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The Strategic Exit, with Lori Power · It's Time for Success: The Business Insights Podcast

• Sharon: [00:00:18] Welcome to It's Time for Success, The Business Insights podcast. I'm your host, Sharon DeKoning. We have some big news to share. This podcast is now reaching entrepreneurs in 25 countries. Incredibly, our guests are helping entrepreneurs around the globe. That's super exciting and it warms my heart. While we are global, this podcast sole mission is to help the heart of our communities the small business owner. And on that note, today is just that building a sellable business so it can continue keeping your team employed in serving your community. Today, I would like to reintroduce Lori Power, who is wearing a different cap today as a Certified Exit Planner advisor. Lori was with us in episode 28 where we chatted about the importance of investing in your people. I strongly encourage you to give that one a listen if you haven't. But today, Laurie is wearing her CFO hat as a Certified Exit Planner, advisor CPA, and the founder of MP benefits, Laurie is uniquely qualified to help us navigate the end game of entrepreneurship. Laurie has collaborated with leaders like Boeing, giving her a high level perspective on what makes a company truly valuable. Today, she's back to help us focus on what we need to do to create a sellable business. Sharon: [00:01:31] I have a quick story, Laurie, before you introduce yourself. Back in the day, my business coach, I used to work, work, work, work, and I mentioned it in different podcasts. I used to work, work, work and I would carry it, my business coach said. Sharing your caring, being busy like a bad badge of honor. And that's exactly what I did. I was so proud of it and I was work like, I'm a workaholic and I am a workaholic. I love what I do, don't get me wrong, but I was portraying that I had to do it. So that's not a sellable business. And I think we're going to dive a bit in there today about how to to rectify that situation. So he really had to hammer that home to me. So I'm hoping that today's episode can, you know, shed some light on some of our listeners as well. Okay, Lori, let's do a reality check for our listeners. They are entrepreneurs and they work hard. What are the top business strategies that must have incorporated into their business to make it sellable? Top ones. Lori: [00:02:20] Top ones is. That's good. It's good because selling a business is as unique as a fingerprint. And anybody who has worked with business owners, especially entrepreneurs, will say, okay, well, how does this business form part of your identity? And can you leave that identity? So I'm going to say the number one thing about selling a business is can you leave that business? Can your identity sustain you leaving that business? That would be then that may not be a traditional CPA approach to things, but based on my interviewing so many business owners and really getting to know what it is and how they do it, and especially in the small business model, it's we are we become part of our business and our identity is truly part of that. And you had said that in your opening. So I would say, number one is, is for a business entrepreneur to really identify and know what life is going to look like after they sell it. That would be my number one to them, because it doesn't matter how sellable the business is if they mentally cannot sell that business and walk away. Sharon: [00:03:38] So like say for example, a customer or a listener, right now they have their business and they want to winter in Arizona for three months. Would that be considered what you're talking about? Like they're able to go away for three months? Lori: [00:03:48] Yeah, they're able to go away for three months. But are they able to leave it behind? Are they able to? What are they going to do for the other nine months of the year? What does life look like when they're not associated with that business anymore? So, for instance, I'll give you a really good story. There's a there was a gentleman who had sold his business. It was a going concern. Business was a good deal. Everything went smoothly. Everything went smoothly. New owners took it over there. They they were they formed part of that community. Things were great. And they changed the name on the front of the building. And the gentleman said, my name's not there anymore. Who am I, who am I? So that to me would be my number one to a business owner. You have a going concern business. But let's think about that. Let's think about what not the first year looks like, but that, as you had said when we were first talking about buying a bookstore. What does the next five years look like? How are you keeping busy? So that would be my number one. And then we can get into to the actual business of things. I don't want to waylay us down. Down an arm of a tree that nobody it wants to think about, but they are going to have to think about that. Lori: [00:05:11] So I would say that would be the number one is what does life look like after the business? So, you know, a profitable business is a sellable business. You need to be able to walk away from the business. That would be your number two is can the business sustain without you? You had mentioned the people that can go down to Arizona for three months. They're down in Arizona for three months. But how often is the business calling them? Are they working from Arizona? I can work anywhere in the world and that doesn't mean I'm walking away from my business. At my business can can survive without me. So can the business. Do you have your systems and processes? That would be my number two. Number two for a scalable business is do you have systems and processes in place? If you have systems and processes in place, you are now working toward a sellable business. You are working toward somebody else being able to walk in and take over those systems and processes. You have the people that are able to carry out and know, and they've been given the autonomy to do the job with leadership skills. Lori: [00:06:25] So my number two would be your systems and processes. When you have when you have your systems and processes in place, a lot of other things just fall into place. Do you have a customer base? Is your customer base spread out, or do you have all your eggs and maybe 1 or 2 baskets? Because what happens if you if you're relying on, let's say you're a company relying on oil and gas. Okay. We know this in Alberta, your company relying on oil and gas. What happens when oil and gas prices tank? What happens? How does that impact your business? Well, how it impacts your business is also