Tag: arizona small business

What’s your Exit Strategy for your Business?

Exit Strategy for your businessYou’ve started a business, it’s going OK, but you’re nearing retirement age. Do you want to keep doing what you’re doing forever? Probably not. What’s your Exit Strategy? Even if you’re just starting, this is something that should be included in your business plan.

The article, “Exit Strategies for Your Business” originally appeared on Entrepreneur Magazine.

If you’re thinking ahead to the day when you’ll no longer run your business, think about these five exit strategies now so you’ll be prepared for your future.

Entrepreneurs live for the struggle of launching their businesses. But one thing they often forget is that decisions made on day one can have huge implications down the road. You see, it’s not enough to build a business worth a fortune; you have to make sure you have an exit strategy, a way to get the money back out.

For those of you who like to plan ahead–and for those of you who don’t but should–here are the five primary exit strategies available to most entrepreneurs:

The Modified Nike Maneuver: Just Take It. One favorite exit strategy of some forward-thinking business owners is simply to bleed the company dry on a daily basis. I don’t mean run it in the red–I mean pay yourself a huge salary, reward yourself with a gigantic bonus regardless of actual company performance, and issue a special class of shares that only you own that gives you ten times the dividends the other shareholders receive. Although we frown upon these practices in public companies, in private companies, this actually isn’t such a bad idea. It’s called a “lifestyle company.”

Rather than reinvesting money in growing your business, in lifestyle companies, you keep things small, take out a comfortable chunk, and simply live on the income. In one of my most memorable Harvard Business School moments, my fellow classmates and I asked the owner of a small, fabulously profitable manufacturing company why he didn’t grow the business bigger and sell it for a gazillion dollars. His response: “Excuse me? You’ve had way too much schooling. What part of 30-hour work weeks and a $5 million personal income don’t you understand?”

Remember, money in the wallet is no longer money in the business. If you’re in a business that must invest to grow, taking out too much money can hurt you down the road. Also, if you have other investors, taking too much can upset them. Imagine their surprise when investors in a small business I once worked for received the company’s internal loan repayment spreadsheet, showing that the business owner was pulling out bucks by paying his family exorbitant interest on loans while investor loans were repaid at rock-bottom rates over as long a time period as possible.

If you think you’re in business for the lifestyle, minimize your dependence on other investors and structure the business to allow you to draw out cash as needed.


  • Who doesn’t like seven figures of take-home pay?
  • Private jets are fun.
  • There’s no need to think hard about getting out: Just pull out the money when you need it.


  • The way you pull the money out may have negative tax implications. For example, a high salary is taxed as ordinary income, while an acquisition could bring money in the form of capital gains.
  • Without careful long-term planning, you may end up pulling out money now you’ll need later.

The Liquidation. Even lifestyle entrepreneurs can decide that enough is enough. One often-overlooked exit strategy is simply to call it quits, close the business doors, and call it a day. I don’t know anyone who’s founded a business planning to liquidate it someday, but it happens all the time. If you liquidate, however, any proceeds from the assets must be used to repay creditors. The remainder gets divided among the shareholders–if there are other shareholders, you want to make sure they get their due.


  • It’s easy and it’s natural. Everything comes to an end.
  • There’s no negotiations involved.
  • There’s no worrying about transfer of control.


  • Get real; it’s a waste! At most, you get the market value of your company’s assets.
  • Things like client lists, your reputation, and your business relationships may be very valuable, and liquidation just destroys them without an opportunity to recover their value.
  • Other shareholders may be less than thrilled at how much you’re leaving on the table.

My favorite piano bar in Boston simply vanished one day when the owner decided he was tired of show tunes. His regular patrons were crushed, but then, he didn’t consult with us first….

Selling to a Friendly Buyer. If my neighborhood piano bar owner had asked, we might have wanted to buy the business ourselves. You see, if you’ve become emotionally attached to what you’ve built, even easier than liquidating your business is the option of passing ownership to another true believer who will preserve your legacy. Interested parties might include customers, employees, children or other family members.

