00:00:47Ashley Mitchell, K is the CEO of True. North retirement, advisors and independent Financial advisory firm managing $230 in client assets and located just outside of Portland, Oregon. Ashley specializes in designing building and implementing custom-designed exit plans to help her business on her clients, secure their final and most important business decision, the exit from their business. She is on a mission to Transitions 300 small business owners successfully into retirement in the next 10 years, please, welcome Ashley to the show. So Ashley, how did you get into exit planning?

00:02:29That was a real turning point for me because I realized I never even talked to him about this. I never even talked to him about a what happens if something happens to you, but be, you know, how do you want to exit your business? And so that was kind of the Catalyst to developing some more knowledge and and getting the motivation to do even more narrowly to find what I was doing for clients and helping them with exiting their business. Gosh. I think that's really great. And the thing about the family is always, so interesting having been around so many small businesses and family-owned businesses. Why do you think family Dynamics are so often an issue when it comes to exiting business?

00:04:14I want to set up family to fail. I think no business owner wants to wants to see that happen. So there's that issue. As well as choosing the right successor. Not just the person who you know, you've identified as someone who want to take over but who is really best suited to take over ownership after you exit. That's very important and it's hard to be objective about that if it's your own child, I'm so there's those issues of is this person who I've identified, who's my child, oftentimes? Are they capable, do they even want it? And and then there's Financial considerations as well because a lot of family, you know, if you have a business that maybe your business or three million dollar, how are they going to pay you the most? Most insiders specially children don't have the money for for that so you can structure it in such a way.

00:05:55I mean, I think so. I think fairness is so subjective. I mean, is it fair to say that one of the ways to really avoid strife? And problems is just through good communication and planning.

00:07:08Meet the family issues is just a cell to a third party and you split the money even let you know. And so sometimes there are things that can be done that you may not have thought about, but depending on how important fairness or equality or some of these other factors are and may drive you in a different direction than what you originally considered. So,

00:08:29So good example that that comes to mind is sometimes if your business is structured a certain way like if it's a C Corp or an S corp that might work well for you know for tax purposes while you're working in your business, but as you start to think about exit planning, maybe you actually need to change how your business is structured. And go from a C Corp to an S corp or or vice versa and you can't just change your business structure and then exit your business that that year. So there are certain things that you would need to think about. Well in advance, that oftentimes years and years in advance, especially if you're going to gradually transfer ownership to an Insider is lost. Sometimes that can take 5-10 years, or even longer. So, did you do it right? You really would would start as soon as possible because there are always things.

00:10:16So just because you're working really hard, that doesn't always mean, you have the type of value in your business that you can that you can sell. And I think that that's to your point is planning with the exit in mind, is part of that. So, what are some of the things that business owners can can do to grow the value of their business.

00:11:37You know, you're anyone customer doesn't make up more than 10 or 15% of Revenue would be a wise thing and this happens in small businesses as well as large businesses to like I remember a few years ago or maybe maybe two or three years ago, American Express used to be the exclusive card holder of Costco memberships. So, you know, if you had a Costco membership, it was only the only did those through American Express cards, so you if you shop at Costco YouTube, how to use your Costco Amex or you had to use debit card her paycheck. And so American Express Costco decided. I forget who they went went West, but they decide to end that contract with American Express, American Express, Costco relationship, represented, a huge portion.

00:13:33Fee-for-service practices where you have patients, who are paying in cash. So, one of the ways that they had dental practice, you could increase the volume of your practice just by incentivizing. You don't still have to increase or grow your Revenue. You just have to kind of change where that comes from and diversify that Revenue base. So that's a, that's a good one that I think again, can take some time because it does take time to acquire new clients to, you know, maybe after try two or three different ways of diversification in your Revenue before you can find one that works. So, but so those are, that's just one example, but there are obviously lost two things that business owners could do to grow the value of their business.

00:15:21Left the office. One Last Time. Locked up and never went back.

00:16:26Likely, you're going to have some sort of saleable business or business that is worth something Beyond you.

00:17:36Ask what you do is you actually combine that with all your other resources. So your Investment Portfolio, you know, maybe have rental properties are real estate and you look at that. And you said, okay. When I combine all of my resources together, do I have enough to transition into the next phase of my life or do I have a gap? So it's okay. If the Gap is Big, we just need to know how big the Gap is and if the Gap exists because even if there are things that it makes it challenging for you to change in your business. So let's say that, you know, there's really maybe not a viable option, or at least one that you want to pursue to try to sell your business, but there are other things you can do on the personal side, maybe distill close that Gap. This happens a lot. So, you know, this is the owner might think that their business is worth $1000000, but made

00:19:09Life because they're plowing everything back into the business and if there's nothing to sell there, at the end of the day, then you're kind of stuck in this rat. Race of, you know, how do I get off now? I can't cuz I don't have any money. Yeah. I'm in it. I think it just must be very devastating when you realize, it's not worth what you thought it was because owning a business is hard.

00:20:17Yes, I would say, you know.

00:20:53No, but I've never really looked for it. So, you know, you know, when you find a dead bird, trust me, so, but there is leaves in mind and my husband gets up on the ladder and down below. And I'm holding this bucket of sludge and he's just dumping stuff down. And so we get to the front of our garage for the flowerpots moves, one of those flowerpots and as he's doing it, he just freezes. And I look over at him and he is just thrown out as back. Like, he can't even move on. So he uses his way down to the ground and he's lying there like right in the driveway. And but there's this big storm coming. So I'm like, I don't know what to do cuz every time prior to this, it was just overflowing and it was not good. So I'm like, are you okay there? Like, can I just keep going? So he's like, laying there in the driveway and he's tortured.

00:22:53Is take the time to hire an expert and, you know, it all starts with having a better understanding for what your business is worth. And and what your goals are.

00:23:07So as he goes to his true north r a.com value, my business. I'm actually have a free evaluation checklist there that with eight pieces of information. You can find out what your business is worth in 5 minutes. So that's the starting point. If you want to, you know, better understand what you need to do in order to access successfully and the great thing is is a lot of us, you know, we're just curious if we want to know what our business is worth. And there's the database that we subscribe to has 55 million different businesses in their database. And so it's a robust way for business owners to find out what their business is worth, and we just eight pieces of basic information that you probably already have at your fingertips. You can figure out what the heck, your business is worth.