going to impact how it's going to be sellable. So how how sustainable is your business based on your customer profile? Then we can get into my favorite topic is how are you treating your people? What's your culture like? Do your people, are they engaged? Do you have a lot of turnover? When you have a lot of turnover and staff, chances are you have a lot of customer turnover. So is it is it a sellable business or is it a job for hire? Right. And that's okay if it's a job for hire and. But know it before. Before you go, before you try to sell something and walk away from the thought that somebody is going to sell it or somebody's going to buy it. Lori: [00:07:57] That is just simply not the case. 70% of the time that is not the case. But 100% of the time it is guaranteed, like death and taxes, that your business will change hands and it will change hands whether it is sold, whether a family member takes it over, or whether it just simply closes its doors. There will be a change at some point in time. How you navigate that change and how you're able to what we call harvest the wealth out of your business, is up to you to control. And again, the number one thing that I would would suggest is know who are you to your business. And number two, do you have the systems and processes in place to allow somebody else to step in and take it over? Um, when I'm talking to a business owner, when I first start talking to them about selling their business. Sharon, one of the things I say to them is if you died tomorrow and we know you don't have a plan, who's your biggest competitor out there? Have you identified your three biggest competitors? Those would be the most likely purchasers of your business. Mm. Right. Sharon: [00:09:22] Interesting. Lori: [00:09:23] So know that right off the bat, if you die without a plan, chances are whomever is left in charge of things will try to liquidate it. Get rid of it really quickly. Maybe they'll just close the doors. Or maybe the best approach is to go to that competitor and say, listen, do you want to merge it? Do you want to buy it? Do you want to take it over? You know, there's jobs at stake when we're working in small, when we're entrepreneurs and we're not in urban centers. So let's think the majority of Canada, huh? Okay, then you're outside of an urban center. How important is your business to that community? I think a lot of entrepreneurs miss how important their business is to that community. You're creating jobs. You're creating stability in the economy. You're creating a want for people to live in that community. So it's really important to have a plan. What's going to happen to your business if something happens to you? And would you, as an entrepreneur, take a step back just for an hour, take a step back and look at that business and say, if I didn't own that business, would I buy that business? And if the answer is no, then we've got you've you've you've got a you've got to put a plan in place. Right. And if the answer is yes, why? What are the top five reasons why you would buy that business today? Sharon: [00:11:06] Okay. So switch it from their view when you're thinking about that. Also when a person starts a business I would say start because I did. You don't think of that. You don't think of down the road what you want. And I think if you're going to start a business, that's a good question to ask yourself. Are you creating a job or you're creating a sellable business? Or what do you want? Right. Is that correct? Lori: [00:11:30] That's absolutely correct. Yeah, I was really fortunate when I came. I did not have I didn't grow up with an ambition to be an entrepreneur. I'm an accidental entrepreneur. Full. Full on. But I had an. I did not appreciate it at the time. Because you're young and you're in and you don't know. But I did grow up with the adage that don't get into something if you don't know how to get out of something. And the lovely thing about how I got into business was I was a succession plan. I was a five year succession plan, so I was groomed into it. I had the opportunity to be mentored. I had the opportunity to be trained. I had the opportunity to know by the time I took over those reins, what I was taking on, the person who who I purchased the business from, or we created it together. And then then he left. Was was able to leave because he had the five year Runway to get ready for it. And as we work toward that five year goal. Each year, he was taking a little step back, a little step back, a little step back to make sure that by the time I was taking those reins, I could take those reins. I could run with those reins. Sharon: [00:12:54] So just doing some research to prepare for the podcast, I hear the five year, three years or five years I think is the, you know, to get ready to do your exit strategies. Is that accurate, three years or five years or what are your thoughts on those? Lori: [00:13:07] Yeah, ideally they want ten. Oh when we. Yeah. So so so when you think about it this way we're thinking about it. That's that's you know so your first your first few years are just coming to terms with getting, getting your systems and processes in your business in place is not necessarily working with advisors at that point in time, like your first few years of thinking of your succession plan is thinking about what do I need to do on the business to make it a sellable business? What can I do as the entrepreneur? And again, once you get into your systems and processes, do I have the right people? Am I able to keep those people? Am I attracting and retaining them? What kind of culture do I want? Those first five years are all about working on self if you would. Right? Self being the business. Okay, you're working on that, then what you're doing is now. Then you're starting to introduce your experts who are going to now start to take you down that road of capitalizing on what you want, what you need to harvest from the business in order to sustain the lifestyle that you've decided to have in your next act. Sharon: [00:14:28] Okay, so you have to come up with a number, almost like a financial advisor. What you need. Lori: [00:14:33] No, you don't come up. You work with an expert. Sharon: [00:14:35] Who's going to. They will help you with that. Okay? Okay. Yeah. Just because like. So for example, I've been doing this business for 20 years. I have no clue. Even if my business is sellable. None. I have no idea. I have no idea what it's even worth. I don't even know if I was to sell it. Would I get 100,000? Would I get zero? Would I get 1.5 million? I have no idea. Is there a quick calculation? Lori: [00:14:58] Well, I'm going to stop you there because I'll be