Tuesday, December 1, 2009

Highlights from Pinnacle's November Spotlight Guest

Our November Spotlight Guest was Jerry Mills CPA, and Founder & CEO of B2B CFO® as well as the author of two (2) books for business owners; The Danger Zone, Lost in the Growth Transition and Avoiding The Danger Zone, Business Illusions.

On our monthly Member training call, I interviewed Jerry about his book, Avoiding The Danger Zone, Business Illusions. Highlights of that call are listed below:

The central message of Jerry’s book for business owners is that at some point you will leave your business. So instead of leaving your business, and future, to chance – you need to plan for your eventual exit.
Some illusions that business owners operate their businesses under, which will impact their ability to successfully exit are:

  • They make decisions based on their ‘gut’ (regardless of business size).

  • That an increase in business sales leads to increased cash flow.

  • That the owner will always be there to run the business and make decisions.

For example: Most business owners believe that the value of the business is based on top line sales – when it is actually based free on cash flow. So, if an owner has increased sales they wrongly assume the value of their business has increased, when in actuality the value may have decreased. This can significantly affect a successful exit, and it is one of the most common illusions that business owners operate under - i.e. chasing after new business - higher volume - thinking that it will make their business more attractive to buyers. This simply is not the case and, in fact, a focus on top-line growth only puts owners in the Danger Zone because without careful attention this type of growth actually stretches their resources and can reduce profitability and, therefore, the value of the business.

In addition to illusions that owners face, they also must avoid the many distractions that will keep them stuck in their business and unable to exit:

  • Initially the owner has a ‘finder’ status – the entrepreneur of the company - where their thinking is strategic. They are bringing in the business and growing the company.

  • As the company grows, many owners stop becoming the ‘finder’ and they transform into the ‘minder’, where their thinking is now tactical – they have stopped growing the company and are now involved in the day to day operations of the business.

  • In addition, if the proper systems and people are not in place to sustain the businesses continued growth, an owner may actually become a ‘grinder’ where they are forced to do the actual “work”.

POINT: When a business owner stops being a ‘finder’ and starts being a ‘minder’ and/or ‘grinder’, their mindset is changed and they can no longer focus on growing the business. This can impact their ability to successfully plan for their eventual exit. More importantly, it leaves them vunerable to potential buyers who are able to determine the business is not being run appropriately and will actually devalue the business.

These are only a few of the powerful insights that Jerry shared with our Pinnacle Members. Jerry's book is a powerful tool for business owners and for advisors, especially in addressing the business (not personal) needs of an exiting owner.

Jerry's organization and network of partners - B2B CFO® - provides vital services for business owners, including many aspects of an exit.

At the end of our call, both Jerry and I encouraged listeners to network with each other and to work as teams to bring solutions to the exiting owners. For more information about Jerry's book or his B2B CFO organization, you can visit their web site at www.b2bcfo.com.


NOTE: Our next workshops are scheduled for:

Tampa, Florida - Jan. 28th & 29th ( www.exitplanningtampa.com)
Boston, MA - March 18th & 19th. (location pending final confirmation)

Specializing in Business Exit Strategies, John M. Leonetti, Esq., M.S. Finance, CM&AA founded Pinnacle Equity Solutions to provide advisors with the tools they need to incorporate Business Exit Planning into their advisory practices. To learn more about John's Exit Strategy Services and to receive a FREE copy of his special report, "How To Incorporate Exit Strategies Into Your Advisory Practice", visit www.PinnacleEquitySolutions.com