by Susan Hileman, Strategic Business Advisor, NWIRC; Galliard trained Family Business Advisor
One of the most frequently asked questions is, “When is the best time to start exit planning?” Forbes Magazine advises at least 10 years to truly leverage the opportunities available to maximize the value of a business. There are strategies that can help, but often it simply takes time for those strategies to be put in place and to work.
In October and November 2019, the NWIRC sponsored a 2-part Exit Planning Workshop in Erie. In addition to the nearly 35 attendees, there were several presenters who provided critical information to consider when transitioning out of a business. The most positive comments were about the manufacturing panel discussion. Presenters from Erie, Titusville and Warren each represented a different perspective and presented their best advice. I’d like to pass the highlights along here.
Ryan Betts from Betts Industries in Warren noted, “The best thing we did was ask for help. We knew we were not going to find the critical piece for our succession plan in the labor pool that we have access to. This is where recruiting the help of a consultant was critical.” So, Advice #1 is: Seeking assistance from outside your business is important. Whether it’s offering a fresh outlook on your business operations or providing options based on experience working with other manufacturers, outside consultants often bring an expertise to the table that simply can’t be found within the organization. As Ryan related, “At the end of the process, we were able to select a candidate that has exceeded our expectations … 18 months later, we are a much stronger organization due to this decision.” Ashleigh Walters, President of Onex, Inc in Erie noted, “Start the process early.” The longer amount of time you can give yourself to plan, the better you’ll be prepared should you need to change the course of action because of a downturn in the economy, a loss of major customers, change of heart for the person chosen to succeed, or other obstacle. Matt Lucco, President of Precision Profiles LLC in Titusville also noted, “Exit planning needs to begin the day you start or acquire your business – or the day you are promoted to the top leadership position.” So Advice #2: Start early. Matt also shared, “Exit planning can assist with the identification of weaknesses in your business that may not otherwise be found (which, when addressed, can strengthen your business).” And that’s Advice #3: Recognize that exit planning is not just for exiting your business—but growing areas of your business before you exit as well!
Throughout the discussion, a common theme among all three manufacturers was the importance of a strong organizational culture. To position your business for the best chance of success in the future, focus on creating a strong culture of cooperation and respect now. It will pay off in terms of employee morale, financial performance, great customer service and a stronger bench-strength of key leadership in place. In my opinion, out of all the information covered at the Exit Planning sessions, this was the golden nugget. Creating a collaborative culture in which every employee understands the company’s mission, vision, core values, and believes they not only contribute but are a significant piece of the puzzle is a definite win for everyone!
It’s never to early too start exit planning, to reach out to outside resources for help, to strengthen the business by growing value, and to recognize the extremely critical part ‘culture’ plays. I would have to agree with Matt, “Implementation and execution of exit planning strategies can positively impact the value of your business.”
The NWIRC thanks the other presenters for the program, including: Ameriprise Financial Services, Decision Associates, Knox Law, McGill Power Bell, the PA Center for Employee Ownership, and PNC Bank.