the devil's advocate here is it may not be sellable right. Like this. This is that alternative. And again, 70% of Canadian businesses are not sellable. They just simply close their doors. Sharon: [00:15:14] But how does an entrepreneur know if they have besides these things like as a quick estimate, because I heard of EBITDA. I heard of EBITDA. Lori: [00:15:23] Yeah. Sharon: [00:15:23] So is there a way that they can look at their financial statements and say that I have a sellable business, but approximately X amount or no. Is there a way of doing that? Lori: [00:15:32] Yeah. Absolutely. Absolutely. So there's there's advisors that will help you to do that. So your your your your first first go to would be your accountant. And then you're going to want to work with you can work with a business valuator. So there's there and make sure when you're I wouldn't work with my accountant to sell my business. That's not their job. So that's when you're looking at your advisors. Look at advisors who actually work in the exit field just because you're an accountant, just because you're a lawyer. So, for instance, I'm not going to go and talk to a family lawyer about corporate stuff. They may know about it, but they're not the expert in it. So your first go to is typically your accountant to refer you to somebody who works in the exit field. Who's going to help you have those first initial conversations, help you understand your the value of your company, and then introduce you to somebody who's going to be able to value your company. And what goes into those valuations. You think about those as the four quadrants of valuations, operations, human resources, your customer base, what is your branding look like? All of those things have value. And it's really important when you're when you're looking at your your company, leave nothing out. Leave nothing out. There's so many deals that are done. And then a month, two months down the road, somebody remembers, oh my goodness, I got to transfer my my machine into the new company entity. It's like all these things should have been done, you know, but you work with a variety of experts. Lori: [00:17:27] So one of the things that I really like to propose to, to an owner at the onset is work with somebody first who can coordinate all of the advisors to come in and meet you at once. Okay. What I hate, and where I think entrepreneurs really lose heart is it's like it's like being on a ping pong. Right. I'm going to go talk to an accountant. An accountant is going to tell me something and take that back. Now I'm going to go talk to a lawyer. Lawyer's going to say everything the accountant said was wrong, and I'm going to take that back now. I'm going to go talk to this person. I'm going to talk to that person. No, we don't need to do that. Think about the entrepreneur as the nucleus. Let's pull everybody into the room that you need to talk to initially. And let's hammer out what the owner, what the founder wants to do over the next few years to get their business Sellable. Have everybody in the room at once. It's so much cheaper, right? You're just paying that one. You're taking an afternoon or a day to really hammer out things, and then you're walking away with actual knowledge and an actual to do list. This is what I need to do for the next time I pull all these people together. It really becomes exhausting for an entrepreneur to have to go meet people one on one, on one, on one on one, and never be able to get that person to talk to this person and and just hammer it out. Sharon: [00:19:02] So is that like right off as soon as you're thinking about selling, is that when they should be doing that? Lori: [00:19:06] Or I would say I would suggest that when when you're getting closer to the to the runway so that 3 to 5 years out, that's when you should start to pull your advisors together, your business valuator, your your business broker who's going to find you a buyer? Maybe it's an M&A. Maybe it's it's maybe there's there's an opportunity for the employees to buy the business. Right. There's so much choice out there. And an entrepreneur really limits their choice when they limit working with advisors. Very often you could be walking away from a really good deal when you don't have the advisors coming into into the room. And when I say advisors, I mean advisors that are actually working in the exit sphere. Sharon: [00:20:00] Gotcha. Okay. So those advisors, again, just to recap, an accountant, a lawyer and. Lori: [00:20:07] A business, a business valuator a business broker. Sharon: [00:20:12] And a broker. Okay. Lori: [00:20:13] You know, you're you're going to want you're going to want a, a value creator coming in. They always often call that the quarterback and you want your financial planner there. Your your top three. I'm not a financial planner, so it's not a plug for me. Your top three advisors to have at that room together, talking to one another are your accountant, your lawyer and your financial advisor to start with, because they're going to be able to nail down what you want to do with the money that you're able to generate from the business. And you can start that initial plan. Then you can pull in the business evaluator, you can pull in the business broker, you can pull in the the advisor who's going to help you with what I do is help coordinate the talent to keep them from going through that transition. You don't want to lose them, right? Like 70%. That's that's seems to be a very magic number in succession planning the majority of the value of your business is how your business is done, which is your human capital. So it's really important that when you're looking at your EBITDA and your human capital is evaluated, that you are able to sustain that human capital not only before the transition, but during the transition and then after the transition. Most business transitions fail three years after they've taken over the business. If they cannot properly transition that talent, because if they're losing talent, they're losing the customer, which means everything they've purchased is just walked out the door. Sharon: [00:21:58] So true. Okay. All right. So I have to tell you a story. So I took an AI course and I did a podcast on AI as well. It was. Oh, what's his last name? He's the, um, anyways is AI intensive course. Rob Hope was his name. It was phenomenal. So if you haven't listened to that podcast yet, our listeners please go back and do that. But in this in this four hour course he talked about, I don't know if I pronounce it right. Gemini. Gemini. Ai so or ChatGPT, whichever. But Gemini or Gemini, whichever the proper pronunciation is was when he suggested just because