It goes without saying that we are experiencing unprecedented times in our lives and business. Not since the Great Depression have we witnessed economic indicators currently demonstrated by the U.S. and world economies. There is no perfect strategy for this dynamic crisis.
Beacon’s advice to our current contractor/construction owners is to stay engaged in their “exit” transition, keeping it simple with a vision of being presently nimble and moving forward with an eye on the horizon of their reality:
- You cannot exit unless you have a buyer.
- Around 70% of your wealth is trapped in your business.
- The probable buyer will be your management or family.
- To retire you must replace yourself.
- The structured buyout process will last from eight to 12 years.
- Start planning 15 years out for succession and tax reduction.
Owners need to have a long- and short-term plan to prepare the management team for your departure and retirement. Below are three suggestions we are advising for our “exit” clients during this period.
1. Revisit Your Strategic Plan to Engage the Management Team
The management team is the future of the company and they must begin to think like owners. Use this uncertain period as a learning moment for the team to participate in managing the company during a crisis and downturn.
This will be a teaching moment. Facilitate your management team to collectively revise your short- and long-term goals. The company and management are in a different position from the last economic adjustment of 2008. Back then, many of the team members were not engaged in leading the company.
This exercise will be a new learning experience and an opportunity for you to observe who on the team will be an emerging leader coming out of this period.
Create a plan that will navigate the company through this dynamic period to manage disruption that:
- Mitigates threats
- Takes advantage of new opportunities
- Leverages your company’s strengths
- Shores up your weaknesses
2. Reduce Error, Increase Productivity, Stress Better Communication and Accountability
Take this period to sharpen the saw and improve systems that makes the company safer, more productive, and thus profitable.
A no-nonsense system that we have observed to have measurable results going directly to the bottom line is the Entrepreneurs Operating System (EOS). We would recommend you first read the book “Get A Grip,” which depicts the system in a fictional environment and an enjoyable introduction. The sequence would be to then read the more technical book called “Traction” as the textbook. Both books are authored by Gino Wickman.
Companies can get the best results by hiring a certified EOS consultant or coach to lead the process. As with most “change management” systems, it does not work overnight. It will play out like this:
- Year one learning the language, process and structure of the EOS system
- Year two with improved implementation, communication, roles and accountability
- Year three (lift-off) with measurable results, fewer errors, higher profitability and a coordinated, accountable team
- Subsequent years of being better, faster and stronger.
Measurable systems will bring a new focus, discipline, accountability and cohesiveness to the management team.
3. Continuity is Key
During and after this virus, it is important to maintain continuity within your business and save cash by keeping the balance sheet as strong as possible. It will give you the flexibility to weather this storm.
Manage your receivables on a weekly basis on amounts owed, amounts left to be performed and aging of receivables.
The federal and certain state governments have implemented plans to provide small business owners with stimulus during these difficult times. The stimulus comes in a variety of forms, including loans, grants and tax credits.
These are temporary programs that have been implemented by the federal government and excellent sources for saving cash and keeping the workforce employed until such time that the economic flood gates open once more.
Finally, keep your hand on the wheel and your eye on the horizon while you move forward. You will get through this storm as you have other challenging periods of the economy, and eventually move into a worry-free retirement funded by your company.