As any statistics buff or craps player will tell you, understanding the odds of a given outcome is in your best interest. They know the mathematical probability of every possible outcome when two dice are rolled and understand they have the highest chance of rolling a 7.
While the resulting number of the dice roll is strictly random chance, gamblers calculate the risk associated with all possible outcomes. Similar to the craps table, your business has quite a bit of risk associated with it as well. These risks can be frightening to some owners when planning their exit. However, understanding the impact of each on their business and how to mitigate them is a crucial step towards a significantly higher “pot” during their exit.
We spoke with Logan Speights, Co-Founder of Proxxy and CEPA since 2022, about risk mitigation measures that can be taken in your business.
Meet Logan Speights
Logan Speights is a highly accomplished Senior Executive, Entrepreneur, Board Member, Consultant, and Mentor with over 20 years of success. Leveraging extensive experience in tech, marketing, operations, and advertising, he transforms organizations through their leadership team.
At his core, Logan is a builder. He has helped to found multiple businesses, as well as a ministry. The building doesn’t stop there though. For fun, he builds everything from cabinets to furniture and chicken coops to horse paddocks. He would say, “Building anything is building something!” As for the future, Logan believes that human-assisted technology, like what he is implementing at Proxxy, is the only answer. It will be a centerpiece of anything he builds going forward.
How long have you worked with business owners?
Logan: Proxxy has been working with business owners for about four years now, but collectively our three founders have over 40 years of experience building businesses as owners or working with other business owners.
Did your owners understand the importance of exit planning prior to working with you?
Logan: In our experience, many business owners recognize the need for the right connections when preparing for an exit, such as finding potential buyers or advisors. But they don’t tend to use those words. Because of that some may overlook key components of a successful exit plan, such as maintaining day-to-day operations or ensuring they have proper legal, financial, and personal wealth strategies in place.
Effective exit planning involves a comprehensive approach that addresses all aspects of a business owner’s life and goals, and it is important to work with professionals who can provide guidance and support throughout the process.
EPI’s State of Owner Readiness Research shows that while owners might have an idea of how they want to exit their business, they do not have a written plan for executing it. Have you found this true in your work?
Logan: Yes. The owners we work with do the components they’re most comfortable with or easiest to grasp. This can include restructuring the books themselves based on internet research. With these few steps in place, they believe that they are ready for an exit. They don’t have any concept of the totality of what all they are looking at.
For example, we have a client who tried to do a generational transfer from father to son. In fact, they had previously tried 4 times and failed each time with the father having to step back into his old role to keep things on track.
When Proxxy got involved we were able to document the plan and walk them through the process allowing everyone to know what to expect and what to do next. The culmination of this was a successful passing of the baton from father to son. In addition, the company has shown an increase in value under the leadership of the son.
What types of risk are hidden in a business that must be mitigated prior to an exit?
Logan: There are numerous risks that business owners must be aware of and mitigate prior to an exit. One of the most critical risks is the need to balance the demands of selling the business while maintaining day-to-day operations.
The process of selling a business can be time-consuming and requires significant attention and resources from senior leadership. However, if the focus on selling the business leads to a neglect of day-to-day operations, this can ultimately harm the business’s value and make it less attractive to potential buyers. It is crucial for business owners to address these risks in advance to ensure a successful and profitable exit. Working with Proxxy helps mitigate most risks, but ultimately solves this problem to maximize the value of the business upon exit.
How do you work with owners to mitigate the risks in their businesses?
Logan: At Proxxy, we pride ourselves on our ability to execute effective risk mitigation and business improvement strategies during the Prepare Gate. Our comprehensive approach involves partnering with other value advisors, allowing them to remain focused on their areas of expertise without getting bogged down in day-to-day execution. For business owners, our services are transformative, helping to optimize their operations with a clear goal of achieving a successful exit.
As EPI notes, “Exit Planning is business strategy,” and we work closely with our clients to develop customized plans that address personal efficiencies, essential initiatives, team dynamics, and management methodologies that align with their specific company goals. Our goal is to ensure that our clients do not lose focus during the exit process and achieve their desired outcomes.
Learn more about mitigating risks in your business in our Exit Planning Content Library.
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