Blue Vault’s Webinar Panelists Ask the Tough Questions in Appraising Your Business’ Assets and Culture
November 13, 2019 | James Sprow | Blue Vault
Wealth advisors have much to consider after participating in Blue Vault’s on-demand webinar: “Succession Planning 2.0: Would you Buy Your Business?” Presented to enrich advisors’ business planning capabilities, panelists Dr. John Rhodes, CNL Capital Markets Corp. and Rick Forbus, PhD, Trove, Inc. each shared insights on how to shape and assess your business as if it were ready to sell. Chris Goethe, Owner, Voyage Franchising moderated the panel discussion.
There were two polling questions prior to the webinar. One revealed that only 18% of webinar participants had a written succession plan that is reviewed annually. The other asked participants if they were within 5 years of selling their practice: 43% revealed they were.
Presenting first, Dr. Rhodes cautioned wealth advisors to accurately assess their business even if they did not plan to sell due to life’s uncertainties. He cited a 37-year-old business owner with a successful, million-dollar business. Tragically, he died in a car accident. His young widow only received $100K for the business because he did not formally appraise it and share that plan with her.
In a here today, gone tomorrow world, Dr. Rhodes had 10 very specific questions to answer when assessing your business or one you plan to buy. These include:
• Does your client have a particular event focus –(demographic/employer/hobby/or interest group), and does it match your strengths?
• Is the practice named after you, or does it have its own identity?
• How much of your revenue is fee based vs. commission based?
• What percentage of your total revenue comes from your Top 20 clients?
• What is the primary source for new clients, and how many have you added in the last 3 years?
• Do you have a menu of services?
• What does your support team consist of?
• What is your overall expense ratio annually?
• Do you incorporate protection planning with your clients? If so, what percentage of your annual review does it generate?
• Do you have an established Center of Influence (COI) network? If so, what is the reciprocal agreement?
Dr. Rhodes stressed the most important thing that wealth advisors can do is to analyze where their revenue source comes from among their top 20 clients and to customize a service program for each to continue to manage them well. He also strongly recommends reassessing the business every 3 years.
Culture Drives Profit
There is also a “cultural” side of selling your business. Mr. Forbus cited a variety of small business examples where patrons are driven to a particular store because of excellent customer service or the personality of the owner. He cited his loyalty to Mr. Groveman – the local Firestone dealer/owner in his town who knows all about his family, grandkids, the cars they drive, and what tires every car needs. These types of small businesses need a talent succession plan too, especially when the owner is the main personality.
A strong small business that is attractive to purchase is built upon the “iron triangle.” The first leg of the triangle represents the tactical processes and technical products of the business; the next is the “right” side of the business including the personality or employee behaviors. Finally, the culture combines all three legs together for a powerfully framed business.
In addition to driving profit, creating a quality culture also: boosts employee loyalty; helps recruiting efforts; attracts new customers; drives the decision-making process; and establishes a good reputation in the community. And, loyalty and talent can be further developed – you can build loyalty around enthusiasm and positivity – employees that are developed are more loyal because you have invested in them.
During talent development, Mr. Forbus said to develop both your talent and that of your employees. Also develop your communication and marketing style to convey the heartbeat of your business. He also shared that happiness matters. Research shows that happy employees outperform the competition by 20%.
Finally, when evaluating the business in the employee-customer chain, is it a compelling place to work? A compelling place to shop? Or is it a compelling place to invest? Be intentional about your culture.
Ready to watch the Succession Planning webinar? Visit https://bluevaultpartners.com/past-webinars. Also, to reach Dr. John Rhodes or Rick Forbus PhD, please contact Stacy Chitty at stacy.chitty@bluevaultpartners.com. To sign-up for future Blue Vault webinars, click here: https://bluevaultpartners.com/upcoming-webinars.
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Dr. John A. Rhodes Jr. joined CNL in 2002, after serving more than 35 years in the financial services industry. In his current position, Dr. Rhodes leads CNL Capital Markets’ Practice Management program, which is designed to help financial advisors manage their business and their lives more successfully. Prior to his current position, Dr. Rhodes developed, coordinated and taught a value-added program designed to assist financial advisors in their business and professional lives. Before the financial services industry, Dr. Rhodes worked in higher education for 15 years. He served as vice president of the University of Memphis for more than 10 years and held various other teaching, research, and service positions at the University of Georgia, Georgia State University and North Carolina State University. Dr. Rhodes was awarded the Bronze Star for Valor for his service in Vietnam.
Rick Forbus, PhD holds a Doctor of Philosophy in Human Resource Management & Leadership, and he has studied Executive Coaching with one of the coaches at The Center for Creative Leadership in Greensboro, NC. Rick also studied at CoachU and George Washington University to increase his expertise in coaching and leadership applications to project managers. Rick is a full-time executive coach and professional trainer. He specializes in organizational re-design using behavioral and community-based action research techniques. He maintains an active speaking engagement schedule and is a highly sought-after corporate retreat and workshop facilitator. In his career, Rick has trained, coached or presented speeches to over 44,000 people. His areas of expertise include team building, process consulting, high-performance meeting and decision-making, vision casting, people alignment, negotiation and change management.
Chris Goethe is a small business coach who helps individuals make the transition from working for others to becoming a successful entrepreneur. For the last four years, Chris has worked in the industry of franchising, helping others accomplish their dreams of owning top-tier franchise brands. Prior to his experience in franchising, Chris worked for a small business start-up in the Atlanta area, helping grow it, over nine years, to a robust, international training and consulting organization. Today, Chris coaches others and guides them through the process of business decision-making.
