Value Acceleration

10,001 Hours is part of a cottage industry called “Value Acceleration”.  Value Acceleration, in its simplest definition, is a business strategy focused on defending and improving owner’s income and company value.  The niche of the niche we focus on are business owners who are looking to retire, or “exit” in the next 2-5 years.

When I first went through the process, over a decade ago, it used to be called “strategic planning”, so I’ll probably reference it that way a couple times just out of habit.  Like I said, I started the process about a decade ago, and I have another 20-25 years before I retire, not 2-5 years, so you definitely don’t need to be near retirement to see the value in strategic planning.

Strategic planning, or, Value Acceleration if you prefer, leads to sellability.  Yes, making  your company worth more means someone has to pay you more to buy it, yet it is still more sellable.  And the key to making your company sellable is to make it transferable.  More on transferability later, but keep that in mind.  You want to sell a job, not a glorified business – you can’t transfer a job.

But first, why I wrote the book, Build It, Sell It, Profit and why 10,001 Hours serves business owners.

I am in my late 40’s and BMM has been around for about twenty years.  I’ve been investing for about 30 years.  Over those three decades, you start a bit of a mental folder of local, iconic businesses.  Names all of us might know.

We are a competitive bunch here at BMM and 10,001 Hours, and we celebrate when a new client joins the our family.  So when the phone rings and it’s a business owner of a company that I’ve known of for the last 30 years, and they say they sold their business and want to talk to us about investing the proceeds of their sale, I’d get excited.  We’d celebrate the potential of the businesses just based on the expected size of it.

Then the person who just sold their business would come in.  They realize that they are in a new phase of their life and need help converting the cash flow from an illiquid asset – their business- to income from a liquid asset – an investment portfolio.  And I’m thinking, “this is going to be easy; the after-tax check is probably $5 or $10 million. I can build a portfolio with 100% probability of success with that.”

But then the check turned out to be a fraction of that.  Sure, the win for BMM didn’t feel as big.  But much more importantly, the client’s financial future was much less comfortable –or as certain – as it could have been.  I saw this once. Then twice.  Then over and over. The problem was that business owners made a decision to sell, not a plan to sell.

Over and over, former business owners were deciding it was time to retire then putting their business up for sale.  They thought that just because their business was around for a long time that anybody should feel lucky to have it – the line of people looking to buy it should be around the block, and people would be willing to pay out the nose for it.

And you’re not immune from this if you’re handing over the reins to a family member – only 30% of companies survive the 2nd generation, 12% the 3rd, and 4% the fourth.

But, still, those were the lucky ones.  Most business don’t even sell, only one-fifth of businesses listed for sale actually do sell.  Instead, many slowly die due to attrition. Or, the owner doesn’t leave on their own terms at all.