The fictional Willy Wonka handed off his chocolate empire to a little boy who was a loyal Wonka customer, someone who was chosen with great care through a selection process designed to weed out all but the most dedicated Wonka devotees. Wonka was able to choose his heir apparent and ride off into the sunset a happier entrepreneur.

Of course, the buyer needn’t come from outside. You can also sell your business to current employees or managers. Often in this kind of sale, the seller finances the sale and lets the buyer pay it off over time. A hair stylist I knew learned a local salon owner was shutting his doors and decided to propose a low-money-down deal to acquire the salon. The owner still makes more this way than he would by closing, and the stylist gets to earn his way into owning a business. It’s a win-win for everyone involved.

The purest friendly buyout occurs when the business is passed down to the family. But remember, the key to “family business” is the word “family.” Is yours functional? No sooner than you leave the family business to the kids, it’s likely they’ll end up fighting over who got the larger share, who does or doesn’t deserve the ownership they got, and who gets the final word. They’ll finger-point for a decade while the business slowly declines into ruin, then blame you for not leaving clearer instructions. If you decide to go this route, you’ve got a lot of planning to do before getting out.


  • You know them. They know you. There’s less due diligence required.
  • Your buyer will most likely preserve what’s important to you about the business.
  • If management buys the business, they have a commitment to making it work.
  • Selling to family makes good on that regrettable offhand promise made 30 years ago, “Someday, son/daughter, all this will be yours.”


  • You can get so attached to being bought by someone nice that you leave too much money on the table.
  • If you sell to a friend, they’ll be peeved when they discover they just bought the liability for that decade’s worth of taxes you forgot to pay.
  • Selling to family can tear the company apart with jealousies and promotions that put emotion way ahead of business needs.

The Acquisition. The acquisition was invented so you can sell your business and leave the kids money, still spoiling them rotten, but at least sparing the business from second-generation ruin. Acquisition is one of the most common exit strategies: You find another business that wants to buy yours and sell, sell, sell.

In an acquisition, you negotiate price. This is good. Public markets value you relative to your industry. Who wants that? In an acquisition, the sky’s the limit on your perceived value. You see, the person making the acquisition decision is rarely the owner of the acquiring company, so they don’t feel the pain of acquisition cost. Convince them you’re worth a billion dollars, and they’ll gladly break out their employer’s checkbook.

If you choose the right acquirer, your value can far exceed what would be reasonable based on your income. How do you select the right company? Look for strategic fit: Which acquirer can buy you to expand into a new market, or offer a new product to their existing customers? I recently read that a classmate of mine started a company that was acquired during the Internet boom for $500 million when it was just 18 months old. He commanded a huge price because his acquirer thought the acquisition gave them critical capabilities faster than they could develop those capabilities on their own.

But acquisition has its dark side. If there’s a bad fit between the acquirer and acquiree, the combined companies can self-destruct. The acquired management team can end up locked into working for the combined company, and if things head south, they get to watch their baby implode from within. Time Warner recently announced that they’re thinking of spinning off AOL, almost exactly five years after the two companies merged. What, exactly, did the merger accomplish? It made two CEOs very wealthy–and destroyed years’ worth of work and billions of dollars. I’m sure the AOL employees who stuck it out enjoyed that particular ride!

If you’re thinking of acquisition as your exist strategy, make yourself attractive to acquisition candidates, but don’t go so far as to you cut off your other options. One software company knew exactly whom they wanted to sell to, so they developed their product in a way that meshed perfectly with the prospective suitor’s products. Too bad the suitor had no interest in the acquisition. The software company was left with a product so specialized that no one else wanted to buy them either.


  • If you have strategic value to an acquirer, they may pay far more than you’re worth to anyone else.
  • If you get multiple acquirers involved in a bidding war, you can ratchet your price to the stratosphere.


  • If you organize your company around a specific be-acquired target, that may prevent you from becoming attractive to other acquirers.
  • Acquisitions are messy and often difficult when cultures and systems clash in the merged company.
  • Acquisitions can come with non-compete agreements and other strings that can make you rich, but make your life unpleasant for a time.

