Business Transition Lessons Learned:
Don’t Rest on Your Laurels!
As a 64-year-old CEO of a $10 million manufacturing company, Richard was confident that he could keep his customers happy and content even though his products were more expensive than those sold by his competition.
After all, he had been in business for over 30 years and he had built strong relationships with his customers. As a result, Richard didn’t focus on keeping his raw material costs low or hire anyone to focus on marketing to attract new customers.
To his dismay, one-by-one, his long-time customers started turning to his competitors for product. The people he had built relationships with were retiring and their replacements were now making the purchasing decisions—solely based on price. They didn’t have relationships with Richard, know why his product was better, or understand that his customer service was superior.
All they cared about was price.
Richard hadn’t saved sufficiently outside the company because he planned to sell his company when he turned 65 and live off the proceeds.
Richard’s business lost customers and therefore value very quickly due to his belief that he didn’t have to work hard to remain competitive in his marketplace.
Richard thought he could avoid the expense of new hires to focus on purchasing and marketing only to find out that he desperately needed these functions in his business.
Richard’s retirement plans were now postponed by several more years and he had to work harder than ever to regain the lost business value so he could sell it. Richard’s wife was forced to delay her retirement plans as well, until Richard could break away from the business.
Richard should have been saving money outside of the business every year to reduce his financial dependence on the sale of the business.
Richard should have recognized years ago that his customer contacts would be retiring and he would lose his customers’ loyalty. He could have had his customer service team work hard to build relationships with the new customer contacts.
Richard should have hired the necessary resources in purchasing and marketing to cut his production costs and target new customers.
You must remain vigilant in order to keep your business relevant and competitive so it continues to grow and increase in value.
Don’t let this happen to you!
Start your exit planning early to ensure that you can extract the full value of your business when you want to retire.Contact us to learn more.