What?s Your Exit Strategy? ?There are two kinds of success. One is the very rare kind that comes to the man who has the power to do what no one else has the power to do. That is genius. But the average man who wins what we call success is not a genius. He is a man who has the ordinary qualities that he shares with his fellows, but who has developed those ordinary qualities to a more than ordinary degree.?Theodore Roosevelt Those who have followed my writings and ideas know that I coach, mentor professionals in the mortgage, real estate and sales professional through a business model called ?The PROS Business Model?. The ?P? is for growing a ?Perpetual Business? no matter what the market and economics dictate. The ?R? is for creating a ?Referral Based? business?by creating Loyal Clients for Life and Professional Referral Partners as an extension of our Sales Force. The ?O? is Operations and Systems?. You must have these to run the company or your clients will go somewhere else. Lastly, the ?S? is making your business ?Saleable? which we will focus on in this writing. You must be a Visionary Visionary your exit strategy requires planning and long-term focus. As a sales professional, what do we have to sell??long term customer relationships, excellent products and services?all of these things have value. How about the ?Brand Name? that we established. Years ago when I started planning an exit strategy, my origination team was called the ?Tom Ninness Team of Cherry Creek Mortgage?. I thought, ?Who would buy this company with that kind of brand?? I did research, paid a marketing company and came up with the ?Mortgage Dream Team?. All documentation, correspondence and marketing material have our brand on them. My name had to fade away, and the Mortgage Dream Team needed to be the focus. Like any idea, the brand must be prepared and marketed properly. What is the Potential Buyer Looking For? In a service related business, there are several measurements that the buyer will be looking for. Detailed profit and loss on revenue and expenses are important, but they will also look at your brand strength, operations and systems, along with the strength and stability of the market the business serves in. When it comes to your operations and systems, the buyer will be looking for two things: the technical and the day-to-day activities that need to be carried out. Manuals need to be in place for the daily operation. The new owner does not want to be put in a position to ?figure it out?. You must have your operations and systems fully dialed in and supported or you will not have a saleable business. What does the buyer need to know? Dave Mattocks, author of the book, ?How to Prepare Your Business for Sale? says that there are five elements that need to be in place to have a valuable and saleable asset that will amply reward you for the years you?ve invested in time, money and effort. Here they are: 1. Is the business profitable? Does it earn an acceptable return on your investment in time, resources and effort? 2. Would your business still be profitable once you leave it? If the answer is no, you don?t own a business, you have a job with overhead. You have to demonstrate your business will continue to be profitable after you exit or what you are really selling is your job that has expenses tied to it. 3. Are you able to hand your buyer a set of operational procedures to follow and achieve the same results after a short time of training? 4. Where are your customers coming from? Will they remain clients after you leave? Where will the new ones come from? How can the new owner grow the business? If you can show a marketing plan that the new owner can follow, this will help answer the buyer?s concerns. 5. How is the business controlled? Will the employees that are currently supporting the business continue to stay on? You must have a continuity plan for the new buyer or they will fail and chances are, you won?t get paid per your sales agreement. Is it too early to think about an exit strategy? My personal opinion is no. I have at least another decade at what I?m doing now and I started planning my exit strategy about fourteen years prior. To create a successful exit strategy, I new that I had to successfully generate profits year after year. If your company is not positioned for an exit strategy, then what are your plans when you leave it?pass it on to your family, merge it with another company or group or just call it quits and call it a good run while it lasted? It?s really your definition of success. Mine is to create an annuity after all the hard work, relationships that I built and the operations and systems that I put in place. Make a decision today to begin your exit plan. Since none of us can predict the future, tomorrow may be too late. I hope this week?s letter will give you something to think about. I look forward to your comments and encourage you to share your strategies about this important aspect of our businesses. To your success!! Tom Ninness is the Vice President/Regional Production Manager for Cherry Creek Mortgage in Denver, CO. He is also the President of Summit Champions, Inc. and creator of the ?The 90 Day Journey to Your Sales Success?, a powerful 90 day action plan for the sales professional. To learn more about The Journey and Summit Champions, go to: www.summitchampions.com or contact Tom at [email protected] Office: 303-840-0753. Mortgage Originator License #100018945
