January 30, 2025 • 17 mins
In this episode of Money Talk With Tiff, Tiffany Grant is joined by Adam Koos to discuss the often overlooked topic of exit planning for business owners. Adam emphasizes the importance of preparing for the eventual transition of one's business, whether that means selling it, passing it to a family member, or another form of exit. Adam shares that one of the biggest mistakes business owners make is starting too late on their exit strategy.
He dives deep into what exit planning entails, how business owners can begin thinking about it regardless of where they are in their business journey, and the critical steps to take. From succession planning, valuation of the company, preparing for potential unplanned events such as illness or disability, to ensuring the business is scalable and attractive to potential buyers, Adam covers key elements that need attention.
Through actionable insights and real-world examples, Adam shares why and how business owners should start planning their exit strategy today to maximize the future value and ensure a seamless transition.
Check out the full show notes: https://moneytalkwitht.com/podcast-show-notes/business-exit-planning/
Takeaways
- Exit planning is crucial for business owners, yet many start the process too late.
- Most entrepreneurs neglect exit planning because they're too focused on daily operations.
- Starting exit planning early can significantly increase a business's market value and reduce risks.
- Succession planning ensures that your business can thrive even in your absence or unexpected events.
- 80% of businesses never sell, highlighting the importance of a solid exit strategy.
- The earlier you plan for exiting your business, the more options and value you'll have.
Resources Mentioned
For continued insights on financial strategies and business tips, tune in every Thursday for a new episode of Money Talk With Tiff. Connect with Tiffany Grant on all social media platforms @MoneyTalkWithT.
Copyright 2025 Tiffany Grant
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
You know what it is. That'sright. It's time to talk money with
your money nerd and financialcoach. Now tighten those purse strings
and open those ears. It's theMoney Talk with Tiff podcast.
Hey, everyone. I am so excitedbecause I have Adam Koch on the line,
and Adam is here to talk to usabout what businesses get wrong about
(00:25):
exit planning. So after you'redone with your business, what do
you do next? So thank you somuch, Adam.
No, thank you for having me.This is going to be fun.
Yeah, for sure. So let's hopright in. First and foremost, what
is exit planning?
I'm so glad you asked becauseI thought, you know, I probably should
back up, rewind and talk topeople about what that even means.
(00:45):
And sadly, I think most nonbusiness owners don't know what exit
planning is. And I think thateven more sadly, many business owners
know what it is, but theydon't know when they need to start
planning for it, how they needto plan for it. But exit planning,
I'll call it also businesstransition planning is essentially
the act of going from being asuccessful business owner to parting
(01:09):
ways with your company,exiting your business and passing
it along to whatever's next,whether that's an auction buyer,
a competitive buyer that's inthe same, same sector, maybe a competitor
in the same industry, sellingit to your employees as like an esop,
that's one strategy. Or, youknow, keeping it in the family and
selling the company to, youknow, a child or, you know, niece,
(01:31):
nephew, son, daughter, thingslike that. So that's essentially
what exit planning is. It's,it's the, the act of retirement if
I want to keep it that simplefor business owners.
Yeah, thank you so much forthe explanation. And, you know, I
feel like this is somethingthat's not talked about enough. Like,
I feel like as entrepreneurs,we're just so much in the daily grind
that we don't think about thisexit planning. So what are some things
(01:55):
that small business owners getwrong about exit planning?
Well, first of all, you just,you said that so gorgeously. Because
the reason this is, I'm sopassionate about this topic and the
reason we've made it such abig part of our business at Libertas
Wealth Management Group isbecause it's. Nobody knows about
it. It's. There's not enoughawareness. So the fact that you're
(02:17):
doing a podcast and makingthis a topic is so huge. Because
you're right. I mean, mostbusiness owners are so caught up
selling their service,managing their team, all the Things
that business owners do,Paying the bills, you know, just
running the company that, youknow, what often happens, and probably
the biggest mistake or thebiggest thing that they get wrong
is just starting too late.When it comes to the planning. They'll
(02:39):
say, you know, oh, yeah, youknow, I'm. I'd like to retire at,
you know, 65, or, you know,dial it back at 65 and quit and sell
the business at 70. But theyjust put it off and put it off. And
I can't count the number oftimes I've talked to a business owner,
whether that be on the phone,over lunch, happy hour, in a. In
a review meeting. And I'llsay, so what are you thinking about
in terms of selling thecompany and walking away? And they'll.
