The Exit Planning Audit: Are you ready to go?

At some point, most small business owners will ask: What is next for me beyond this business?

“I want to pursue something new.” “I’m burned out.” “I wonder if I could sell this business.” “My family member or employee wants to take over, and maybe it’s time.” “Retirement sounds good!”

If you are having a similar thought, it may be a good time for a business audit. A business audit is essentially a business check-up — you are assessing the health of your business so you can make well-informed decisions about next steps. A business audit is a great management tool to use at any stage of business… ideally annually!

exit planning audit

An exit planning business audit is a tool to help you specifically evaluate your readiness for an ownership transfer and determine if your business is a good sales prospect. Will your business be attractive to a buyer or will it need improvement prior to offering it for sale? Is the business’ goodwill of high enough value to attract interested buyers, or are you better off selling physical/tangible assets and simply closing the business?

Here are some initial business audit questions to consider when exploring a business ownership transition:

Your business exit motivations:

  • Why do you want to exit your business?
  • What do you want to do next?
  • Do you want to leave completely or stay involved in some way?
  • Do you have any conditions for a business sale?
  • Do you have a vision for your business even after you aren’t involved?

The status of the business:

  • Do you have up-to-date financial statements that match your tax returns?
  • Have sales revenues and profits consistently increased over the past few years?
  • Does your business have a distinct competitive advantage?
  • Does your business operate with clear written procedures and agreements?
  • Can your business operate without you, or with you in a different role?
  • Does your business have opportunities for growth?

Your answers to these questions (and many more!) will help you determine the right next steps for you and your business, and the best timeline for an ownership transition.

A business exit can be complicated and we encourage you to start thinking about your business exit well in advance. You want time to consider what an exit would mean for you and your business well before you are ready to make this change.  You want a transition that won’t negatively affect your employees and the vendors, clients or customers reliant on your business.

Don’t wait until your business is struggling or you are desperate for a change before you act.  With thorough exit planning, you can improve your readiness to transition and the value of your business!

At Paul Terry & Associates we help small business owners answer the many questions related to ownership transition. We take clients through an exit planning audit — prioritizing business ownership transition motivations, evaluating the business’ strengths and weaknesses, and assessing the readiness for a business sale. Then we help business owners create a plan for a successful transition.

Learn more here!

Are you ready for your encore?

The traditional idea of retirement is increasingly becoming an old notion—either because people need to keep working as a financial necessity or because they still want to work. Instead of retiring, many people are looking to do something on their own terms, and do work that really matters.

encore career

The term “encore career” is being used to describe a new career later in life—one that is focused not just on making a living but on making a difference.—a San Francisco non-profit that helps people pursue “second acts for the greater good”—defines encore careers as jobs that combine personal meaning, continued income and social impact in the second half of life. And according to the organization, the idea is catching on. As many as 9 million people ages 44 to 70 are already in encore careers, with 31 million more interested in the idea but not sure how to make the transition.

For many, the encore career most appealing is starting a business. In 2012, nearly one quarter of all new businesses were started by people ages 55 to 64.  According to the Ewing Marion Kauffman Foundation, business creation by older Americans grew more than 60% between 1996 and 2012.

So if you are interested in starting your own business as an encore career, where do you begin?

1. Follow your passion! Your business will only succeed if you love what you do. As Steve Jobs says, “The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.”

2. Know yourself well. Assess your strengths and weaknesses to determine if you have what it takes. Do you have some of the traits common to successful entrepreneurs? What are your existing skills?  Older entrepreneurs have an advantage — at this point you probably have a good sense of what you love to do and what you can do well. Now, instead of doing that work for an employer, you can do it for yourself.

3. Get out there to connect and learn. There is so much to learn from others in the field. Read, take classes, join small business groups of like-minded people, find organizations focused on the issues you are passionate about, as well as organizations focused on senior entrepreneurs. Starting a business can be a risky endeavor but much less so when you have relevant skills, a sense of the marketplace, and an understanding of what others have tried already and what has succeeded or failed.

