Newsletter: December 2010
We thank you for contributing to a wonderful year for us. We are grateful and wish you a very happy and healthy year to come!
Are your taking your "Lessons Learned"?
An annual activity as part of your commitment to continuous improvement is a year-end personal review and reflection. Have you taken the time to really think about and identify how things have gone for you and your business in 2010? And how do you know? What will you do more of, less of, or differently in 2011 to sustain and grow yourself and your business? If you have not taken the time to do so by early 2011, you are missing out on a critical and powerful opportunity for "lessons learned".
Unfortunately these fundamental and important questions are commonly overlooked, or worse, neglected. Whether it is due to lack of awareness of the value of this process, or the belief that you are doing fine and don't have time for this; continuing to do the same this year will produce the results you produced last year. Fearing the answers and not wanting to take responsibility to address is another issue for people; however, this is a huge business risk, and a failure indicator. If you don't take the time to ask and thoughtfully respond, you rob yourself of an easy and convenient way to garner valuable ideas- both simple and complex - to position yourself and your company better for the New Year. In the current market - still calibrating to recover in many areas, there is a fine line between failing and thriving. Without thoughtful intent and candid discovery, your risk for the former increases.
Currently we see many changes and trends enhancing the need for awareness, and urgency in intentional planning:
- Health care reform and the impact it will have on individuals, businesses and communities;
- Baby boomers looming retirement (or non-retirement due to inadequate savings for retirement);
- Government's inability to continue to support governmental services and entitlements such as education, social security, Medicare, Medicaid;
- Environmental regulations and green technology;
- Internet force (big companies aren't so powerful anymore representing a fundamental shift in competition based on the internet).
These are but a few examples of the changing marketplace landscape. They will all impact you and your business either directly or indirectly. And what have we missed that will have an impact on your business in 2011: competition, recruiting new talent, access to capital?
The biggest mistakes we are seeing are: You can't recover and grow by cutting; no or low sense of awareness about market conditions; low or no sense of awareness about how your business is really performing; and, no or low sense of urgency equaling complacency. These mistakes will incinerate your chances to succeed and grow - either slowly or dramatically.
As mentioned last December, we strongly encourage you to conduct a reflective assessment of what you've accomplished and what's left over as a way to help you learn and plan for 2011. This process will not take much of your time (30 minutes max) and if the questions are answered honestly and thoughtfully, we believe the results will serve as a foundation for further growth and development. Here are the questions.
- What were your major accomplishments in 2010?
- What did you accomplish in 2010 that you can build on in 2011?
- What didn't you accomplish but intended to that needs to be modified or abandoned for 2011? (re-basing adds relevance and focus and clearing/releasing of the no longer relevant and opens space for new focus and priority activities)
- What didn't you accomplish because you procrastinated and now it should be a priority?
- What worked well for you last year? Why?
- What didn't work well for you this last year? Why?
- Lastly, what attributes would represent the ideal (but realistic) state for you and your company next year?
We recommend that you write down your responses so you can use it as a reference for alignment with your overall business and professional goals, for strategic visioning, and to have as a comparative/quick guide for next year's reflective assessment. It is a leader's role to understand what's worked, what needs to be changed, modified, or released, and which direction to point resources for best results. It doesn't have to be a difficult and complicated process. What's most important is, are you sincerely asking the questions and using the honest answers to your and your business's advancement?
Guest Article: Is Your Business At Risk?
By Adi Ringer, CFP®, ChFC, http://www.bridgepointcustomstrategies.com
Most business owners have a long term goal in mind. Some have it more detailed than others, but running a business is usually a means to an end. How can you know if you are well prepared to accomplish your goals? Here are 8 questions you should answer:
- Can outside pressures force you to sell your business? (For example divorce, debt, non-active partners, etc)
- Can competition or economic downturns force you to work longer?
- Is the value of your company subject to change from outside pressures?
- Are you paying too much in taxes?
- Do you have a clearly written management or operations plan for someone to step into?
- Do you know if you will you have enough, after taxes, to accomplish your personal goals when you sell your business?
- Are your trade secrets and unique value drivers protected?
- Do you have a backup plan in the event you can't sell or get out of your business they way you thought you would?
If you answered yes to any of these questions, you should know you're not alone. According to a PriceWaterhouseCoopers survey, the number one reason private business' sales fail or only partially succeed is a lack of planning on the sellers part. If you're thinking: "I did plan, I met with consultants and attorneys and CPA's. Now what?"
