Your Exit Plan: The 3 Inarguable Reasons to Start NOW
What is Your Business Exit Plan? If you’ve ever done a business plan for the purpose of raising capital, one of the key questions is “What is your exit plan?” Many business owners think that question is self-serving, intended merely to let the venture capitalists figure when and how they will get their return on investment. In truth, however, that question is far more important. A business exit plan is a strategic plan with an end date. Putting a time frame on your plan, and defining the goals to be achieved by that date, creates a future-focused mindset for the owner. It controls and reduces your tendency to prioritize daily firefighting over long term thinking. It provides you with a yardstick to measure progress. Most importantly, it affects your thinking about almost everything in your business. Here are the 3 inarguable reasons why you should start your exit plan now. Reason 1: It’s Never Too Soon In my years of working with business owners, I’ve helped many transfer their businesses to family and employees. I’ve worked with others who sold their companies to a third party for tens of millions of dollars. Surveys show that many owners have regrets afterward. Others happily move into the next phase of their lives or careers. A few have seller’s remorse. On the other end of the spectrum, some come to the realization that they hated their business owner lives for years. The majority feel that they received a reasonable reward for monetizing their work of decades. None of them. NOT ONE of them has ever said “I spent too much time planning.” It’s likely that the sale of your business will be the most important financial event of your life. There are a few lucky owners who have wealth outside or beyond the value of their businesses, but for most of us monetizing those decades of effort is the culmination of our working careers. If your exit plan is to transfer to family, you can choose vehicles like Grantor Retained Annuity Trusts (GRAT) or Self Cancelling Installment Notes (SCIN). These may have to be in place for years to substantially reduce or eliminate taxable proceeds for you and/or your heirs. In a sale to employees, developing the documentation that shows their assumption of managerial responsibilities over time is a basic qualification for SBA loan approval. That, plus developing their “down payment” equity, punches the ticket for you to walk away with your proceeds in pocket on the same day that you cede control of the company. In a sale to third parties, the condition of the financial markets at your time of exit will decide the size of your multiple. Preparing your business with due diligence in mind, and understanding the different classes of buyers, allows you to better choose the time, method, and proceeds of your transition. Although it is difficult to time the stock market, shifts in acquisition multiples take much longer to develop. Being prepared allows you to enter the market while prices are at a peak. Five years is reasonable planning time. Ten years is better. There is no time frame that’s “too far out” to be thinking about your exit. Reason 2: It Changes Your Thinking It’s difficult to run a business without being reactive. Employee issues, customer problems, and vendor policies can shift your priorities on a daily basis. When your exit plan is in place, you have a broader perspective. Every decision you make is now in the context of “Does this support my bigger picture?” There are numerous examples. Hiring: If your exit plan is to pass the business on to your children, then hiring becomes a support function. You look for employees who can fill in areas where your offspring lack the necessary skills or don’t have an interest. If you plan to sell to employees, then you are looking for a Successor in Training (SIT). That is someone who shares many characteristics with you. If you are selling to a third party, you want a Second in Command (SIC). That is someone who compliments your strengths, and who can be contractually incented to stay on the job with a new owner. Securing a management team adds considerable value to any company. Lease vs. Buy: If your plan calls for selling to someone who is likely to relocate the company, or who already has your production capabilities, you may want capital equipment to be easily disposable. A competitor or much larger acquirer may want to leave the equipment out of the transaction. In a Main Street business, you may choose to have a strong tangible asset base for an entrepreneurial owner to use when obtaining acquisition financing. Real Estate: Should you own your building? Some buyers (say a publicly-traded acquirer) prefer to lease space. In that case, owning your building could provide a post-transition income stream in your retirement. On the other hand, a relocated company could stick the owner/landlord with a special purpose building that requires significant remodeling to be rentable. These are just a few of the decisions that are better made in the context of your long term plan. The decisions you are making in your business today all have lasting implications. Reason 3: A Plan is not an Action If you are taking a long trip, you likely determine the route before you start out. If it is complex, you may print out the directions. Nonetheless, you are still likely to use a navigation app to alert you to problems along the way, like traffic jams or construction. But everyone understands that printing out the directions isn’t the same as beginning the journey. You might take that step days or even weeks before actually getting into your car. It’s the same with your exit plan. Choosing your time frame and preferred method of transition isn’t the same as making it happen. Writing it down is a key component of preparation, but it shouldn’t be confused with implementation. Starting Your
The Foundation of Everything
Take a step back and look at your company. Do the people seem genuine? Do you feel as though they are making significant progress in reaching the organization’s goals and ambitions? Do you believe in your people, your process, and your mission? How do you foster trust within your company, especially during a crisis like COVID-19? Trust has three foundational components, like a 3-legged stool. Each leg is essential and depends on the others to work together. If one leg breaks, everything collapses. The same goes for trust if one of the components begins to wobble— trust is in jeopardy. The three foundational pillars of trust are authenticity, logic, and empathy. Authenticity “A true leader is one who is humble enough to admit their mistakes.” – John Maxwell Did you ever experience being in a conversation at work and feeling that the person you were talking to was not being completely honest with you? Our human nature can quickly zone in and identify those not being real with us. To avoid a problem with authenticity, BE YOU – ALL THE TIME around EVERYONE – Voice your thoughts and opinions, respectfully. Pay