. He could either turn away prospective clients or build a team of consultants underneath him.  As a growth guy, the idea of treading water didn’t appeal to Ned, so he opted to build a team. However, to ensure his team could execute without him, Ned decided to focus on one service offering: post-click analysis. Rather than help optimize a website for the entire customer journey, Ned’s company would become one of the world’s leading firms on optimizing a customer’s journey after they opted in to a website.   Most digital marketing consultants offer a wide range of services, but Ned knew it would be impossible to remove himself if they offered help in too many areas. By specializing in post-click analysis, Ned and his team were able to streamline their offering. Demand for Ned’s time started to diminish as his employees became some of the world’s leading experts in a narrow slice of the analytics market.   Within seven years of starting Endrock Growth & Analytics, Ned had 70 employees, more than $2 million a year in EBITDA, and multiple acquisition offers.   

The sale of a business marks a major life event. It’s emotional, stressful, and exciting all at the same time. And unfortunately, it’s often a lot of work. Most business owners will only experience the process of selling a business once in their life. This is both good and bad news. On the bright side, you only need to get through it once. But many business owners aren’t ready for the process and risk leaving money on the table as a result. With many sellers relying on the sale to fund their retirement and lifelong financial goals, getting it right from the start is critical. Here are tips from sell-side business advisors on what to do (and not do) when selling a business. What to do (and not do) when selling a business Start thinking about selling your business early — really early One of the top mistakes sellers make when selling their business is not starting the process early enough. There are many reasons starting last minute can really hurt your bottom line. It’s not uncommon for business owners to assume they’ll never retire at some point during their life. But as often happens, life changes. Perhaps health concerns for you or a spouse make continuing to run your business difficult. Or maybe you eventually lose the excitement when getting up every day and want a change of pace. Sudden sales or immediate retirements Unfortunately, when business owners want to sell with a tight timeline (or fire sale), they may have fewer options to exit. It’s not uncommon for some buyers to want the owner and/or members of the management team to stay on for a period to help with the transition. If there’s an earn-out, it’ll usually require the seller to stick with the company for different milestones (time, financial, or otherwise) to earn the full purchase price. Earn-outs aren’t ideal for sellers, but if you’re unwilling or unable to consider deals with any continuation component, it could impact the sale price, timeline to find a buyer, or both. Make your business more sellable later by getting advice now Business brokers often recommend getting a valuation done years before expecting to sell the company. Sarah Grossman, Principal of BayState Business Brokers in Needham, MA, says this helps sellers “shape their timeline and any financial planning that needs to be completed prior to a sale.” Understanding the fair market value of the company is critical to setting expectations for the seller, but understanding the drivers of the valuation can help increase the sale price over time. Grossman says, “a [business] broker can advise them on things they can do in their business over the next few years to make it more saleable when it does go on the market.” How to maximize your cash at closing Aaron Naisbitt, Managing Director at Dunn Rush & Co, an investment bank focused on sell-side M&A in Boston, MA, emphasizes the importance of going to market and knowing what your business is worth. He says, “the biggest mistake many businesses owners make is not running a competitive process when the business is capable of attracting interest from a broad number of buyers. This mistake most often occurs when the owner has already made the second biggest mistake – not taking the time to educate themselves and prepare adequately for the process.” Not every business will be able to run a competitive process. But those that can, and don’t, “Will leave money and terms on the table if they do not do so” he adds. Getting professional help is key here as trying to negotiate a sale directly with a buyer might be short-sighted. Grossman says it’s not uncommon for sellers to be approached directly by competitors. She cautions sellers considering working with buyers directly as “They could be leaving significant money on the table without a clear understanding of the valuation of their company. Sellers also need to work with a broker and their advisors to understand a typical deal structure so that they can maximize their cash at closing.” The importance of understanding the terms of the deal cannot be overstated. This is where money is made or lost. Naisbitt cautions that sometimes terms can sound really good, but aren’t always common sense. He adds that without an advisor, sellers “Don’t know where to argue.” During negotiations, you have to consider “What is it that’s important to you and what are you willing to give up” he says. Exit planning is not time to DIY — assemble your team of advisors When selling a company, gathering your team of advisors early on is key to getting a successful outcome. Again, odds are you haven’t sold a business before and probably won’t again. We don’t know what we don’t know…and you only have one shot to get this right. Your team of business and personal advisors will be instrumental in getting the deal over the finish line. Your business advisory team may consist of: a business broker or M&A advisor, accounting and tax advisors, and transaction/M&A attorney. On the personal side, your sudden wealth advisor who focuses on helping individuals experiencing a transformative liquidity event. Be sure to involve your wealth advisor in discussions around deal terms too. For example, when considering deal structure, it’s important to ensure alignment with your objectives or financial needs. What are your income needs after the sale or do you have plans for a big purchase? Your advisor can help determine how much cash you need at closing and whether to consider the pros and cons of arrangements like an installment sale. And at closing, a financial advisor can help you determine Section 1202, realizing the gain over time with an installment sale, asset versus stock purchase, or state tax implications such as the charitable goals, legacy objectives for heirs, or estate tax planning strategies. Brokers explain what sellers are most unprepared for during the process Selling a business is a lot of work. In addition to running the company in the usual course of business, sellers also need to comply with a host of due diligence requests from the buyer’s team and the lender financing the transaction. The magnitude of this process is by far the most 