I already have a Google account and it's safe. So anyways, I punched in. I created my own gem and it's a CFO gem. That's what I did. And I asked all those questions for it, and I asked it to evaluate my company to see because I don't even know. Like I mentioned, I don't know if it's worth 100,000. If I have to close. I don't know if it's 1.5 million. Like, I mean, how do I not know that I don't know. So I punched in into my CFO gem about this, and he asked me all kinds of intelligent questions, much like what you had talked about, like we did talk about, you know, the, um, always say like repeat customers. He talked about he did ask me about all my numbers, financial numbers, systems and processes. Anyways, a lot of stuff he asked me and he come up with a number that I wasn't overly happy with, but I wasn't. You know, it's hopeful. It's hopeful because I know that that's a starting curve. So what's your take on people doing that if they don't have a clue, is it way out of whack just to start with, or what are your thoughts? Have you ever encountered such a thing? Lori: [00:23:39] I'm sure it's out there. I'm not familiar with with people doing that, but I'm sure it's a good starting base. And I think what makes it a really good starting base for you is it's a, it's a number that you weren't happy with. Yeah. And that's, that's not a bad news story because you have runway. So what's going to get you to the number that you are happy with. And again, taking that step outside of your business to say, would I buy it today. And look at that number that that you were provided and say, okay, would I buy it for that? Oh yeah. Hell yeah. I'd go in all day long and I'd buy it for that. Okay, so what's going to make somebody like you buy it for the number that you want it? Sharon: [00:24:27] Right. Lori: [00:24:28] And so that's where you're going to to then as an outsider looking at your business, you're going to look at those four quadrants. Right. You're going to you're going to look at your sales. You're going to look at your operations. You're going to look at your finance. You're going to look at your human capital, and you're going to to analyze those almost like a swot, right? Like do a Swot for all four quadrants and say, okay, what are the strengths? What are the weaknesses? What are the opportunities. Right. What's trending out there. And do that for all four quadrants. Now you're getting into systems and processes for all four of them. And you're able to then have that starter market that what we started with before is use that first 3 to 5 years to really look at your business as your as. Would I buy it today and work on all build those strengths, capitalize on the opportunities right. Mitigate the the threats. What can I do to mitigate the threats. A lot of business value overlooked. Okay. A lot of business value is secured by mitigating threats. And when I say that of course I'm an insurance person. So you know, I'm going I'm going to always go down that road. Lori: [00:25:51] But it is a proven fact. If you can identify the threats to your business and you can start to mitigate those threats. So how how are your loans? What's your cash flow looking like? Do you have good banking relationships? Right. These are all important aspects that the new owner is going to want to take over. They don't want to have to redo things from scratch. If they did, they'd be starting a business, not buying a business. And let's keep that in mind. Yours is not a startup. Yours is an existing business. So how can you mitigate those threats? Is your insurance up to date? Do you have Eno? Do you have key man? Do you have all of those aspects in place that is going to to protect the business? Are there are there any lawsuit threats? Are there is there any legislation that is a threat to your business? Right. I work in a in a highly regulated industry. We always before we even think about selling, we have to think, what are the regulatory measures that may be a threat to the longevity of my business. Sharon: [00:27:08] Wow. Okay. So, so much more than what my gem can tell me about, that's for sure. Okay. So this is why I think there has some limitations. But for me, it was just like a bit of an eye opener started. I was more curious than anything. Lori: [00:27:21] No, but it's an excellent first start. Sharon. I mean, I think that is just it's an amazing first start that if people can do that and just get that ball rolling, right, like just I think what you did was, was an amazing and excellent thing to do to start that that thinking in your head. Sharon: [00:27:42] So if you get thinking with that. So I'd say I did my gem. So what's my next step? So now I want to go a little bit further and figure this out. What do I do next. Lori: [00:27:49] Next step is, is step away from your business for for a day. Right. Step away and think about would I buy my business? That's your next step. Sharon: [00:28:01] I don't know if that's a proper question though, because I'm 57. I'm not going to buy the business at my age. Lori: [00:28:06] No, no, you're you're going to look at it and it's not age. It's would I buy this business if I were 20 years younger? Right. Like, put yourself in the mindset of a buyer. Sharon: [00:28:20] Okay. Lori: [00:28:21] Gotcha. What does that look like? And I and I really do want to put a plug in for for considering employee ownership. Employee ownership in Canada is is pretty phenomenal. We can do you can have employee buy ins. You can you can set your business up so it's 100% employee owned. There is there's so much opportunity there especially when you're working in the non urban areas. And I'll just just put that plug in there because it is an option that many entrepreneurs when they're selling their business they don't think about. If you have the runway and you and you have the the ability to consider it. And when I say runway sharing, what I mean is, is that you don't need to sell the business tomorrow. There's too many people that give themselves less than a year to get out there. They're done. They they don't have bandwidth anymore. They need to sell that business. But if you have the runway to consider what employee ownership might look like for your business in one way, shape or form, then have that conversation. Think about it. Sharon: [00:29:40] So you would consider that after you get a valuation done. Lori: [00:29:44] Yeah. Yeah. Absolutely. You would. Absolutely. You would. Sharon: [00:29:47] Okay. Yeah. You talked about that. Makes me think of one question is the five D's is when you have to sell. Can you go into the again I was just doing some research. Get ready for the podcast. And this come up