The IPO. I’ve saved IPOs for last, because they’re sexy, they’re flashy, and they get all the press. Too bad they make the lottery look good by comparison. There are millions of companies in the U.S., and only about 7,000 of those are public. And many public companies weren’t even founded by entrepreneurs but rather were spun out from existing companies. Heck, AT&T and its spin-offs are almost a significant fraction of the listed exchanges!

If you’re funded by professional investors with a track record of taking companies public, you might be able to do it. Of course, the professional investors will also have diluted you down to the point where you only own a tiny fraction of your company anyway. The investors will make out great. And maybe, if you’re the principle entrepreneur and have done a great job protecting your equity, you’ll make some money, too.

But if you’re a bootstrapper, believing in a fair IPO is a touchingly na?ve act of faith. Besides, do you have any idea what’s actually involved in an IPO?

You start by spending millions just preparing for the road show, where you grovel to convince investors your stock should be worth as much as possible. (You even do a “reverse split,” if necessary, to drive up the share price.) Unlike an acquisition, where you craft a good fit with a single suitor, here you romancing hundreds of Wall Street analysts. If the romance fails, you’ve blown millions. And if you succeed, you end up married to analysts. You call that a life?

Once public, you bow and scrape to the analysts. These earnest 28-year-olds–who haven’t produced anything of value since winning their fifth grade limerick contest–will study your every move, soberly declaring your utter incompetence at running the business you’ve built over decades. It’s one thing to receive this treatment from your loving spouse. It’s quite another to receive it from Smith Barney.

We won’t even talk about the need to conform to Sarbanes-Oxley, or the 6 percent underwriting fees you’ll pay to investment bankers, or lockout periods, or how down markets can tank your wealth despite having a healthy business, or how IPO-raised funds distort your income statement, or …

In short, IPOs are not only rare, they’re a pain in the backside. They make the headlines in the very, very rare cases that they produce 20-year-old billionaires. But when you’re founding your company, consider them just one of many exit strategies. Realize that there are a lot of ways to skin a cat, and just as many ways to get value out of your company. Think ahead, surely, but do it with sanity and gravitas. And if you find yourself tempted to start looking for more office space in preparation for your IPO in 18 months, call me first. I’ll talk you down until the paramedics arrive.


  • You’ll be on the cover of Newsweek.
  • Your stock will be worth in the tens–or maybe even hundreds–of millions of dollars.
  • Your VCs will finally stop bugging you as they frantically try to insure their shares will retain value even when the lockout period expires (Warning: they won’t necessarily be looking out for your shares, too.)


  • Only a very few number of small businesses actually have this option available to them since there are very few IPOs completed annually in the United States.
  • You need financial and accounting rigor from day one far above what many entrepreneurs generally put in place.
  • Some forms of corporation–S-corps, for example–will require a reorganization before they can be taken public.
  • You’ll spend your time selling the company, not running it.
  • Investment bankers take 6 percent off the top, and the transaction costs on an IPO can run in the millions.
  • When your lockout restrictions expire, your stock will be worth as much as a third world hovel.

Need help with your Exit Strategy or Business Plan? A SCORE Mentor can help for FREE! Click here to schedule a mentoring session.


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Elements of a Restaurant Startup Business Plan

Any new business needs a plan. Here are the key elements of a strong Restaurant Startup Business Plan. This is part 2 of the series for Restaurants Startups. Read part 1.