(03:00):
And, you know, last year youwere talking about maybe parting
ways in about two to threeyears. What are you thinking? You
want to know what the answeralways is? Two to three years.
Another two to three years is fine.
Yeah. It doesn't change. It'salways two to three years from now.
And so what happens is there'sso many. I mean, we could. We could
do another podcast just on themistakes that get made and the problems
(03:22):
that occur as a result ofstarting too late. But just to give
you a tease with a couple ofthem, you know, what if you get divorced
now? What. How's the ownershipof the company set up? How is the
divorce having nothing to dowith ownership? How is the divorce
going to affect you as anowner, a leader, and an employee
within your company? What ifyou get disabled? What if you get
(03:42):
a disease, Parkinson's,dementia, because you waited too
long, now all of a sudden,your company's being sold at a fire
sale. Because everybody knowsin your. In your industry and in
the city you live in, theystart to catch wind because, you
know, word travels fast, andnow you're not getting nearly what
you wanted for it. What if youpass away and you haven't planned
for that in advance? It's notlike you're. If you're married, your
spouse can't just walk in andstart running the company. You know,
(04:04):
like, for me, I. I own acouple companies, but I know that
my spouse isn't even licensedto be a financial advisor, wealth
manager, financial planner. Sohow much is my company going to be
sold for if I pass awayprematurely? And I didn't plan for
that. So there's selling. Thenumber one thing that business owners
get wrong is starting too latewhen it comes to planning their transition
(04:24):
and planning their exit.
Gotcha. Gotcha. And you know,you said so many gems right there.
One question I have for you.What is too late? Like how soon in
business should we startthinking about exit planning?
Sure. No, that's a greatquestion. What is too late? Well,
since we can't, I'm going togive you the long answer to the second
(04:46):
part of the question. Becausesince we can't predict the future,
at least nobody's figured outhow to do it as far as I know. We
have this joke gift that aclient gave me way back in the early
2000s and it's a crystal ball,but it doesn't work. So I'm always
pointing at it. When peopleask a question about things like
what do you think is going tohappen with the stock market after
(05:07):
the election? It's like, well,I keep trying to get this crystal
ball to work and it just won'twork. But anyway, so since we don't
know and can't predict thefuture, I don't know what we consider
to be too late because we justdon't know what the future holds.
But the second part of yourquestion is really the gem. And that
is how soon should we startplanning? And this is not sales,
(05:29):
this is not me trying to givethe audience some one liner or get
business owners, give themsome cliche answer. But the answer
is as soon as possible. Andthere's multiple reasons for that.
But it doesn't matter ifyou're selling your business in three
years, 13 years or 30 years.You need to start planning to transition
(05:50):
your business or to exit yourbusiness now. And there's a number
of reasons why, but that'sthe, that's when you need to start
right now.
Gotcha. Gotcha. And you know,this is something that, like I said,
we never think about. And sosomebody's listening. They might
be, you know, 20 years in,might be their first year in, you
know. So what I'm hearing isif you have a small business that's
(06:13):
an actual business, so nothobbies and things like that, that's
important to say. Then thetime is now. Like it doesn't matter
where you are in business aslong as it's an actual business and
running well, does that sum itup A hundred percent?
100%? No, you're right.
Perfect. Perfect. Okay, so Igot homework to do. But as I say
(06:37):
homework though, that bringsme to my next question. What are
some things we should thinkabout when it comes to our exit strategy?
