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Your Company as an Investment

By Generational Equity

Golden Egg

One of the most important topics we cover at our exit planning conferences is the idea of what your business represents to you. Is it merely a job? For some, it is a hobby. Others see it as who they are and self-identify closely with it (making a transition away challenging).

What we try to convey to our attendees is this: Your business is an investment, pure and simple. And you need to see it as such.

Why?

If you see it only as your job, you usually will not be thinking strategically or long-term at all. You might only be looking as far ahead as the next payroll. For some smaller businesses, this is a sad reality. However, if you ever want to grow beyond this into another dimension of your businesses life, you have to force yourself to see the company as a true investment.

Likewise, if it is a hobby, you are most likely not considering the longer term. Now if you are financially independent and have inherited great wealth that will tide you over for the rest of your life, then treating it as a hobby is probably OK. But are YOU in that position? And sadly, given the myriad of things beyond your control (such as your health), what could happen to your life savings if something unfortunate were to happen? Realizing that your “hobby” is an investment is vital.

Finally, far too many business owners see their business as an extension of themselves and the idea of ever departing – much less handing the reins over to a third party – is almost impossible to consider. For the sake of business continuity, your key employees, your customers and most importantly, your family, you need to step back and ask yourself, “Where do I personally want to be in X years?” (X is fully dependent on you and where you are in life.)

Even though it gives you great pleasure to be the one unlocking the doors at 5:00 a.m. every morning and the one closing down at 7:00 p.m., and despite the fact that your ego is stroked every time one of your employees comes to you for the umpteenth time with a question that should not have gone to you (if you had a middle-management team), the reality is that your business is an investment, like any other you make.

Where’s the Beef?

Have you ever calculated your return on investment (ROI) on this “stock” you have bought in your company? Do you have a target return that you want to reach before you exit? Odds are you have never even considered this.

Why?

Because you have fallen into the trap of NOT seeing your business as the investment it is in your financial future; not only for you, but for your family. You are seeing it as a job, a hobby, or your personal identity. Frankly, this could be the most serious financial mistake you will ever make.

Fortunately, Generational Equity and our team of exit planning professionals are here to help. Most of us have been working with entrepreneurs and their families for close to 30 years. This experience has taught us that the most important thing we can do is shake your thinking loose and help you consider that your business is the single largest investment you will ever make.

Getting back to the ROI question, the second reason you have never done this calculation is because you are missing the largest piece of the equation: Your company’s value.

If you don’t know this number, you have no idea what your ROI might be because this is the key item used to make that calculation. If you dig deep enough in your financials, you can probably find the total equity listed in last year’s balance sheet. That might equal what you paid into the company over the years, but will not account for the “blood, sweat, and tears” that have gone into it.

If you are not looking at your company as an investment vehicle, you need to attend a Generational Equity executive exit planning conference. Spending a day with us is an excellent ROI in terms of your time. To learn more follow these links:

And perhaps this client’s input summarizes why attending our conferences are so important to business owners:

What I Learned From Generational Equity Helped Me Become a Better CEO

To learn more, feel free to give me a call at 972-232-1125 or email me at cdoerksen@generational.com.

And no matter what, begin to consider the notion that your company truly is an investment.

By Carl Doerksen, Director of Corporate Development at Generational Equity.

© 2021 Generational Equity, LLC. All Rights Reserved.

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The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!
Eric Erlandson, Owner, Action Fastenings, Inc.
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
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Tom Currier, Former President & CEO, Rackmount Solutions
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.
Bryan D. Horn, Owner, Over Under Clothing
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
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Terry D. Wickman, President, Keytroller
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.
Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters
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Robert Evans, President and CEO of Mealtracker Dietary Software
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
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Bil MacLeslie, CEO, ipHouse
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Ralph Noblin, President of Noblin & Associates