In March 2022, Florida enacted the politically charged Individual Freedom Act, informally known as the STOP WOKE (Wrongs to Our Kids and Employees) Act. Less than two years later, the U.S. Court of Appeals of the Eleventh Circuit blocked the enforcement of the Act on the grounds it violates employers’ right to free speech. This decision directly impacts employers in the Eleventh Circuit and will have a ripple effect on employers nationally.   How did the Individual Freedom Act (Stop WOKE Act) affect employers? The Act attempted to prevent employers from mandating training or meetings for employees which “promote” a “certain set of beliefs” the state “found offensive” and discriminatory. There are eight prohibited beliefs each relating to race, color, sex, and national origin. According to the Act, employers must not teach the following: Members of one race, color, sex, or national origin are morally superior to members of another race, color, sex, or national origin. An individual, by virtue of his or her race, color, sex, or national origin, is inherently racist, sexist, or oppressive, whether consciously or unconsciously. An individual’s moral character or status as either privileged or oppressed is determined by his or her race, color, sex, or national origin. Members of one race, color, sex, or national origin cannot and should not attempt to treat others without respect due to race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, bears responsibility for, or should be discriminated against or receive adverse treatment because of, actions committed in the past by other members of the same race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, should be discriminated against or receive adverse treatment to achieve diversity, equity, or inclusion. An individual, by virtue of his or her race, color, sex, or national origin, bears personal responsibility for and must feel guilt, anguish, or other forms of psychological distress because of actions, in which the individual played no part, and were committed in the past by other members of the same race, color, sex, or national origin. Such virtues as merit, excellence, hard work, fairness, neutrality, objectivity, and racial colorblindness are racist or sexist, or were created by members of a particular race, color, sex, or national origin to oppress members of another race, color, sex, or national origin. Employers still had the ability to mandate employees attend sessions that either refute these concepts or present them in an “objective manner without endorsement.” This dictates how an employer deals with its employees and is particularly limiting in how employers address discrimination training. Employers who failed to adhere to the law were liable for “serious financial penalties—back pay, compensatory damages, and up to $100,000 in punitive damages, plus attorney’s fees—on top of injunctive relief.”   The Ruling – Honeyfund.com Inc. v. Governor [2024] In March 2024, the U.S. Court of Appeals of the Eleventh Circuit served an injunction preventing enforcement of the Act. Despite the state insisting the Act banned conduct rather than speech, the court ruled the Act unlawfully violated the First Amendment’s right of free speech by barring speech based on its content and penalizing certain viewpoints. While certain categories of speech such as “obscenity, fighting words, incitement, and the like” are traditionally unprotected, the court pointed out that “new categories of unprotected speech may not be added to the list by a legislature that concludes certain speech is too harmful to be tolerated.” Florida is keen to appeal against the decision.   What does this mean for employers? Regardless of one’s opinions on the matter, this can be viewed positively from an employer’s standpoint. Employers in the private sector can control speech in the workplace, and this ruling confirms their autonomy will continue. Whether or not the rest of the country will follow suit remains to be seen. This case, in tandem with the US Supreme Court’s ruling to ban race based affirmative action, signals today’s intense political climate is likely to continue to impact how employer diversity, equity and inclusion (DEI) initiatives are approached. Employers should continue to review their DEI initiatives, ensuring they are in line with the latest precedents. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560      

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