Well, that's, ironicallyenough, you know, the reason why
we need to start early. SoSome of the biggest, most important
things, there's lots of,there's, there's more than we have
time for in this 15 minutes.But if I just start rattling off
(07:00):
a few, a few things. One wouldbe succession planning. So we talked
about what happens if we passaway, become disabled by having a
succession plan in yourbusiness. If, if something's going
to happen to you at 30, 35,40, 50, 60, it doesn't matter what
age. That right off the bat issomething that, if you start doing
some business transitionplanning, some exit planning in your
(07:21):
business, if you, if you puttogether an exit plan today. And
that's why, by the way, as aside note here, the reason I call
it business transitionplanning is because of the problem
I think we have in this, in,in this business owner world that
we all live in as businessowners, that whenever somebody hears
exit planning, they think,well, I don't need to do that until
much, much later. Because theythink exit, they think 65, right?
(07:42):
The reason I'm calling itbusiness transition planning is because
I want people to get exitplanning out of their vocabulary
and start thinking it more ofhow do I transition my company from
where it is today to where Iwant it to be, wherever that might
be. Usually it's, I want to bemore efficient, I want to have succession
in place. I want to be readyfor the inevitable, I want to be
ready for emergencies. I wantto make more money, so I want to
(08:03):
become more profitable. I wantto de risk my company. So for instance,
my revenue is, 30% of myrevenue is my top client. That's
a problem. That's calledcustomer concentration. So there's
all kinds of things that wecan do as part of business transition
planning that ironicallyenough, if we start putting together
(08:24):
evaluation and then we figureout, here's where our company's worth
today, the first thing theowner is going to do is say, I disagree,
they think it's worth more. Italways happens. But once we start
looking at the value and whyit's valued where it is now, we have
to do things like clean up thefinancials, you know, poor record
keeping, excessive expenses,expenses, you know, something called
recasting. When valuing abusiness, valuating a business, you
(08:48):
have to add, take, take allthe personal expenses that you're
running through the businessand take those out, which includes
the owner's salary, and thatincreases the value of the company.
I mentioned successionplanning early earlier. That's, that's
crucial. We have to have asuccession plan in place. So when
a buyer comes in and Says, allright, you know, if I buy this company
and this person leaves, or ifthey pass away during the, during
(09:09):
the negotiation, I don't thinkI want it anymore right now. What
about continuation planning,something people call often, you
know, golden handcuffs. So abusiness owner comes in and they
say, okay, well, I'm lookingto buy this company. What happens
if the owner leaves? Are the,Are all the executives going to leave,
too? You know, are all thepeople who are important to making
this thing run, are they gone?And now I'm sitting here losing clients,
(09:32):
customers. So that'simportant. And so what you end up
finding out here at the end ofthe day, and I know I just touched
on a few of these topics, butwhat you end up happening is if you
implement a businesstransition plan, or if you want to
call it an exit plan, that'sfine. And you do that now, what you're
going to end up with is lessrisk in your business. You're going
to end up with more profit andgrowing profits. You're going to
(09:53):
end up with happy employees,continuation planning, succession
planning, and you're going tohave less risk, all while growing
more and exponentially overtime. So that when you are ready
to sell, you will have grownso much more by implementing this
process now as opposed towaiting till later. And, oh, by the
way, let's just say out of theblue, for whatever reason, you have
(10:13):
a competitor or somebody thatjust shows up at your door one day
because the timing is right,and they say, you know, hey, I'm,
I'm interested in buying yourcompany. Let's sit down and look
at the books. You've alreadyprepared for it. You're already ready.
You don't have to get ready.And again, getting ready. I didn't
say this before, but it takesat least two years to really implement
a plan and do it the right wayand then implement that well, get
(10:36):
the plan created and thenimplement that plan over the course
of, say, one to two years. Soputting the plan in place takes a
year, and then implementingthe plan takes another year or two.
Wow. Wow. And, you know, I'mglad you mentioned valuating your
business so gettingvaluations, because that's something
that I did maybe about acouple of years ago or so, and I
(10:58):
was pleasantly surprised. Isaid, okay, that's awesome. However,
there were some things thatthe lady was like this that you need
to do now in order to get abetter valuation in the future. So
that's why I totally agreewith you when you say start now,
wherever you are, because,like the small little changes that
(11:19):
I made today in the future isworth thousands and thousands of
dollars.
It's crazy how that works.Just compounding interest.
Right, right, right. And like,the little changes I made took me
like a few button clicks and Iwas done.