If you did, congratulations on taking great steps towards protecting and growing your business. But did anyone ever mention having an EXIT PLAN? They probably did. Any business needs to have an exit plan ready for every stage of the business or unexpected event if they want to be able to leave the business on their terms whenever they are ready and retain control under any circumstance. A business exit plan is a comprehensive planning approach aimed at maximizing and preserving the value of a company at the time of exit while minimizing taxes, risks and unintended consequences associated with the transfer, in order to meet personal financial goals. This process encompasses the work of attorneys, CPA's and other advisors and consolidates the different goals into one cohesive plan aligned with the owners' personal objectives.
Why should I think about this now?
Because having a clear vision of what you want for your business down the road will help you make decisions today. Business owners with a clear vision for the future, including how they will exit from the business, are more focused and motivated and therefore can be safer and more successful in the short run. The exit planning process needs to start well in advance of the planned departure, typically 2 to 10 years before, to allow time for the implementation of strategies necessary to accomplish the goals.
A typical business exit plan will address the following issues:
- Defining in clear terms the owner's objectives
- Analyze the availability of existing and future financial resources
- Establish an accurate and realistic valuation of the company
- Establish contingency plans to protect the value of the company
- Determine if the company is sellable and to whom
- Identify any emotional hurdles to overcome between family members, partners or investors
- Growing the value of the company and how
- Determine the consistence between the business succession objectives and the Estate objectives
As entrepreneurs and business people, it's easy to get lost in the running of the business and we find ourselves too often skipping the important things to take care of the urgent ones. But when it comes to the protection of your hard work you can't afford to leave the future to chance. Here is another way to look at it: When it comes to your financial security, do you want to do fire prevention or fire fighting?
Adi Ringer is a Certified Financial Planner® and Chartered Financial Consultant specializing in Financial and Exit Planning. Adi is located in San Luis Obispo, CA. and is the owner and senior strategist of BridgePoint Custom Strategies. Adi is the creator of the Reverse Business Plan®, a comprehensive process for combining business and personal objectives designed to grow, protect and ultimately exit a business while accomplishing personal goals.
For additional information, he can be reached by e-mail at or by phone by calling 805-574-1005.
Healthcare Corner
Here's To Your Health
Our Newsletter message this month invites you to take the time to thoughtfully review 2010 and to plan for 2011. This is a pragmatic business strategy.
But as you do that, we encourage you to add another component to your planning — you and your health. In our previous newsletters we talked about taking responsibility for your health. And why is this important and why do people (perhaps you) ignore it? Perhaps you are too busy, perhaps you do not want to spend the money, or perhaps you don't truly believe that good health makes a difference in the success of your business. Oh there are so many reasons, all of which are excuses and all of which do not serve you, your family, or your business well. Frankly, they make no sense at all.
Think about it for a minute. You are dedicated to running, leading or at least being part of a successful business. You are committed to its growth, to your employees, to your customers and to your family. (For some, commitment may even border on the obsessive.) So far so good. Now how can you possibly accomplish this if you are ill, tired, stressed, depressed, or anxious? You can't at least for long. So you are now faced with sabotaging what's so important to you (being a success) by ignoring what is so critical to you to accomplish this — your health.
Good health habits not only save your life, they can energize your business. Energy Leadership, which we discussed in our September 19, 2010 Blog, is more than a new age gimmick. Energy Leadership is an often-overlooked critical variable in management. Just think about how you react to people (and bosses) who have low energy and seem distracted and unfocused. Poorly as most people do. So why would you choose to emulate this behavior?
As you plan for 2011, we encourage you to add a self-care plan that includes:
- Preventive health
- Annual physicals
- Preventive care diagnostics
- Mammography
- Colonoscopy
- Cholesterol screening
- Diabetes screening
- Other diagnostics your physician may advise based on your overall health and family risk profiles
- Regular Exercise (ideally both cardio and weight training)
- Good nutrition (which includes necessary hydration — water intake)
- Adequate Rest (for adults, ideally we are striving for 8 hours)
- Time away from the business to recharge and reenergize
A great plan not executed is useless, as it is an unrealistic plan. And a great plan that can be executed but isn't because of your inability to muster the energy or falters because of your poor health is tragic!
So our reminder to you as we close out on 2010 — give as much attention to you as you do to your business.
Happy New Year!