less attention to what you think people want to hear and give more attention to what you need to say. For companies to emerge from this crisis successfully, all ideas need to be explored to reimagine and decide the best strategy. Leaders need to allow the office to be a safe place for everyone to speak when creating a culture of trust. A leader is not expected to know all the answers— welcome comments and ideas. Allowing an environment for fresh perspectives helps build an authentic team and ultimately leads to trust within the organization. Logic “When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion.” – Dale Carnegie Most problems concerning logic are not about the quality of the logic, but about the ability to communicate the reasoning in a decision-making process. Likely, we all have sat in team meetings where one person dominates the time by taking us on a long journey through their experience and often is interrupted and never makes a definitive point. Many people like to tell a long story before getting to the point. To communicate logic clearly, start with your point in a crisp, clear sentence and then make your supporting statements. This approach allows for greater clarity and prevents you from being interrupted before making the critical point you needed to make. If everyone in an organization has clarity on the decisions, real progress can be made, and trust becomes foundational. Empathy “Empathy is simply listening, holding space, withholding judgment, emotionally connecting, and communicating that incredibly healing message of you’re not alone.” – Brené Brown Would your employees say that management is listening to them? Not just hear them, but attentively LISTEN. The best listeners provide eye contact and lean forward in the conversation with no distractions (put away the cell phone). Listening is critical for building empathy. For most companies, this is the leg that “wobbles” due to demanding schedules. However, during a pandemic, this is a critical time to listen. Each of us is experiencing this crisis differently. We are all facing unique circumstances and challenges. Listening to your team to better understand them and their situation fosters a healthier relationship to build trust. Trust is the foundation of everything we do. It can be earned and built. It can also wither and break. If a company develops and operates in a culture of trust and transparency among all stakeholders, it can make unprecedented progress in reaching its goals. With a foundation and culture of trust, companies experience better productivity, enhanced morale, lower staff turnover, ability to handle challenges, willingness to take risks, enhanced creativity, optimism, teamwork, higher client satisfaction, better company reputation, and higher profitability. Be real, start with your point, and know you are not alone. It works, trust us. Does your organization want to learn more about building a culture of trust that can help you to unprecedented growth? You’re not alone, and we are here to help. SOURCES: Unleashed: The Unapologetic Leader’s Guide to Empowering Everyone Around You, By Frances Frei and Anne Morriss (Authors) The Five Dysfunctions of a Team, By Patrick Lencioni (Author) The 21 Irrefutable Laws of Leadership, By John C. Maxwell (Author)
Succeeding in a Virtual Interview for Candidates
Tips you can use when being interviewed virtually. Thanks to the modern workforce enjoying the freedom of choosing their work hours and office settings and also the increased availability of telecommunication mediums, many organizations and individuals are relying on virtual meetings and interviews when exploring new candidates to join their company. Doing so can limit feelings of connection and develop uneasy feelings during an interview. However, when done correctly, virtual interviewing can establish solid rapport, increase the speed of the hiring schedule, and improve the onboarding experience. The following is a tutorial to make sure that you get the most out of your upcoming virtual interview. 1. Are you a procrastinator? No? Now is not the time to start. Get familiar with the software you will be utilizing. Test your speaker, microphone, and video. Make sure to close out of other applications to enhance the speed of your operating systems. Conduct a run-through with a peer to learn the program’s capabilities and gain feedback. If you do encounter issues where a glitch occurs and you can’t hear the response, be direct and honest. There could be a connection issue, so wait for the audio to resume and ask them to repeat what they said. It is essential to be upfront and obtain the answers necessary to make a thoughtful employment decision. 2. People like pretty Is it a coincidence that the Home & Garden Channel (HGTV) generates over $1B annually and is the fourth most-watched network behind three news outlets? Nope! People enjoy settings that make them feel a sense of comfort and organization. Refrain from overly distracting artwork, display items, and TV screens. If video conferencing from an office, that is great. If not, feel free to move things around to allow for a well-lit, neutral area. While preparing your environment, take note of where your fidget items are. Leave the stress ball in the drawer. Put the metronome in the closet. Make sure you silence notifications on your phone and the device that you are using for your interview. Your focus should be on the interviewer. As such, you should have notes and questions on the device you are using. Tip: This will allow you to maintain eye contact rather than looking down and reading from a notepad. 3. Look in the mirror When interviewing virtually, there is no checking in with the receptionist or lounging in the waiting room with other candidates. Before the call, take some time to remind yourself why you are interviewing for this role and organization. Look yourself in the mirror and get motivated. While doing so, make sure that you are well-groomed and well dressed— FROM HEAD TO TOE. Wearing a business appropriate top and sweatpants bottom is a dangerous game to play. Not only will you not be mentally stimulated wearing sweatpants, but it will also promote poor posture, and what if they ask you to stand up and show them the picture of you and your friends at the Grand Canyon up on the top shelf behind you? Nobody wants to see a half-dressed person in an interview. Enjoy the time you have with your interviewer and get to know them – they could be virtually interviewing many candidates that day. Separate yourself by following these tips and appropriately sending a thank you note of some kind promptly after the interview. Putting this tutorial into action may not have you walking out of the building in a blaze of glory, but it will bring a big smile to your face when you walk away from your camera. Click here for our Candidate Resource Center for more information and tips on resume writing, interview preparation, and more to help candidates on the next step of their career journey.