with the five D's. Tell me about that. Lori: [00:29:59] But yeah the exit planning Institute. We call it EP. They always talk about the five D's. So you get death, disability, divorce, disagreement, distress. But I think there's so many more. There's disinterest, there's disorientation, there's decline. And one an advisor. I've always loved mentors. Over the years. I've always gravitated toward mentors. I have so much yet to learn, and mentors are the way to do it. And one of my mentors said to me, because I was very fond of saying, I want it to die at my desk. And he said to me, oh, what if you're dead? But you don't know it? I'm like, oh my gosh, what does that look like? And he said, and that's another thing of our industry is it's it's an aging industry. So we we've got a lot of people that work beyond perhaps their capacity And what happens when you've got onset of dementia but you don't know you have dementia. And as I said, I live in I work in a highly regulated industry. What happens if somebody is sold an insurance policy that is not for them, and you haven't worked in their best interest? What happens then? So, you know, it's one thing we we think, okay, we're going to jump off a cliff and we're going to die. Mhm. What if we jump off that cliff and we just injure ourselves fatally. Right. What happens then? You know, I have a colleague of mine who was brought in as part of a succession plan as well. Lori: [00:31:41] And he was just one year in when the owner went to Hawaii and died. Now what? You know, so. So death isn't isn't your only thing, and you burn out. Burnout. Disinterest. Right. Like that. That's one of those D's. And it's a big D because you you had said, well, I don't want to buy my business today. I'm, you know, 50 some years old. Right. So you're not interested enough to buy the business. And that's okay. But so many owners get out there and and they leave the conversation until they've had it. I cannot take another day in the office. And there's a lot of this. And this is why so many businesses don't sell is because I don't even want to sell it. I'm just closing the doors and I'm walking away. And that is such a tragedy. You think about that community. You can go into almost any small community in Canada, and you can walk by, you can walk by, drive by these empty buildings that used to be going concerns. And I will tell you something that's near and dear to my heart, and I'll tell you about where I'm from. In Nova Scotia, little town called Mulgrave. And Mulgrave is a very interesting case study for Canada. It is an isolated town in plain sight. You say? Well, how's that possible? Okay, so back before they built that dreaded causeway that connects the mainland of Nova Scotia to Cape Breton Island, our town was a going concern town. It had everything. Lori: [00:33:17] It had businesses. It had the ferry. You had to come into our town to get to Cape Breton Island. Things were going back and forth. It's a bustling community. That causeway comes in. My town sits here. The causeway goes here, right? So now nobody has any any need to come into our town. And you have to kind of go over what they call a cape to come into our town. It's a it's, you know, we're on the ocean. So then you go, okay, well, that still doesn't isolate you. Oh, but it does, because then they build a highway that bypasses our town and goes all the way down to Guysborough. What do we have in our in our town? You know, we don't have a liquor store. We don't have a gas station. We don't have anything, you know. And so we have a lot of empty buildings. Yeah, right. And now it's starting to come back. We've got a whole new generation of entrepreneurs that that, you know, uh, you know, my generation's children have gone back and they're starting to to build the town up again. But it's it's a slow, slow process. So when I talk about the importance of a business to a small community, I'm saying that from my heart that think about this because it is just so important. If you've become disinterested in you're just ready to close your doors. Please think about your employees. Think about your customers. Think about the community that you serve. Sharon: [00:34:50] Yeah. My line, I always say is business builds a community, and a community builds a business. It's we're always hand in hand there. Yeah. Even like for myself, I have I think it's 17 employees now. I think, you know, they got mortgages. They've got you know, they're living in the community. They're shopping in their communities. Like it's. Yeah, it's it's a it's a responsibility. I think for us as a business owner. Lori: [00:35:12] Yeah. Sharon: [00:35:12] To ensure that they're looked after. That's that's the way I always looked at it for myself anyways. Lori: [00:35:19] And a lot of business. On that note, Sharon, a lot of businesses, when they start to think about transition, they they want to do it in hiding. They don't. Some of the most successful transitions that I know personally have been very transparent and very communicative with their employees. And they were because there was a communication strategy in place, those employees transitioned to that new owner. And there's a really funny line where there was a business owner. I think the business owner was 72 or something like that. And and he says to the advisor, he says, well, I don't want my employees to know that I'm I'm thinking about exiting. And the advisor said, you're 72 years old. They're not stupid. Sharon: [00:36:09] They're not going to be surprised. Lori: [00:36:11] They're not going to. In fact, they will probably they will probably encourage you and be happy for you. So allow them to be happy, right? And in my business, we say that to to advisors as well. You're if you're working in the best interest of your customers, then you need to think about succession planning, because your customers need to know that they have a longevity of continuing what you have started with them. So when we put in employee group benefit plans, it's important that my customers understand that the way that I do business is going to be carried on by my son, who's coming into the business, and I'm taking the time to train him. He's got support staff and introduce him to each of these customers so that they understand that if something happens to me, they're still safe. They're still looked after. Often overlooked in that succession plan. Sharon: [00:37:14] So you don't need to do that when you're just starting to think about it, though. Do you think like not? Yeah. Because as I've said, I did my research and sometimes people say I've read that it's not the case because you might lose some staff if they're a little bit scared