4. Don’t do it alone. Starting a new business can be a significant undertaking. You need a strong network to help you navigate through the rough patches and mentors who will share sound guidance. It is important to surround yourself with supportive and insightful people.  As someone with life and career experience, there is a good chance you have a strong network of contacts already — people you can turn to as a support system and people who might eventually be customers or clients.

5. Use all the business tools you can find. There are many non-profit organizations and government agencies committed to helping people start their own small businesses. In San Francisco, the Office of Small Business is a great resource and there is a San Francisco Business Portal for finding all the licenses and permits you’ll need. Check out our website for more resources.

6. Money, money, money. There are many small and home-based businesses that can be launched without much start-up capital. No matter your size, knowing the resources you have and projecting what you may be able to earn is critical. How much do you need to make each month to cover expenses and make a profit? What are your start-up costs and how will you fund your transition? There are many ways to fund your business, with crowdfunding platforms becoming an increasingly popular strategy.

7. Make a plan! Your plan doesn’t need to be lengthy but it’s helpful to give some thought to marketing, money and management before you begin. A business plan can force you to clarify your idea, understand the external conditions that might affect your business, and set realistic goals with benchmarks to track your progress. Doing the research, talking to people and creating realistic financial projections will give you confidence to get your business started and keep it going. Renaissance Entrepreneurship Center offers a 12-week Business Planning Class to help you through the process.

Above all, what’s most important is to get out there and keep learning. Starting a small business is tough but it can be so rewarding both for the people you serve and the person you become. You are never too old to learn something new and make a difference.

Selling Your Business – Essential First Steps

Are you thinking about selling your business? We assist small business owners with management transitions. For clients interested in selling their businesses, we help them focus on these essential first steps:


1. Understand your business exit motivations

Why do you want to sell your business?  Perhaps you want to start a new business or focus on other pursuits. Maybe you are burned out, at odds with your business partner, or ready to retire. It is important to understand what is motivating your decision to sell your business. Your current perspective and emotional outlook can affect your approach to the sale and the timing of your business exit.

2. Prioritize your sales goals

It is good to start a business sale process with a clear idea of your desired outcomes. Are you looking to sell immediately? Is a high sale price the most important factor for you? Do you want to remain involved in some capacity? Do you have preferences for who buys the business? Do you want to influence how the business operates after you sell? Is a cash sale necessary or will you consider seller financing?  Clarifying what you want will affect the sales approach you take.

3. Assess your business’ current condition

Is your business a good sales prospect? Is your business likely to attract a buyer? Are there areas of the business that will need improvement before you sell?  When looking at each aspect of your business, you must try to understand the business from a potential buyer’s perspective. You need to consider your sales and profit history, the business’ financial condition and your products or services. For a brick and mortar business, look at your business location, your facilities and your equipment. To be a good sales prospect, your business may need to retain your employees and your clientele…and perhaps even you for three to six months!

4. Assess the current value of your business

How much is your business worth?  Valuing your business helps you set an asking price. There are different ways to determine the value of a small business. You will need to consider your tangible and intangible assets and the business’ prospects for growth. You can hire a business valuation expert to do a business appraisal or work with a business broker to request a Broker’s Opinion of Value. With recent tax returns and financial projections in hand, it may be sufficient to work with us to do some simple calculations to estimate a realistic amount.

Now you are ready

Once you are clear on your motivations, your goals, and the current condition of your business, you are ready for one of these next steps:

• Prepare to present a sale-ready business to interested buyers.

• Invest the time to make your business more attractive to buyers and increase its value. (This would start with an action plan and timeline for each area of the business that needs improvement.)

• Offer to sell the business at its current sub-par condition (knowing you may have lower interest and/or a lower sale price).

• Continue to operate the business as well as you can and close it when you are “done”, selling any tangible assets.

We can help! We work with clients through these initial business transition steps. We review the current business so you can consider a business sale. We help with business improvement action plans to improve the value of your assets (even if you do not sell right away). We help you compile the documentation necessary for a business sale. Learn more.

Where did the time go?

This is the question we all ask, and perhaps small business owners ask the most! Many time management experts say that the key to managing our time well and being productive is figuring out what is most important, and making time to do that first. But how can we do that when it all feels so urgent?