I know, but it's, but it's sohard to do that because even though
it's important, it's. There'salways something else that seems
(11:41):
like it's more important or abox to check off or an email to respond
to. You know, there's always something.
Absolutely. Absolutely. Allright, so we're coming up towards
the end of the podcastepisode, but I want to leave our
listeners with one more thing,and that is, I know you already gave
us a ton of tips already, butwhat is one tip you would say for
(12:01):
our small business owners whenit comes to exit planning or transition
planning?
Okay, yeah, no, no, you'regood. I appreciate that. By the way,
business transition planning.So I'll leave you with this. First
of all, roughly 80% ofbusinesses never sell. Let that sink
(12:23):
in for a minute. It's sad.That means that 80% of businesses
dissolve. They never sell atall. Of the 20% of businesses that
do sell, 75% of those 20% sellfor less than market value. Then
to put a cherry on top, andit's not a good cherry, by the way,
it's a rotten one. 80% ofbusiness owners net worth is tied
(12:46):
up in their company. So do allthat math, right? It's more about
what happens if you don'tplan. You're going to be a statistic.
You're going to be, you could,you could end up part of the 80%
that never sells and you getnothing, your family gets nothing.
And all the, all the work youdid, the blood, the sweat, the tears,
(13:07):
the, the bad hires, thesuccess, it all just, it's all for
nothing at the end of the day.And then if you're one of the 20%,
but you don't plan, you're notgoing to even get what your business
is worth. That's what thestatistics tell us. And then on top
of all that, 80% of your networth is in that business. So the
(13:27):
advice, the one piece ofadvice that I would tell anyone listening
to this podcast would be tofind somebody who's accredited, who
has a designation in business.Transition planning, exit planning,
reach out to them, grabcoffee, grab lunch, jump on a phone
call, zoom meeting, ask somequestions and just, just have an
(13:48):
intro call. For starters,that's. That'd be the first thing
you should do. And then fromthere, chances are, if you find the
right person, you shouldprobably go through the process.
Now again, I don't care ifyou're 25 or 65, I don't care if
you're selling your businessin three years or 13 years, as I
always say. But get a plan inplace and you'll be, you'll be thanking
yourself years upon yearslater. And just as you said, those
(14:10):
little tiny things you do now,and this is going to be a whole lot
more than little tiny things,by the way. But the more you do,
the bigger the impact is. Andby doing that planning now, you're
going to thank your future,your future self is going to thank
you just in compounding effectfor doing that planning today.
Yes, yes, I absolutely lovethat mic drop. That was a perfect
way to end. But if people wereinterested in finding out more about
(14:35):
you, more about your practice,how could they find you?
If you're interested inconnecting with me personally, easiest
way is probably LinkedIn. Justgo to LinkedIn. Looked up my, my
name, Adam, last name is K O OS as in Sam. It's pronounced Koch,
but it looks like coos. Secondplace to go. If you're looking for
more information on thisparticular topic. You know, business
transition planning, exitplanning. One of the companies that
(14:58):
I own is called Elevate andExit, and the website's actually
elevate and exit.com. youknow, we don't have a marketing department,
so that's how we chose it. Andthen the. If you're looking for more
personal financial planning,retirement planning, I'll give you
one more statistic as we quithere. 75% of business owners who
sell one year later aresurveyed and say they severely regret
(15:18):
selling their business. Andthe number one reason why they regret
selling their business a yearlater is because they didn't have
a plan for what they weregoing to do when they were done.
I always joke and kind of callit life after football because there's
all those statistics abouthow, you know, people go to the NFL,
NBA, you know, Olympicathletes, and as soon as they're
done, which is usuallysometime in their mid to late 20s,
and that's probably pushingit, right Then they don't know what
(15:40):
to do with their livesafterward because their whole life
has been football, it's beensoccer, it's been volleyball, it's
whatever it is, you know whatI mean? So having a plan, a personal
financial plan for you, yourpartner, your spouse, for what life's
going to look like and all thethings you're going to do when you're
done with your business is socrucial. So you can find us@libertas
wealth.com which again, wework with, you know, primarily business
(16:01):
owners and executives at ouroffice at Libertas. But then elevate
and exit.com is where you canfind all the exit planning and business
transition planning information.
