{"id":197,"date":"2011-11-04T12:37:19","date_gmt":"2011-11-04T19:37:19","guid":{"rendered":"http:\/\/theasoe.com\/blog\/?p=197"},"modified":"2011-11-04T12:40:14","modified_gmt":"2011-11-04T19:40:14","slug":"building-value-the-inconsequential-business-owner","status":"publish","type":"post","link":"http:\/\/www.theasoe.com\/blog\/?p=197","title":{"rendered":"Building Value – The Inconsequential Business Owner"},"content":{"rendered":"

All owners understand (at some level anyway) that they will someday leave the businesses they have created. Let\u2019s assume for a moment that tomorrow you leave your business permanently. If you are an Inconsequential Owner, your exit will have no impact on the business, and that\u2019s good for business value. Buyers pay for business value\u2014not for the departing owner.
\nIf you constitute a significant part of your company\u2019s value (a.k.a. a Consequential Owner), and you have left the scene, there will likely be few buyers interested in your company, and those who are will likely pay significantly less than they would had you been an Inconsequential Owner.
\nExit Planning is the process you can use to transform yourself into an Inconsequential Owner for your sake, for your family\u2019s sake and the sake of your company. Put another way, your Exit Plan should answer this question: \u201cWhat has to happen in my business by the time I leave it, to: (1) enable me (and my family) to achieve financial security and (2) allow me to move forward with the rest of my life, secure in knowledge that I have been a good steward of the business?\u201d
\nFor most owners, one of the first and most important things that \u201chas to happen\u201d after figuring out where you are (current business value) and where you want to go (your exit objectives) is to create and sustain business value.
\nWhen we talk about value in the context of Exit Planning we divide the discussion into three areas: Building Value, Protecting Value, and Minimizing Income Taxes.
\nBuilding Value.<\/strong>
\nThere are several themes to explore. First we ask, \u201cWhat do you, as the owner, need to do to create a successful company that can operate without you?\u201d Topics include: 1) Develop a market focus; 2) Create a top management team; and 3) Adopt a proper financial focus and corresponding policies. For more information on these topics, you might read Innovation and Entrepreneurship <\/strong>by Peter Drucker.
\nSecond we ask, \u201cWhat characteristics will buyers pay handsomely for?\u201d We call these characteristics Value Drivers and they include (but aren\u2019t limited to):
\n\u2022\tA stable and motivated management team;
\n\u2022\tOperating systems that improve sustainability of cash flows;
\n\u2022\tUnderstanding and nurturing you company\u2019s Competitive Advantage;
\n\u2022\tA solid, diversified customer base;
\n\u2022\tA realistic growth strategy;
\n\u2022\tEffective financial controls; and
\n\u2022\tGood and improving cash flow.
\nProtecting Value.<\/strong>
\nWe will talk about protecting value from both internal and external threats. Instead of handling these threats as they occur, we will talk about the threats and how to avoid them before they happen. Topics include: protecting propriety information and trade secrets; preventing employees from doing harm to the business when they leave (by taking customers, employees, business relationships, etc.); and anticipating and evaluating outside threats to your company.
\nMinimizing Income Taxes.<\/strong>
\nThe lifeblood of every business, and therefore its best indicator of value, is cash flow. Our discussion includes how to preserve cash flow and value from income taxation\u2014legally, of course. Income taxes on the sale of your business interest can range from zero to over fifty percent. Of course, each tax-efficient design and the tools used to implement those designs usually have both disadvantages and advantages. However, we do not see any upside to paying more than necessary to your silent partner, Uncle Sam.
\nAs you read this blog (and subsequent ones) about Exit Planning, we hope you begin to appreciate that while planning and preparing yourself and your business for an ultimate exit may seem to be a daunting task, it need not be so. Indeed, if you approach the task systematically, you will use only small chunks of time and effort for a potentially enormous payoff.
\nIf you would like more detailed information about Value Drivers, please contact us<\/a> and we\u2019ll send you a complimentary copy of our White Paper, \u201cValue Drivers.\u201d
\nKjell Andreassen, Certified Exit Planner CExP<\/a>, acceler8 llc<\/a><\/p>\n

This article contains excerpts from an article in The Exit Planning Review\u2122 published by Business Enterprise Institute, Inc. Subsequent issues of The Exit Planning Review\u2122 provide unbiased and advertising-free information about all aspects of Exit Planning. Please contact us<\/a> or if you would like to sign up for a free subscription to The Exit Planning Review\u2122, if you have any questions or want additional Exit Planning information.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

All owners understand (at some level anyway) that they will someday leave the businesses they have created. Let\u2019s assume for a moment that tomorrow you leave your business permanently. If you are an Inconsequential Owner, your exit will have no … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[30,7,1],"tags":[97,98,21,95,96],"_links":{"self":[{"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/197"}],"collection":[{"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=197"}],"version-history":[{"count":3,"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/197\/revisions"}],"predecessor-version":[{"id":199,"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/197\/revisions\/199"}],"wp:attachment":[{"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=197"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.theasoe.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}