The pros and cons of the to do list

Many of us keep detailed to-do lists. Our list will grow and grow and can become so long that it’s easier to focus on the “simple stuff” we can quickly complete and check off the list. We put off the tasks that will be most strategic for our business, the tasks that will help us grow and be a success.


As small business owners we wear many hats and must often multi-task. We have the tendency to want to do it all ourselves (even when we are stuck) and we don’t want to delegate (or don’t know how to). We are often completely consumed in the business without making time to work on the business, or we let personal stuff get in the way of how we run our business.

The effects of overwhelm

There can be a lot of emotions tied up with how we spend and “manage” our time, too. When we have too much to do we can get overwhelmed and frustrated. Our actions become non-productive. We procrastinate (ignoring what we know we must do) or we sabotage ourselves (purposely doing something counterproductive), and we end up paralyzed – blaming ourselves and sometimes even giving up.

The 80/20 Rule

One way out of this overwhelm is by paying attention to the Pareto Principle or what is often referred to as the “80/20 Rule”:


If you can figure out which tasks are producing your business’ results, you can spend more time on those activities and less time on others.  Often if a task makes you feel uncomfortable or if you are putting it off, it may be a sign that it needs your attention!

As a simple way to start, Perry Marshall, author of 80/20 Sales and Marketing, recommends that we flip our daily to do list. “If there are 10 things you need to do today, odds are that one task is worth 10 times more than the rest. It is natural to want to put it off and get the other tasks done first but you need to switch it around and first focus on that one thing that is most important.”  Do you need to write your marketing plan, call a disgruntled customer, create financial projections or go after a new client?  Focus on that key task first.


When I talk to my business students about time management I share the same essential message. The first step is to identify the priorities — or  BIG ROCKS — for your business and then structure your time to put them first. If you are a small business owner (particularly if you are just launching your businesses) you really cannot do it all. You need to focus on the key 10-20% of your business that can bring the best results now. Once you have some comfort in or mastery over that area, you can expand your focus.

Taking action

Now, it’s time to take action!  Starting first thing tomorrow…

  • Look at your to-do list and pick only three tasks for the day – tasks that are the most important for your business right now. (What task will help you make money now? What task will build a key business skill now? What task will help solve the most critical issue?)
  • Tackle only one task at a time.
  • Set a start time and end time for each task to keep yourself focused.
  • Pick someone to hold you accountable and share what you are doing with them.
  • Don’t forget to get rid of all distractions. Clear other work off your desk, turn off email, put down your phone… and get to it!

The reality is that your to-do list will never go away and it will probably always be long.  It may be helpful to write down all your tasks so they don’t keep swimming around in your head. But the goal is to not get distracted by your list.

And sometimes is important to put away the list entirely. Our best business breakthroughs often come when we aren’t focused on our business. Sometimes it is only when we take a break, that we can gain perspective.

Rock, paper, wisdom

At Paul Terry & Associates, we make wisdom stones for our colleagues and clients. These stones have become a long-standing tradition (over 20 years!) and they express our intention to help small business owners tune in to their passions, stay focused on their goals, find meaning in their business management, and make a difference in the world.

wisdom stones

Each stone, with its special design and word of inspiration, is unique and the process of making them is a labor of love.

wisdom stones

Every year my wife, Leslie, creates a stone design. Together we select river rocks from a quarry, we wash and scrub them, I apply linseed oil, and then Leslie glues interesting handmade papers to each rock, often incorporating string or twine. The last step in the process is adding a word of wisdom to the back of each stone.

wisdom stones

After so many years of making these stones and sharing them with others, we started to wonder… where do they end up and what do they mean to people?

So we asked. Here is some of what we found out…

They decorate people’s bookshelves, tables and mantels:

wisdom stones

They live in the office, the bathroom and the garden:

wisdom stones

And they can be found in many rooms throughout peoples’ houses:

“One is on my table, another on my bookshelf, a fourth by my meditation area, and a fifth by my bedside.”