Restaurant startup business planPortraying an unambiguous clear-cut concept lets the customer know what to expect. Examples are Mexican, Seafood, Asian, Cowboy, Diner, etc. Items that are influenced by the concept:

  • Image
  • Name
  • Exterior Design
  • Interior Design
  • Employee Uniforms
  • Menu Design
  • Menu Choices
  • Menu Changes
  • Type of Entertainment
  • Production
  • Consistency
  • Service
  • Future Opportunities


  • Quick-service
  • Midscale
  • Upscale

Market Customers

  • Colleges and Universities
  • Local Population
  • Tourism
  • Local Businesses
  • Market trends

Market Locations

  • Access
  • Visibility
  • Parking

Market Competition

  • Competition
  • Competitor’s Profile
  • Competitive Strategy
  • Competing categories of food providers.
  • Distinct Competitive Advantage

Marketing Strategy

  • Unique Selling Proposal
  • Digital Media – website, social media, videos, search engines
  • Print Media- local newspapers, magazines and student publications
  • Broadcast Media- local programming and special interest shows
  • Hotel Guides- concierge relations, Chamber of Commerce brochures
  • Direct Mail – subscriber lists, offices for delivery
  • – yellow pages, charity events, community involvement
  • Public Relations – special events – print and broadcast coverage, especially at the start up
  • Point of Sale
  • Advertising – online and offline
  • Mobile Marketing – SMS text messaging, mobile app, mobile listing, Google Maps
  • Promotion
  • Customer lists
  • Target Market Location
  • E Mail


  • Facilities & Offices
  • Hours of Operation
  • Employee Training & Education
  • Systems & Controls
  • Food Production
  • Delivery & Catering

Management & Organization

  • Key employees & Principals
  • Compensation & Incentives
  • Staffing
  • Job responsibilities
  • Selection
  • Training
  • Perks incl. meals
  • Compensation
  • Motivation
  • Board of Directors (if warranted)
  • Consultants & Professional Support Resources
  • Management Structure & Style
  • Ownership


  • Controls
  • Shrinkage
  • Waste issues
  • Delivery issues
  • Bar costs
  • Start-up costs
  • Operating costs
  • Food costs
  • How to grow business
  • How to raise capital
  • Seasonality
  • Franchise
  • Independent
  • Resources (NRA ARA ASBA Local Colleges etc)
  • Service standards
  • Hours of operation
  • Distinct Competitive Advantage
  • Leases / rents
  • Licenses / permits
  • Health dept. issues

Legal Structure

  • Sole Proprietorship
  • Partnership (General or Limited)
  • Corporation (C or S)
  • Limited Liability Company

If you need help with your Restaurant Startup Business Plan – a SCORE mentor can help you for free! Click here to schedule an appointment.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.



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What you Need to Think About if You Want to Open a Restaurant 14 Jun

What you Need to Think About if You Want to Open a Restaurant

So you want to open a restaurant, it’s your dream. How are you going to make your dream come true? After all there are thousands of entrepreneurs like you who dream of opening their own restaurant, whether it’s fast food or a fine dining establishment. Like you they know that increasing numbers of consumers want to dine out or take away prepared food. The number of U.S. food-service operations has skyrocketed from 155,000 about 30 years ago to almost 900,000 today, and nearly 75% of them are independent units – not chain restaurants.

Growth in the quick service segment continues to be driven by desire for convenience. As the number of employed persons in the United States continues to increase, the amount of time left to prepare meals at home continues to fall. In fact, nearly three out of ten adults (29%) indicated that purchasing take-out is essential to the way they live. This trend is even more pronounced among younger adults, with 47 percent between 18-24 reporting that take-out is essential to the way they live. More than half of all restaurant traffic – combining both table service and quick service – is off premises, which includes drive-through, take-out and delivery.

Potentially Profitable

What you Need to Think About if You Want to Open a RestaurantA properly run food service can generate great profits. Fast food operations generally make a lower profit per sale but have higher sales volume. Fine dining operations generally serve fewer people so they need to make a higher profit per person. Family priced and the average ethnic restaurant fall in between. On the flip side, a poorly run food service operation can lose plenty of money. A restaurant is one of the few businesses where there are potentially more chances to lose then to make money. The many aspects of food service such as the handling of money and perishable products make restaurants tough to run profitably.