or they're. Lori: [00:37:29] Only scared when you're when you don't have a strategy. Sharon: [00:37:33] Right. So make sure you have a strategy implemented before we start chatting with them. Or even, you know, some customers might switch or whatever. So that might devalue your your business if you too early. Lori: [00:37:45] I that's I, I have never seen when it's when it's a solid communication strategy. I have not seen customers jump ship. I have not seen employees jump ship. That's my experience. But it's also my experience with a lot of CPAs that I meet with once a month. You know, we we get together and we talk about these things and we're coming at it from different perspectives, whether that's the accountant or the lawyer or the business valuator. It's if there's a communication strategy in place. One, it's how you present it to your customers. Are you presenting it that, oh, you know, I'm leaving or are you presenting it? That hey, you know what? I want to introduce you to this team. This team is now going to be coming on to support me during this transition time, and they're going to take you over. I had worked with, with, uh, with a lawyer for a long time and or a lawyer firm, let's put it that way. And over the course of working with that lawyer firm for. Oh, I don't know how long I've been with them now, 15 years I've worked with three different lawyers and never had I felt that I needed to switch law firms. Lori: [00:39:05] So I started off with one at one of the one of the partners, and he was getting ready for retirement. And he said, hey, you know what? I'm getting ready for retirement. But I think so. And so partner is going to be a really good fit for you. He we had a couple of meetings and I moved on to, to her. She again was a was a partner and then I moved on to to number three. But it was it's how it's the strategy of introducing think about yourself as, as a customer of other places. Would you necessarily leave just because the founder is leaving. I think that is a fear. Fear being a liar, right? I think that's a fear based me that has been propagated by people who let fear run their decision making. Right? Because you think yourself as a customer, would you really leave a credible place that you've done business with for however many years, simply because the founder is transitioning out? I don't think so. Sharon: [00:40:13] Gotcha. Can you tell me exactly what you do as a CPA or as you're just pronounced? I probably saying it wrong. Tell me what that is. And to our listeners. Lori: [00:40:23] Oh for for so so a what I call it a CPA or certified exit planning advisor. So one of the reasons that I do employee group benefits. So somebody would say, well, why would you need to be a CPA an exit planner. Well, I just had indicated three quarters of the value of a business is based on the humans that can take care of the systems and processes. Right. It's the leadership scope. So as a CPA, that communication strategy, the benefit program, keeping the employees during, before, during and after that transition, that's how I use my designation. I understand the exit planning. I understand what it means to transition. And I know how important it is from one owner to the next owner to transition that talent. That's how I utilize my credentials. A business Valuator will use their CPA to evaluate that business. But the majority of reasons why we we anybody goes for a designation is you have that common language, right? We all speak a common language, and we're all putting the owner as the center, as the nucleus of what we're doing. And when we're having those conversations, I can have that conversation with the accountant. I can have that conversation with the lawyer, can have that conversation with the evaluator, with the business broker, and be able to have that strategic plan to do what we all need to do to get that business owner safely through that transition and into their next best life. Sharon: [00:42:14] Okay, so am I picking this up, right. You're almost like like not not really a mentor, but you would help them right from the beginning till the end to make sure that they're looked after at every step. Is that correct? Lori: [00:42:25] Yeah. That's what CPAs do. Sharon: [00:42:27] Yeah okay. Okay. All right. Because sometimes as a business owner, we get busy and we forget things really fast. Lori: [00:42:33] No, no. Absolutely. And one of the hardest things with entrepreneurs is just that they think they can do it all themselves, right? And you think you do it all, all yourself. Well, I would never pretend to be able to do your job, Sharon, as I'm sure you would not pretend to do my job. So that think about it that way when you're thinking about, well, I'll just do it myself, or I'll just I'll just, you know, form my own contracts, you know, those sorts of things. You'll save yourself so much heartache and likely significant amount of money if you just pull people in and they have that conversation and get you started. Sharon: [00:43:13] So correct me if I'm wrong. So step by step process. So say I'm or any of our listeners, I think, okay, I'm going to sell a business. My business I'm thinking about selling my business. Step one would be to evaluate or reach out to us, a CPA like yourself. What would be step one? Lori: [00:43:32] Step one? Yeah. Reach out to a sepa. Sharon: [00:43:34] Sepa? Lori: [00:43:35] Yeah. Make sure you know if you're even. If you're working with your accountant, ask your accountant to introduce you to a certified exit planning accountant. Sharon: [00:43:45] Gotcha. Okay. Lori: [00:43:47] Okay. That. That should not be. You know, if the accountant says, well, I can do that too. Okay. Can they really. Do you do you want a successful transition or do you? And that means working with somebody who successfully transitions companies. Sharon: [00:44:06] Okay. And then so I go to my accountant, they get to refer me to a CPA. So does the CPA reach out to the evaluator. Is that the next step. Or do we find an evaluator. Lori: [00:44:19] Know what a CPA will typically do. Will we'll have that conversation. So from so if somebody reached out to me okay. If somebody if Sharon, if you reached out to me, one of the first things I'd do is have have a conversation and say, what's your runway look like, Sharon? What exactly do you want to do? What does it look like? Afterwards. Who's your financial planner? Right. So let's have that conversation. Once we have that conversation, I'd probably say. Let's get in touch with your financial planner. I'm going to. So let's get in touch with your financial planner. And let's pick a day where we can get a lawyer, an accountant, your financial