“The chaos of my life always benefits from having a few wisdom stones nearby. And yes, they are in every room of my house. Almost.”

For some people, the stones are decoration.  For others, they are continued inspiration. One colleague keeps her wisdom stones in her office and they inspire her communication with her clients.  Another colleague shared,

“I sometimes have a client pick up a rock to guide our consulting session if they are stuck on some issue: it breaks them into a smile!”

This colleague used her wisdom stones at a party once as a way to introduce people to each other. Each party guest read a word on a rock and shared what it meant for them, which made for some fun ice breaker introductions.  She then mused that if she could remember which rock she received on which year, it would be interesting to look at the words of wisdom and see how they matched the trajectory of her business and her business growth.

It has been fun to see where these stones have ended up and what they mean to people. For me, making the stones and then giving them away is a way to connect to community… sharing small objects of beauty that hopefully bring joy and inspiration to others.

If you have ever received a PTA wisdom stone, please let me know what it means to you.

Your management transition

Are you thinking about transitioning out of your current management role in your business? Stepping away from your small business doesn’t have to mean giving it up completely. It could mean removing yourself from day-to-day operations or delegating management responsibilities to someone else so the business can continue to function smoothly without your constant presence.
In any business transition—whether it involves a change of business ownership or just a change in management, we encourage business owners to consider these five factors:

stepping away

1. Assess or audit your business

Before making a big management change, understand the value of your business and the strength of your existing systems. Be sure to ask key questions and audit your business. Have you built business assets that have real value? Do you know what your business is worth? Do you have operational systems that can be understood by others? Do you have key employees that will take on increased responsibilities?

2. Support and train others

To step away from the business, your employees need to be prepared to take on more responsibility… and you have to be ready to give up some control. If family members are taking the reins, they need to know the details of the business and understand what will be expected of them. You may need to hire new senior management who must get up to speed and gain your trust. Any new manager (or eventual owner) needs to get to know the business inside and out and develop the skills needed for success. Your role is to facilitate all of this.

3. Take your time

In any transition – whether it involves a change in business ownership or just a change in management – a gradual process is ideal. This allows for a new manager/owner to grow into his/her role. It takes time to gain confidence and also credibility in day-to-day management for all stakeholders. As time goes on, you may be able to assume a more advisory (or backseat) role… and by then you will be ready for it. If selling your business is the goal, you will need time to prepare for the sale and find the right buyer. So… look at a realistic timeline and set the right pace for you.

4. Get help and accountability

It can feel impossible to focus on a future transition when there is so much to attend to with the business right now. You are managing services, employees, cash flow, marketing and day-to-day operations. How can you focus on your transition goals when so many other aspects of the business need your attention right now? An advisor, support partner or support group can help you create a transition plan and stay accountable to the plan within a realistic timeline. Other professionals such as an accountant can help you understand the financial health of your business and the ramifications of any change. At some point, you will need legal help, too. Get the help you need to hold yourself accountable.

5. Your identity as a business owner

As a small business owner, your whole identity may be wrapped up with your business. You may want a change but you may feel reticent about losing control of the business and the change of identity the comes with stepping away. Perhaps you would no longer have a reason to stay involved with a merchants group, or you may no longer be invited to participate in certain business networks. Without your business identity, you may need to redefine or reinvent yourself.
As small business owners, we pour our hearts (as well as lots of time and often lots of money) into our businesses to make them succeed. After this investment, we want to see our businesses continue to flourish even after we step away from full-time management. Creating a solid transition plan with a good support team can help make our can help make desires a reality.

Paul Terry & Associates works with small business owners who want to value their business, prepare for a business sale or step away from a full-time management role. For clients preparing for a management transition, we can help:

  • Work through the challenges related to change and new roles
  • Install effective management metrics and timelines
  • Hire or train committed management staff
  • Create financial projections for any transition
  • Help the owner(s) write a succession plan

Learn more about our ownership transition services.

Taking Action

At Paul Terry & Associates we help small business owners build successful and sustainable enterprises. Our consulting process is focused on clear assessments, careful advice and taking action. Central to our approach is business action planning.

taking action

Your passion and a strong vision for your enterprise may have launched you into small business ownership. However, a great idea alone won’t make you a successful business owner. You must turn your initial ideas into realistic goals with a specific plan for action.

