How many companies do you find with great management teams and excellent systems, but who do not have a diversified customer base? Their cash flow is dependent on one or two customers. Why would buyers spend millions of dollars on a business only to have those customers go elsewhere after they’ve acquired the company? At the very most, a prudent buyer could structure a buyout to protect against the loss of a key customer, probably
By Maurie Cashman Today, let’s talk about tactics. According to Wikipedia, tactics are conceptual action(s) implemented as one or more specific tasks. Strategy is a high level plan to achieve one or more goals under conditions of uncertainty. Strategy is important because the resources available to achieve these goals are usually limited. So we must choose tactics necessary to accomplish your strategy and figure out how you will implement your decisions. Tactical Planning must support your Strategic Planning.
By Maurie Cashman Business fundamentals are the first value driver that needs to be examined by an owner in building the business value necessary to achieve the post-business ownership lifestyle he or she desires. That first step is to create a written value-building plan that: • outlines what must be done to reach your goals; • makes specific recommendations about how to achieve each task; • designates the person(s) responsible for accomplishing each task; and
In our last newsletter we discussed the need to Close the Gap Between You and Your Successful Financial Future, the process that you and your advisors can use to establish two important guideposts: The amount of money you will need to live a comfortable post-transition life; and The current value of your company. If, as is the case for most owners, you discover a gap between the two numbers, you can begin to close the
Last week, we reviewed the situation of fictional owner, Joe Davolla. He and his advisors had identified a $1,000,000 gap between the current value of his company, and the value he’d need from it in five years when he plans to complete the transition of his ownership. What Joe needed, and what many owners need is to grow business value, and grow it quickly and sustainably over several years. To accomplish this, owners need to
DO YOU KNOW YOUR GAP? By Maurie Cashman After taking a bit of a sanity break last week, let’s get back to business by talking about the gap that you may need to fill between your objectives and the reality of your ability to transition ownership in your business.
By KERRY HANNON Published: September 9, 2013 MICHAEL LOWE was bored with retirement. He was doing yoga five times a week and reading voraciously after leaving the work force in 2008. He had enjoyed a three-decade legal career, most of it spent as a corporate lawyer for Verizon. The hitch was that his wife, Melissa Kroning, 61, registrar of the Smithsonian American Art Museum, was still working full time. So globe-trotting was out. “I was
By Maurie Cashman Somewhere over the rainbow, skies are blue And the dreams that you dare to dream, Really do come true. What dreams are you working for? Last week we talked about enthusiasm for your work and what can happen when you do or don’t have it. It is gratifying to get the opportunity to step back and see the fruits of your hard labor and to stop and smell the roses and it
Is the Enthusiasm Still There? By Maurie Cashman After expressing great enthusiasm for my business in a presentation a wise friend once asked me this: “Will you know when to quit?” It rocked me back on my heels a bit and made me think about it seriously as I was in the early startup days. The answer I finally gave to myself was: “I will never quit, but I will stop if I lose my
Buyers Will Focus on Your Geographic Density By Maurie Cashman Last week we considered Private Equity Groups as an option for consideration in your ownership transition plan. All buyers will focus on key traits in your business, one of which is geographic density. As you consider your business sale, a large part of your transition planning should be focused on the traits in your business that a buyer would find as either strengths or weaknesses.