planner in a room and have a conversation about you. Okay. Have a conversation about you first. Because remember I said you you need to be able to exit your plan, your your business. Once you have the conversation about you, then have the conversation about the business. Right. It's a really good backup for you to say, okay, well, this is what ChatGPT told me my business is worth. I can't retire on that. Okay. Let's have that conversation with everybody in the room. What does it look like to you? Right, where where are the misses in that valuation? How much money is it going to take in order for you to be able to retire successfully? Sharon: [00:45:48] Okay. Okay. Okay. All right. I think I'm picking up what you're laying down there. I was a little bit confused, as you can tell. Okay, let's talk about danger zones that a business has to be aware of or fix and avoid. Example one big business that drives a large percentage of your sales, which I did some research. So we and you talked about it earlier about you don't want to have like say I don't know what the percentage is like 60% of your income or maybe even 40, maybe 30. I don't know what the magic number is of your income to be focused on one customer or even supplier for that matter. Correct? Lori: [00:46:17] That's right. Yeah, yeah. That's right. What's the backup? What's the backup plan. Right. Like that's that's you know, that's what you need to do. Like you don't when you get into a plane, they always tell you where the exits are, right? Like you, you're getting on, but you know how to get off. So so that's that's important. That is that's a risk. So one, if you can't walk away from your business for any length of time and really depend and know that your leadership staff is going to be able to handle things without creating an inferno that you're coming back to, that's that's a problem. We need to look at that, okay. Sharon: [00:46:59] So be able for it to run without you. Correct. So something to work on is that okay. And how do they work on that. Is that the systems and the processes. Lori: [00:47:07] Absolutely. It's systems and processes. And giving your leadership team the autonomy to make decisions that that delegation that's the word to use. Can you can you delegate effectively and be sure trust, trust that that your your team is going to be able to follow through. If they have to ask permission for almost everything, then, you know, that's that's a problem. Sharon: [00:47:36] Okay. Micromanaging is a no go. Got it. Lori: [00:47:38] And micromanaging. And are your managers micromanaging you? No. Are your managers actually managers? And this is where we get into looking at personnel and operations, which leads into your your systems and processes. Just because somebody's been with you 10 or 15 years does not make them a manager. Right. Some people are just really good at their job, but not necessarily good at encouraging other people to do their job. Sharon: [00:48:06] Mhm. Lori: [00:48:07] Right. So it goes back to those right people in the right seats on the bus. Sharon: [00:48:13] Okay. All right. So that is so percentage of sales um systems and strategies. What else is a simple fix. If they're thinking about this. Like how else could. Lori: [00:48:23] Oh look at those threats. Right? How can I mitigate my threats? What can I do to protect my business? What's my backup plan? There is so much value that is added to a business when you just identify and mitigate those threats. Sharon: [00:48:43] Gotcha. One thing too I learned too, is like how to stay current. Again, doing these research. You gotta stay current. For example, one of the things factors is even having like a recurring income, like a subscription plan, I believe was one thing that and that really because there's no way in my business I can have a subscription plan. So I got to come up with a plan B for that to generate repeat business. What are some other ways that they can. Quick quick fixes. If they have a way of doing that or incorporating AI I heard was one of them. I don't know what that would even look like, but there's so many ways of, I guess, staying current maybe. Right. Probably. Lori: [00:49:21] Well, staying current, staying on top of things with your customers. Like have you asked your customers? Have you asked your employees? So you know, I love I love working with threes. So quick feedback is, you know, how is it good? How can it be better? What's the one thing I can change? If you want to really mitigate your your risks of client loss of employee retention, ask the question how is it good working here? Okay. How could it be better working here? What's the one thing you would change people like when you ask? You give surveys and there's like 20 or 30 questions and you're not planning to action any of those questions don't ask. And I don't even do surveys anymore if they've got all these pages of of questions and I know they have no action plan. So if you're going to ask, have an action plan. So for instance, if, if you're going to to bother your customers by asking for their feedback in order to cover off those threats and make your business sellable, right? So there is a lot of gain for an entrepreneur to ask these questions, but have an action plan. Like when you're you know what your customers are going to say, like it's unlikely that I'm going to call XYZ customer and say, you know, how how is the benefit plan? Good. Well, it's good because it pays claims. Lori: [00:50:52] How could it be better? Or it could be cheaper. I know that, right. So I'm going to mitigate that by saying, okay, outside of rates, which you know, cost is cost, how could your plan be better if you were looking at one thing to change? What would you change? And chances are the one thing that they want to change we can probably do on plan design. So you see, I have an action plan before I've even reached out to ask them. But as we start to, you can't track what you don't measure, right? Or you can't measure what you don't track. So as you start to track these answers, you can start to go back to your staff. You can build those systems and processes. You've now mitigated a lot of threats because now your customers feel that they that they've been listened to. Right. And the lovely thing is, is if you make these changes, go back to those same clients and say or customers and say, you know what, I want to thank you so much for talking to me about this. I want you to know that we now have have a three ring rule. And I knew an accountant one time that said that said, we have a three hour rule now, and the three hour rule is every call gets returned within three hours. Sharon: [00:52:14] Mhm. Yep. Lori: [00:52:15] And that came from from talking to their customers and saying, what's the one thing we can do better? The one thing you can do better is call me. You know, sooner than a week. Sharon: [00:52:27] Right? Yeah. I was getting nervous. That's one thing, too, because I know that was one of the comments if you did a questionnaire. But I always feel like I'm already spamming my customers and I know my email like I have 95 unread emails right now that I have to go through before noon today. So sometimes it's like, oh, do I do that or not? But I guess they can choose not to do it or whatever. It's up to them, I guess, but. Lori: [00:52:49] They can choose not to do it. Or you can just call. Right. Like that's. Sharon: [00:52:53] That's true. Lori: [00:52:54] That's an interesting way of doing it. So you know what we're really taking a deep dive into to our business. And we want to we want to be the best we can be for you. Sharon: [00:53:04] Yeah. Sometimes because that makes it more personal. It's not just. Yeah, I like that idea, actually. Okay, we should probably wrap this up because we've been on here a long time. As you can tell, I love business, and I hope our listeners love business because we both love business. Is there anything I missed that you would like to add to our listeners before we sign off? Lori: [00:53:22] It's a big topic and it's a unique to you topic. And when I say it's unique to you topic, I'm going to go right back to say that it's a thumbprint, right? How you choose every business is different. Everybody can be like you. You can have in my industry, you can you can have thousands of people that do the same job, but how they do it is very different, and that's what makes it unique. And that's what attracts my customers to me versus their customers to them. When you start to think about the your exit or your transition, which is a better approach, think of it as unique to you. But number one, get the right advisors in there. Don't don't settle. Don't settle for, you know, you working with with a lawyer who's also a CPA doesn't diminish the lawyer. The corporate lawyer you've worked with, uh, your whole career doesn't diminish them at all. It doesn't mean I'm not going to work with them anymore. It just means I'm dealing with a lawyer who's actually has experience in this. Right. And I need them to do that particular job. Or. Same as if I was going to build a house. I need somebody who's going to be able to understand concrete. My carpenter is not going to be that person. Sharon: [00:54:48] Okay. I think that's perfect. All right. So how do our listeners reach out to you if they would like to reach out to you? And are you can they reach out to you from anywhere, like, even across Canada? Lori: [00:55:00] Absolutely. Yeah. We we work. We work coast to coast and into the territories. So you can reach out to us any time. It's benefitscom. Or they can email it's Laurie l o r I'm p.com. Sharon: [00:55:18] Well thank you so much for joining us again. I like I say I love business and I love your intake on it. Lori: [00:55:23] Thank you for the opportunity. This is a wonderful topic to to talk about. Sharon: [00:55:27] Well I think as a business owner you don't totally you just jump in, I think I don't know, I did I'm pretty sure a lot of us do the same thing. You just jump in and hope for the best and you're not really thinking about the end goal. But it comes fast. And anybody that's in their 20s and they're just starting a business 57 is fast, so just focus on that anyways. It's fast. Lori: [00:55:47] Well and think about how to get out. Like, you know, thinking about it is is the first step. You can think about it in your 30s, even if you don't plan to get out until your 50s or 60s. Think about it. Start to write things down. What do I want to see? It's not. It's not really much different, Sharon, than having a will, right? You have a will in your 20s. It's going to be very different from the will that you make in your in your 50s right. The the uh you know my assumption that my kids would never want to be involved in my business I guess has proven wrong. Right, right. I thought I thought they were smarter than me. But you know, they are smarter than me and they will bring something unique to the business. So what I thought about ten years ago where my business was going to go is very different now, but at least you're thinking about it and you're able to pivot. If you don't think about it, you're not able to pivot. Sharon: [00:56:44] Yep. So if somebody was interested more in that selling to your team, that's something you can help them with, right? Lori: [00:56:53] Yeah. I can point people in the right direction for the advisors that that are are that are working in that space. And so I belong to what we call being, which is the business exit advisor network for here in Canada. And so we're a bunch of CPAs that come together once a month, and we talk about all these different topics from the perspective of each of those experts. So if there's somebody that is going to be looking at, say, employee ownership and what that looks like, I would call on my good friend John Stevens and I would say, hey, John, would you have an initial conversation with Sharon? She's interested in learning more about employee ownership, right. If you're looking for a business broker and wanting to know, well, is there really any buyers out there for my style of business, I would have you talk to Jeffrey Cullen. These are all members of bean, but they're also CPAs, certified exit planning advisors. And we come together because it's not competitive. It is collaborative. Sharon: [00:58:03] Interesting. Lori: [00:58:03] And that's really important. Sharon: [00:58:05] I think you need to hook me up with John Stevens. I'd like to do a podcast with him. Lori: [00:58:09] Well, I will absolutely provide an interaction for that. Sharon: [00:58:13] Thank you. Okay, I'm going to sign off because we are now almost up to an hour already. So thank you for helping us see that. An exit plan is really just a great business plan. It is always a pleasure chatting with you and getting to know you more. Lori. It's. We met at WaPo and we just connected instantly. So I really appreciate you coming back and helping us over here. For our listeners, please feel free to reach out to Lori. As you can tell, she is a wealth of knowledge and as we discovered, sooner is better than later. Also, we ask that you subscribe, leave a review and share our podcast and if you have an area of expertise or real life learnings that could help our listeners, I would love to hear from you. Kindly reach out to Sharon at promo. Thanks everybody for listening.