Yes, thank you so much, Adam.And I'll make sure I have all of
those links in the show notes.You keep hitting us with gems, even
during your outro. No problem.But thank you so much for coming
and I hope you have awonderful, wonderful rest of your
(16:22):
day.
Thanks. You too. Thanks forhaving me.
Bye.
Thank you for listening,joining and being a part of the Money
Talk with Tiff podcast thisweek. You can check Tiff out every
Thursday for a new Money Talkpodcast, but if you just can't wait
until next week, you canlisten to previous podcast episodes@moneytalkwitht.com
(16:43):
or follow TIFF on all socialmedia platforms at Money Talk with
T. Until next time. Spend wiseby spending less than you make. A
word to the money wise isalways sufficient.
You know what it is. That'sright. It's time to talk money with
your money nerd and financialcoach. Now tighten those purse strings
and open those ears. It's theMoney Talk with Tiff podcast.
Hey, everyone. I am so excitedbecause I have Adam Koch on the line,
and Adam is here to talk to usabout what businesses get wrong about
(00:25):
exit planning. So after you'redone with your business, what do
you do next? So thank you somuch, Adam.
No, thank you for having me.This is going to be fun.
Yeah, for sure. So let's hopright in. First and foremost, what
is exit planning?
I'm so glad you asked becauseI thought, you know, I probably should
back up, rewind and talk topeople about what that even means.
(00:45):
And sadly, I think most nonbusiness owners don't know what exit
planning is. And I think thateven more sadly, many business owners
know what it is, but theydon't know when they need to start
planning for it, how they needto plan for it. But exit planning,
I'll call it also businesstransition planning is essentially
the act of going from being asuccessful business owner to parting
(01:09):
ways with your company,exiting your business and passing
it along to whatever's next,whether that's an auction buyer,
a competitive buyer that's inthe same, same sector, maybe a competitor
in the same industry, sellingit to your employees as like an esop,
that's one strategy. Or, youknow, keeping it in the family and
selling the company to, youknow, a child or, you know, niece,
(01:31):
nephew, son, daughter, thingslike that. So that's essentially
what exit planning is. It's,it's the, the act of retirement if
I want to keep it that simplefor business owners.
Yeah, thank you so much forthe explanation. And, you know, I
feel like this is somethingthat's not talked about enough. Like,
I feel like as entrepreneurs,we're just so much in the daily grind
that we don't think about thisexit planning. So what are some things
(01:55):
that small business owners getwrong about exit planning?
Well, first of all, you just,you said that so gorgeously. Because
the reason this is, I'm sopassionate about this topic and the
reason we've made it such abig part of our business at Libertas
Wealth Management Group isbecause it's. Nobody knows about
it. It's. There's not enoughawareness. So the fact that you're
(02:17):
doing a podcast and makingthis a topic is so huge. Because
you're right. I mean, mostbusiness owners are so caught up
selling their service,managing their team, all the Things
that business owners do,Paying the bills, you know, just
running the company that, youknow, what often happens, and probably
the biggest mistake or thebiggest thing that they get wrong
is just starting too late.When it comes to the planning. They'll
(02:39):
say, you know, oh, yeah, youknow, I'm. I'd like to retire at,
you know, 65, or, you know,dial it back at 65 and quit and sell
the business at 70. But theyjust put it off and put it off. And
I can't count the number oftimes I've talked to a business owner,
whether that be on the phone,over lunch, happy hour, in a. In
a review meeting. And I'llsay, so what are you thinking about
in terms of selling thecompany and walking away? And they'll.
(03:00):
And, you know, last year youwere talking about maybe parting
ways in about two to threeyears. What are you thinking? You
want to know what the answeralways is? Two to three years.
Another two to three years is fine.
Yeah. It doesn't change. It'salways two to three years from now.