Whether you are an emerging entrepreneur or an experienced business owner entrenched in the complexities of running a business, business action planning can help you identify measurable goals and create specific steps to reach your desired outcomes.

Every area of your business – customer/client relations, business operations, ownership expansion, and your eventual exit from the business – can benefit from action planning. So how do you begin?


Put it in writing. Writing down exactly where you are today and where you want to be in the future will force you to think concretely. Taking the time to write down your goals may spark some new ideas, too.

Be S.M.A.R.T. – that is, specific, measurable, achievable, realistic and timely/time-bound. You need to be able to clearly state what you want to achieve and your goal needs to be concrete and doable. Initially, steer clear of goals that might take you three to five years to achieve. Once you get comfortable with the action planning process, you can use it to tackle bigger, longer-term goals. For now, stay focused on something you can attain within a year’s time, or even less.


Take it one step at a time. You are much more likely to attain your goal when you identify specific steps to reach it. Each step needs a realistic deadline and an estimate of how much it will cost you—not just in dollars but in your time and other resources.

Taking Action5


Everyone needs someone to lean on. Trusted advisors and people in your business support network are essential during this process. They can be a sounding board while you create your plan and they can keep you accountable once you have a plan… every step of the way.


Long and pretty isn’t necessary. A business action plan isn’t a fancy document—it’s a usable one. It needs to be accessible and referred to frequently. It might help to set reminders on your calendar to review it so that you can stay on track and make adjustments if necessary.

Still feeling daunted by action planning? We support clients through the action planning process every day –helping them create relevant goals, identify specific action steps, measure results and stay on track. How can we help you build a successful outcome?

Wendy’s Wisdom

As the coordinator and teacher of Renaissance Entrepreneurship Center‘s Business Planning Class, I help small business entrepreneurs create solid business plans focused on management, marketing and money. Students learn, struggle and grow through the process… and many return to Renaissance to share their lessons learned as guest speakers, consultants and mentors.

At the last Business Planning Class graduation, Wendy Lieu, graduate of the Fall 2012 Business Planning Class, shared her wisdom. As of owner of Socola Chocolatier, Wendy Lieu handcrafts delicious artisanal confections.

Hiring great professional support

In every stage of small business, whether you are an emerging or an established business owner, it is important to have trusted relationships with professionals who know you and can support and direct your business growth and long-term sustainability.

professional support

Why get professional support?

As a small business owner, you will hire outside experts for many reasons — for technology support, social media development, financial planning, bookkeeping, legal issues, personnel reviews, or to improve your business management. You may also benefit from contracting with a business advisor who can be an expert sounding board on business decision-making, holding you accountable and helping you to meet your goals.

What to consider first

First, you need to be clear about why you want help and what you want from any professional. What is your challenge or opportunity?

Next, identify the qualities that would make a professional a good match for you and your business. You want to find someone who:

  • Has skills and experience that exceed your needs
  • Is ethical, transparent and trustworthy
  • Has an approach that fits with your style
  • Is available when you need them

How to find “the right one”

It can be hard to know if someone will be a good match just from looking at a website. We recommend asking for referrals from people you know and trust, and who are also in small business. After getting referrals, though, you must still do your own due diligence! You are not just hiring someone for an hour of their time (even if for now that is all you need). You want to find someone who can be a great support person for your business for months and years to come.

Due diligence

Whether you find a professional from a Google search or a trusted colleague, you need to do your homework. When interviewing potential people to work with, it is important to:

  • Honestly represent who you are and what you are looking for
  • Ask lots of questions to verify this person has the expertise you need
  • Read their testimonials and/or reviews
  • Understand the terms of the relationship and any contract, including fees.
  • Pay careful attention to the questions he/she asks you. (They should be assessing if you are the right fit for them, too!)

(Once you are working with someone, be sure to continue to re-assess your needs and the professional relationship so that you get the outcomes desired as your business grows and your needs change.)