Conducting an Effective Virtual Interview
Tips you can use when interviewing candidates remotely. As today’s workforce moves from traditional offices to remote work, many businesses are adopting a new way of conducting interviews, and in some cases, even onboarding. While this trend is due in large part to the COVID-19 crisis, there are many positives to moving more of your interview process into a virtual format. Virtual interviews are a great way to work around scheduling conflicts or limit face to face interaction due to social distancing. Did you also know: Five minutes of live video interviewing is considered equal to a 200-question written assessment. Data is suggesting that video interviewing is six times faster and more productive than a phone interview. 93% of communication is non-verbal. 57% of candidates prefer live video interviews. (SOURCE: LinkedIn) We have compiled a few useful tips to help you navigate the process of conducting a virtual interview. 1. Test Your Tech Get familiar with the software you will be utilizing. Test your speaker, microphone, and video. Make sure to close out of other applications to enhance the speed of your operating systems. Conduct a run through with a peer to learn the program capabilities and gain feedback. If you do encounter issues where a glitch occurs and you can’t hear the response, be direct and honest. There could be a connection issue, so wait for the audio to resume and ask them to repeat what they said. It is essential to be upfront and obtain the answers necessary to make a thoughtful employment decision. 2. Create a Neutral Space For a professional atmosphere during the interview, it is vital to find a quiet place, free from distractions. Make sure you choose somewhere that people will not be wandering around in the background. Turn off or mute your phone and silence all notifications to give your full attention. An appropriate background should be neutral but not dull. You can still show some personality outside of a plain white wall by showcasing plants, bookshelves, or diplomas and awards behind you. Depending on the software, you can also choose or create a virtual background that is not distracting. 3. Lighting and Angles For a clear video, it is best to utilize natural lighting— facing you as much as possible. If the natural lighting is not possible, considering adding a lamp to your desk or a ring light to the top of your laptop. A well-lit subject exudes trust and friendliness. Have your computer placed above eye level and tilted slightly down. A quick fix is to use books to elevate your surface. This placement prevents the camera from being directed at your neck and nose and appears more natural like it would in a face to face conversation. As in a regular interview, sit up straight and make eye contact with the camera. Body language still matters to emanate a professional demeanor. 4. Keep Your Candidate Informed Notify your candidate ahead of time that the interview will be virtual. Send a calendar invite with a link to the software you will be using and instructions so they can practice ahead of time and test their tech. In the email, be sure to include who will be involved with the interview, their title, and the role they play so they can research ahead of time to prepare. This will allow candidates to become comfortable with the platform and ensure a smooth interview for both parties. 5. Showcase Your Culture During a virtual interview, candidates are not always able to view the office space and coworkers that they could be working with in the future. Consequently, it may be more difficult for a candidate to get a feel for the company culture. To showcase this, spend more time preparing a presentation to express the company’s mission and vision. You can also send the candidate employee testimonials and links to social media posts that capture the essence and spirit of your company. There are software and video options available for you to provide virtual tours of office and production facilities. This investment usually offers a healthy ROI and help you complete a hiring initiative from start to finish in a virtual format. 6. Remain Positive Virtual interviewing can be a first-time experience for you as well as the candidate, and there may be a few fumbles with the transition from in-person interviews to virtual. You are both working through this together and making the best out of the situation. Remain positive and express appreciation to the candidate. After this experience, you may find you enjoy virtual interviews more than other forms. Whether you use Teams, Zoom, Google Meet, FaceTime, or one of the many other video platforms, find the one that works best for your company and allows you to assess body language and professionalism. Virtual interviews also allow for more flexibility in scheduling across locations and time zones, which can help attract more qualified candidates from a broader region. Along with making the right employment decision in this new era of social distancing and stay in place, virtual meetings also have the benefit of lowering travel and venue costs, all of which are beneficial for your bottom line.