And so what happens is there'sso many. I mean, we could. We could
do another podcast just on themistakes that get made and the problems
(03:22):
that occur as a result ofstarting too late. But just to give
you a tease with a couple ofthem, you know, what if you get divorced
now? What. How's the ownershipof the company set up? How is the
divorce having nothing to dowith ownership? How is the divorce
going to affect you as anowner, a leader, and an employee
within your company? What ifyou get disabled? What if you get
(03:42):
a disease, Parkinson's,dementia, because you waited too
long, now all of a sudden,your company's being sold at a fire
sale. Because everybody knowsin your. In your industry and in
the city you live in, theystart to catch wind because, you
know, word travels fast, andnow you're not getting nearly what
you wanted for it. What if youpass away and you haven't planned
for that in advance? It's notlike you're. If you're married, your
spouse can't just walk in andstart running the company. You know,
(04:04):
like, for me, I. I own acouple companies, but I know that
my spouse isn't even licensedto be a financial advisor, wealth
manager, financial planner. Sohow much is my company going to be
sold for if I pass awayprematurely? And I didn't plan for
that. So there's selling. Thenumber one thing that business owners
get wrong is starting too latewhen it comes to planning their transition
(04:24):
and planning their exit.
Gotcha. Gotcha. And you know,you said so many gems right there.
One question I have for you.What is too late? Like how soon in
business should we startthinking about exit planning?
Sure. No, that's a greatquestion. What is too late? Well,
since we can't, I'm going togive you the long answer to the second
(04:46):
part of the question. Becausesince we can't predict the future,
at least nobody's figured outhow to do it as far as I know. We
have this joke gift that aclient gave me way back in the early
2000s and it's a crystal ball,but it doesn't work. So I'm always
pointing at it. When peopleask a question about things like
what do you think is going tohappen with the stock market after
(05:07):
the election? It's like, well,I keep trying to get this crystal
ball to work and it just won'twork. But anyway, so since we don't
know and can't predict thefuture, I don't know what we consider
to be too late because we justdon't know what the future holds.
But the second part of yourquestion is really the gem. And that
is how soon should we startplanning? And this is not sales,
(05:29):
this is not me trying to givethe audience some one liner or get
business owners, give themsome cliche answer. But the answer
is as soon as possible. Andthere's multiple reasons for that.
But it doesn't matter ifyou're selling your business in three
years, 13 years or 30 years.You need to start planning to transition
(05:50):
your business or to exit yourbusiness now. And there's a number
of reasons why, but that'sthe, that's when you need to start
right now.
Gotcha. Gotcha. And you know,this is something that, like I said,
we never think about. And sosomebody's listening. They might
be, you know, 20 years in,might be their first year in, you
know. So what I'm hearing isif you have a small business that's
(06:13):
an actual business, so nothobbies and things like that, that's
important to say. Then thetime is now. Like it doesn't matter
where you are in business aslong as it's an actual business and
running well, does that sum itup A hundred percent?
100%? No, you're right.
Perfect. Perfect. Okay, so Igot homework to do. But as I say
(06:37):
homework though, that bringsme to my next question. What are
some things we should thinkabout when it comes to our exit strategy?
Well, that's, ironicallyenough, you know, the reason why
we need to start early. SoSome of the biggest, most important
things, there's lots of,there's, there's more than we have
time for in this 15 minutes.But if I just start rattling off
(07:00):
a few, a few things. One wouldbe succession planning. So we talked
about what happens if we passaway, become disabled by having a
succession plan in yourbusiness. If, if something's going
to happen to you at 30, 35,40, 50, 60, it doesn't matter what
age. That right off the bat issomething that, if you start doing
some business transitionplanning, some exit planning in your
(07:21):
business, if you, if you puttogether an exit plan today. And
that's why, by the way, as aside note here, the reason I call
it business transitionplanning is because of the problem
I think we have in this, in,in this business owner world that
we all live in as businessowners, that whenever somebody hears
exit planning, they think,well, I don't need to do that until
much, much later. Because theythink exit, they think 65, right?