Though the future looks bright for the food-service industry overall, there are no guarantees. This industry is a classic mature market. The competition is stiff and profit margins are low. Many restaurants fail during their first year, frequently due to a lack of planning. Over 30% go out of business year one, 60 % or more fail after 3 years, eventually giving way to the pressures of owning one. Even the most successful operators will tell you this isn’t a “get rich quick” industry. It’s more like a “work hard and make a living” industry. The formula for success is concept, ambiance, quality food, good service and great people.

Working in a Restaurant

Regardless of the type of food-service business you intend to start, the best way to learn the ropes is to work for a similar operation before striking out on your own. This will give you significant insight into the realities and logistics of the business. You may find you don’t like the business. Or you may find you’re more suited to a different type of operation than you originally thought. Hopefully, you’ll discover you’re in exactly the right place.

Do as many different jobs as possible. If you’re not actually doing a particular job, pay attention to the person who is – you may find yourself doing it when your own restaurant is unexpectedly shorthanded. Remember owners starting out should be involved in every detail of the operation, working nights, evenings and weekends. Your investment and future success are on the line.

Your Roadmap to Success – The Business Plan

We at SCORE believe you can succeed provided you carefully plan for all aspects of your business. A well thought out business plan covering all start-up and key operational elements is necessary for success. Your business plan should cover, at a minimum, the following issues:

  • Your dream – business description – who you are – what you will do (category / concept / product / services) – your competitive advantage – legal structure
  • Your market – your target customers – competition – your competitive advantage
  • Your marketing strategy – promotion / price / people / place
  • Your operations – your business model / how you make money
  • Your management – organization – controls – who is responsibility for what
  • Your personnel – hiring – training – responsibilities – compensation – personnel policies
  • Your financial status – funds / assets / sources / investment / working capital
  • Your financial projections – P & L / balance sheet / cash flow / break even
  • Your goals – strategic / financial / personal
  • Your action plans – what – when – who – how – cost
  • Your executive summary – you fifteen minutes of fame

This is part one of a series of articles on what to do if you want to open a restaurant. The next step is the business plan.

Click here to schedule a free mentoring session with a certified SCORE mentor in the Greater Phoenix Area.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

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3 reasons you want to Learn How to Blog 30 May

3 Reasons Why You Want to Learn How to Blog

You’re in business. You have a website. How do you attract people to your site? With a blog. That’s why you need to learn how to blog.3 Reasons you want to Learn How to Blog

The “if you build it they will come” mentality of a website doesn’t work in today’s inbound marketing world. People will search for what they want when they want or need it and it’s up to you to make sure your content comes up when they’re looking for what it is you have to offer.

Here are the 3 Reasons why you need to Learn How to Blog:

  1. Search Engine Optimization (SEO): When someone searches for what it is you have to offer, the freshest, most relevant content will come up first.
  2. Become known as an Expert in Your Field: The more you blog about what you know, the faster you’ll become a thought leader and an influencer with a following.
  3. Attract Interested Parties to Your Website: When used in combination with social media, you’ll drive potential clients to your website where you can turn a visitor into a lead and later a lead into a sale.

Where do you start?

  1. You need a blog on your website. Having a WordPress website will make it easy to do that.
  2. You need to clearly define your target market(s) and put yourself in their shoes.
  3. You need to learn how to blog properly and effectively.

I hold a blogging class at Greater Phoenix SCORE regularly. Check the schedule on the left or click here for the full schedule of classes.

About the Author:

Giselle Aguiar, AZ Social Media WizGiselle Aguiar, founder of AZ Social Media Wiz is a social media, inbound and content marketing strategist & trainer helping business owners learn how to leverage the power of social media marketing, increase traffic to their websites, generate leads, increase brand awareness and establish themselves as experts in their fields. She’s the official social media, newsletter and blog manager for Greater Phoenix SCORE and offers Social media classes at the new AZ Social Media Training Center. 602-738-1700. You can connect with Giselle online at LinkedIn or on Google+.

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16 May

Getting the Best Results from LinkedIn

Practically everyone knows about LinkedIn now, but not everyone uses it well or even at all.

Why? Hearing how it works is one thing; most of us learn by doing. Right?