Finalizing the match

Take your time to make a good decision. You need to feel confident that this professional understands you and your needs, will be available when you need them, and will help you implement effective solutions. This person will be an essential business asset – giving you advice that you can use, and helping you to develop systems for your business. With the right support, you will be able to focus your energy on your clients, customers, employees and business goals… and see long-term positive results for your business!

Managing my business in partnership

The first business I owned in San Francisco was a gourmet cheese shop, called Cheshire Cheese, located in the Fillmore District. In a previous blog post I shared how my business partner, Michael, and I decided to go into business together and start Cheshire Cheese. Here’s the story of how we managed and expanded our business partnership.

Seize the opportunities

Six months after we opened Cheshire Cheese, the retail space next door became available for lease and the primary lessee offered us the master lease. (He also gave us his Pacific Heights mailing list and all his demographic studies on the neighborhood!)  We discovered that our sublease was already 75% of the master lease so we jumped at the chance to take over the entire lease.  We successfully negotiated a new 10-year lease with the building owner.  Now we could double our size with the security of a long-term lease.

With limited capital to cover the expansion, Michael and I created a new partnership.  We found two women who could bring new strengths and additional capital to the business.  Tara was a graphic designer and display expert and Lynn was experienced with HR and motivating employees.

With the new next-door location, we added a small café and expanded our identity.  Cheshire Cheese became Cheshire Cheese & Mad Hatter Tea.  With the infusion of additional capital, we could now afford to hire more part-time employees.


Communicate openly

We were now four owners who each brought different skills-sets and personalities to the business.  We had our differences but we were in agreement where it mattered most: our vision for the business, the impact we wanted to have in the community and, most importantly, how we would manage the business together.

We decided on a consensus-driven approach to management.  (An early philosophical decision was to continue only offering vegetarian items and to not expand into wine sales.)  We created a written agreement that reflected our values and our equal ownership.

We held “official” business meetings every Wednesday after the store closed.  We used this time to plan work schedules, discuss personnel, review financial statements, prepare for holiday celebrations, and eat all the free samples that new vendors would drop off for us to taste.  Transparency and honesty was essential for us, so we made sure we talked about money — how we were doing both by the day, the month and based on our annual budget.

Build on lessons learned

Every day was a team learning experience.  We learned about the subtleties of food products, how to serve customers well, how to make strong relationships with vendors, and how to follow health department codes.  Through a lot of trial and error, we were also getting better at running the business profitably, managing it jointly, and working through management and personnel challenges along the way.  The best lessons learned were from hands-on experience.

Plan our exit

After running the business together for five years, two of the partners wanted to move on – one to another business and the other to go back to school.  We all decided we would sell the business.  To get ready to sell, we had to learn how to value our business as an asset, organize our internal systems, leverage our long-term lease, and negotiate with potential buyers.  After several months of planning and negotiation, we successfully sold the business to new owners!  (Cheshire Cheese & Mad Hatter Tea continued to operate for 15 more years.)

Business partnership means attending to both the business and the relationship

Like a business with one owner, a  business with multiple owners must be based on a viable business concept and a solid plan for marketing, money and management.  Unlike a business with just one owner, co-owners must be constantly attuned to the needs of both the business and the owner relationship(s).

Starting off, Michael, Tara, Lynn and I were aware of the qualities that each of us brought to the business – our personalities, passions, purpose, work styles and areas of expertise.  Once we were in business together, we had to pay attention to the dynamics between us — how well our individual strengths or weaknesses meshed, and how well we communicated and made decisions together.  Our written partnership agreement was key — both as a guide for managing the business and as a road map for how we would approach our business exit.

Owning a business with others took a lot of work!  But it was also incredibly rewarding.  With business partners, we didn’t have to tackle business challenges alone and we all got to share in the business’ success.

Are you starting a business in partnership or already managing a business in partnership? At Paul Terry & Associates we help both new and established business partners understand key business issues and how to work best together.  We help co-owners define roles, address key financial issues and minimize areas of conflict.  We also help business owners write partnership agreements and create business action plans so that they can move forward with clarity.