(07:42):
The reason I'm calling itbusiness transition planning is because
I want people to get exitplanning out of their vocabulary
and start thinking it more ofhow do I transition my company from
where it is today to where Iwant it to be, wherever that might
be. Usually it's, I want to bemore efficient, I want to have succession
in place. I want to be readyfor the inevitable, I want to be
ready for emergencies. I wantto make more money, so I want to
(08:03):
become more profitable. I wantto de risk my company. So for instance,
my revenue is, 30% of myrevenue is my top client. That's
a problem. That's calledcustomer concentration. So there's
all kinds of things that wecan do as part of business transition
planning that ironicallyenough, if we start putting together
(08:24):
evaluation and then we figureout, here's where our company's worth
today, the first thing theowner is going to do is say, I disagree,
they think it's worth more. Italways happens. But once we start
looking at the value and whyit's valued where it is now, we have
to do things like clean up thefinancials, you know, poor record
keeping, excessive expenses,expenses, you know, something called
recasting. When valuing abusiness, valuating a business, you
(08:48):
have to add, take, take allthe personal expenses that you're
running through the businessand take those out, which includes
the owner's salary, and thatincreases the value of the company.
I mentioned successionplanning early earlier. That's, that's
crucial. We have to have asuccession plan in place. So when
a buyer comes in and Says, allright, you know, if I buy this company
and this person leaves, or ifthey pass away during the, during
(09:09):
the negotiation, I don't thinkI want it anymore right now. What
about continuation planning,something people call often, you
know, golden handcuffs. So abusiness owner comes in and they
say, okay, well, I'm lookingto buy this company. What happens
if the owner leaves? Are the,Are all the executives going to leave,
too? You know, are all thepeople who are important to making
this thing run, are they gone?And now I'm sitting here losing clients,
(09:32):
customers. So that'simportant. And so what you end up
finding out here at the end ofthe day, and I know I just touched
on a few of these topics, butwhat you end up happening is if you
implement a businesstransition plan, or if you want to
call it an exit plan, that'sfine. And you do that now, what you're
going to end up with is lessrisk in your business. You're going
to end up with more profit andgrowing profits. You're going to
(09:53):
end up with happy employees,continuation planning, succession
planning, and you're going tohave less risk, all while growing
more and exponentially overtime. So that when you are ready
to sell, you will have grownso much more by implementing this
process now as opposed towaiting till later. And, oh, by the
way, let's just say out of theblue, for whatever reason, you have
(10:13):
a competitor or somebody thatjust shows up at your door one day
because the timing is right,and they say, you know, hey, I'm,
I'm interested in buying yourcompany. Let's sit down and look
at the books. You've alreadyprepared for it. You're already ready.
You don't have to get ready.And again, getting ready. I didn't
say this before, but it takesat least two years to really implement
a plan and do it the right wayand then implement that well, get
(10:36):
the plan created and thenimplement that plan over the course
of, say, one to two years. Soputting the plan in place takes a
year, and then implementingthe plan takes another year or two.
Wow. Wow. And, you know, I'mglad you mentioned valuating your
business so gettingvaluations, because that's something
that I did maybe about acouple of years ago or so, and I
(10:58):
was pleasantly surprised. Isaid, okay, that's awesome. However,
there were some things thatthe lady was like this that you need
to do now in order to get abetter valuation in the future. So
that's why I totally agreewith you when you say start now,
wherever you are, because,like the small little changes that
(11:19):
I made today in the future isworth thousands and thousands of
dollars.
It's crazy how that works.Just compounding interest.
Right, right, right. And like,the little changes I made took me
like a few button clicks and Iwas done.
I know, but it's, but it's sohard to do that because even though
it's important, it's. There'salways something else that seems
(11:41):
like it's more important or abox to check off or an email to respond
to. You know, there's always something.
Absolutely. Absolutely. Allright, so we're coming up towards
the end of the podcastepisode, but I want to leave our
listeners with one more thing,and that is, I know you already gave
us a ton of tips already, butwhat is one tip you would say for
(12:01):
our small business owners whenit comes to exit planning or transition
planning?
Okay, yeah, no, no, you'regood. I appreciate that. By the way,
business transition planning.So I'll leave you with this. First
of all, roughly 80% ofbusinesses never sell. Let that sink
(12:23):
in for a minute. It's sad.That means that 80% of businesses
dissolve. They never sell atall. Of the 20% of businesses that
do sell, 75% of those 20% sellfor less than market value. Then
to put a cherry on top, andit's not a good cherry, by the way,
it's a rotten one. 80% ofbusiness owners net worth is tied
(12:46):
up in their company. So do allthat math, right? It's more about
what happens if you don'tplan. You're going to be a statistic.