There are a few main aspect of how and why LinkedIn is important. Business owners use it to find competitors, customers, employees or even suppliers and vendors. Others looking for contracts or jobs explore the range of opportunities LinkedIn offers through their services. Salespeople now find LinkedIn to be a resource to garner glimpses of companies and potential leads for their products and/or services.

Let’s focus on Business Owners. Many features of LinkedIn cross over, the importance of personal profiles, business pages and even showcase pages can be key features in building your business. LinkedIn has become one of the world’s most respected business and professional resources. Most often when you have a question about a person or company where do you go? Google, right?

Google yourself and/or your company. Do you do that often to see what shows up? If you are on LinkedIn and don’t have a personal website or have your company website set up with appropriate SEO features, then more than likely you will notice your LinkedIn profile as being in the top Google results. That should be enough to cause panic. Relax, it just means that you need to develop great profiles.

When you look at your profile status, is it All-Star quality? What does that mean? It means your profile meets the professional standards LinkedIn requires for the best opportunities for you. The better you fit in, the more you can stand out. It’s like learning the rules before figuring out how to bend or break them. Of course, you may possibly not even know them.

What if you did? Would you be more attractive to potential customers? You look for it in others, right?

SCORE presents many opportunities for business owners to learn and practice important business development features. This LinkedIn workshop goes a little deeper with a hands-on practice of the material being presented. Facilitating that kind of environment can be a little challenging, so the class size is limited. You’ll also get a copy of the workbook being used.

Join us! Sign up for this hands-on session, – at SCORE Tuesday, May 24 from 12 – 4pm, before it fills up. Bring your laptop and jump in, explore – get your questions answered. Click here to register!

Smartphones are discouraged. Tablets might work if you have a keypad.

ZenBenefielAbout the Author:

Zen Benefiel is an accomplished author, coach, facilitator and speaker with Masters degrees from the University of Phoenix in Business Administration and Organizational Development. Zen is a blogger, social media expert, trainer and web developer since 2000 with a collection of works at www.zenbenefiel.com. Zen is also co-host of 2 Small Biz Guys talk radio show on Star Worldwide Networks.


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Welcome Greater Phoenix SCORE’s new President: Jay Gladney

Jay Gladney, new president of Greater Phoenix SCOREWhenever the leadership “baton” of an organization is passed to a new person, we always wonder what does person have in mind for the organization? What is his or her vision for the group? What do they bring to group in the way of experience, etc.?

On May 1st, 2016, the role of president of Greater Phoenix SCORE transferred from Andy Beran to Jay Gladney. Those of you who have been involved with SCORE in the last years is familiar with Andy as he’s hosted many of the large events. Here you get to meet Jay:

Jay’s Background:

Forty seven years of service in the U.S. Intelligence Community—23 as an Air Force officer and non-commissioned officer focused on intelligence collection and analysis—and 24 years with Defense contractor organizations supporting the Command, Control, Communications and Intelligence (C3I) mission area (including 18 years with Oracle Consulting up to the position of Regional Vice President). Associate Professor at the U.S. Air Force Academy.

Senior-level information systems engineering professional services executive and project/program manager.  Co-founded and served as CEO for a telecommunications consulting partnership. Had P&L responsibility for an Oracle consulting group engaged in support of the Intelligence Community.  Managed software development teams for successful commercial software. Developed and taught project management courses. An Oracle University-certified instructor for Oracle Project Manager and Oracle Team Lead courses.

His Vision for Greater Phoenix SCORE:

To make the Greater Phoenix SCORE Chapter better known, more relevant, and more effective in supporting the establishment, growth, and profitability of small businesses. It is our goal to become the primary business advisory and coaching resource for Phoenix small business owners.

Also on the board are Bill Morgan, VP of Operations; Patrick Ingram, VP of Client Education; and Doug Hughes, Treasurer.

Jay, and all of the officers, are a Certified SCORE Mentors.

Click here to schedule a free mentoring session with a mentor near you!


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