Your People and Planning for the Reset
There is an old African proverb called The Fable of the Lion and the Gazelle. To survive every day, the lion must catch the slowest gazelle. For the gazelle to survive, it must outrun the fastest lion. The message for both, “When the sun comes up, you’d better be running.” Regardless of industry and how positively or negatively positioned a company has been through the COVID-19 crisis, we face a new post-pandemic business normal to varying degrees. We defer to healthcare experts and government leaders as to timing, but as a business leader, you should be planning now for a successful restart of your company when the sun finally comes up. According to a recent article from McKinsey & Company, there are “five horizons” or 5 R’s that leaders and companies need to think about and act upon during this time and beyond: Resolve, Resilience, Return, Reimagination, and Reform. We are going through the Resolve and Resilience stages now (cutting costs, monitoring cash flow, retaining or transitioning employees, preparing to return, and planning to normalize operations). All of us have been inundated with content regarding the current situation. However, what about this new post-pandemic period applies to your people? As business leaders, our task is now to manage an efficient restart, a comeback in stages, and begin running toward a better future. The way to make that happen is to focus on your workforce through planning, communications, and deciding whom to bring back and when since it is your people who will determine the outcome. Planning for the Return In a recent survey by Fishbowl, 80% of workers across the country do not feel safe going back to work if their state were to reopen immediately. While the data varies by area, these are startling numbers that point out that there are still many unknowns relating to widespread testing and a vaccine. Regardless of the size of your company, you could also face litigation if any employment laws are broken. What is an employer to do? Returning after such an abrupt forced shutdown will be challenging, especially with a fearful and reluctant workforce. To overcome these hurdles, three areas of planning will be crucial: business and operational considerations, communications and timeline, and then a plan to return to the workplace. BUSINESS & OPERATIONAL CONSIDERATIONS Refer to plans that you may already have in place, such as your original business plan or strategic planning you may have engaged in before the pandemic to serve as a guide. Working with an HR consultant may help in developing Disaster Recovery and Infectious Disease Control Plans, as well as a plan for normalizing operations. Review your financials, develop a 13-week cash flow forecast, and determine your priorities by function and location. You may have previously had an annual 1-3-5 year plan for your business. Now, focus on a 30-60-90 day plan. If your HR Team has been working remotely, they will need to be one of the first back to the office to assist in staging the return of your workforce and ensuring compliance. COMMUNICATION & TIMELINE PLANNING Perhaps noted author, John Maxwell, put it best during a recent webinar addressing leadership during COVID-19: “The best thing we can do right now is not to do business, but just do relationships.” As a leader, continue to stay in touch with your people and keep them focused during this trying time. Communicating the return should be positive, but also respectful. In this phase, determine a timeline for bringing back teams in order of priority. Build a communication plan for employees returning onsite denoting the reasons why, work schedules, expectations, safety measures, and explore options for continued remote work if possible. While portions of your workforce may already be remote, or able to WFH, it will also be essential to address furloughed and laid-off employees. Each is a different category that requires a separate communication plan. Furloughed employees will be more accessible, as they never left your system. Laid-off employees you choose to bring back will have to be rehired, onboarded, and put back into your system. This period is also an excellent opportunity to top-grade your talent (more to follow). RETURN TO THE WORKPLACE & DAILY OPERATIONS Do you have the staffing to handle the process and administrative functions in your operation? This phase is where you can get detailed in terms of how your people will enter and exit the facility, temperature or other testing procedures (many mobile temperature check methods are available), having suitable PPE on hand, signs for social distancing, personal hygiene, and practices for overall facility cleanliness and sanitation. All are to reduce fear and meet new OSHA, CDC, and state requirements. Prior training and instruction on these new procedures will be crucial as your employees return. Reimagining the Future: Topgrading Your People The COVID-19 crisis will reveal problem areas in your business, but also opportunities to improve. Perhaps the most critical ingredient to a company’s success in this new era will be the people we surround ourselves with as we embark on this journey. Consequently, we have been provided a painful yet unique opportunity to improve the quality of talent driving our business forward. The wife of one of our BEST Stakeholders manages a retail store in a local mall. She had the unfortunate task of laying off her people during the shutdown, but she has kept in touch with her team and intends to bring most of them back when they reopen. However, there is one who will not be invited back due to poor performance and bad behavior. For others, she will promote and increase their hours when they reopen. She has been topgrading her people. Topgrading talent is an interviewing philosophy that seeks out the highest quality workforce by ensuring that acquisition and development focus on the most talented, well-rounded performers, as well as those with a cultural fit. Click here for a useful article on how to “Topgrade your people for post-pandemic success.” While this challenging time may appear to be an