You're going to be, you could,you could end up part of the 80%
that never sells and you getnothing, your family gets nothing.
And all the, all the work youdid, the blood, the sweat, the tears,
(13:07):
the, the bad hires, thesuccess, it all just, it's all for
nothing at the end of the day.And then if you're one of the 20%,
but you don't plan, you're notgoing to even get what your business
is worth. That's what thestatistics tell us. And then on top
of all that, 80% of your networth is in that business. So the
(13:27):
advice, the one piece ofadvice that I would tell anyone listening
to this podcast would be tofind somebody who's accredited, who
has a designation in business.Transition planning, exit planning,
reach out to them, grabcoffee, grab lunch, jump on a phone
call, zoom meeting, ask somequestions and just, just have an
(13:48):
intro call. For starters,that's. That'd be the first thing
you should do. And then fromthere, chances are, if you find the
right person, you shouldprobably go through the process.
Now again, I don't care ifyou're 25 or 65, I don't care if
you're selling your businessin three years or 13 years, as I
always say. But get a plan inplace and you'll be, you'll be thanking
yourself years upon yearslater. And just as you said, those
(14:10):
little tiny things you do now,and this is going to be a whole lot
more than little tiny things,by the way. But the more you do,
the bigger the impact is. Andby doing that planning now, you're
going to thank your future,your future self is going to thank
you just in compounding effectfor doing that planning today.
Yes, yes, I absolutely lovethat mic drop. That was a perfect
way to end. But if people wereinterested in finding out more about
(14:35):
you, more about your practice,how could they find you?
If you're interested inconnecting with me personally, easiest
way is probably LinkedIn. Justgo to LinkedIn. Looked up my, my
name, Adam, last name is K O OS as in Sam. It's pronounced Koch,
but it looks like coos. Secondplace to go. If you're looking for
more information on thisparticular topic. You know, business
transition planning, exitplanning. One of the companies that
(14:58):
I own is called Elevate andExit, and the website's actually
elevate and exit.com. youknow, we don't have a marketing department,
so that's how we chose it. Andthen the. If you're looking for more
personal financial planning,retirement planning, I'll give you
one more statistic as we quithere. 75% of business owners who
sell one year later aresurveyed and say they severely regret
(15:18):
selling their business. Andthe number one reason why they regret
selling their business a yearlater is because they didn't have
a plan for what they weregoing to do when they were done.
I always joke and kind of callit life after football because there's
all those statistics abouthow, you know, people go to the NFL,
NBA, you know, Olympicathletes, and as soon as they're
done, which is usuallysometime in their mid to late 20s,
and that's probably pushingit, right Then they don't know what
(15:40):
to do with their livesafterward because their whole life
has been football, it's beensoccer, it's been volleyball, it's
whatever it is, you know whatI mean? So having a plan, a personal
financial plan for you, yourpartner, your spouse, for what life's
going to look like and all thethings you're going to do when you're
done with your business is socrucial. So you can find us@libertas
wealth.com which again, wework with, you know, primarily business
(16:01):
owners and executives at ouroffice at Libertas. But then elevate
and exit.com is where you canfind all the exit planning and business
transition planning information.
Yes, thank you so much, Adam.And I'll make sure I have all of
those links in the show notes.You keep hitting us with gems, even
during your outro. No problem.But thank you so much for coming
and I hope you have awonderful, wonderful rest of your
(16:22):
day.
Thanks. You too. Thanks forhaving me.
Bye.
Thank you for listening,joining and being a part of the Money
Talk with Tiff podcast thisweek. You can check Tiff out every
Thursday for a new Money Talkpodcast, but if you just can't wait
until next week, you canlisten to previous podcast episodes@moneytalkwitht.com
(16:43):
or follow TIFF on all socialmedia platforms at Money Talk with
T. Until next time. Spend wiseby spending less than you make. A
word to the money wise isalways sufficient.
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