“Whoever is careless with the truth in small matters cannot be trusted with important matters.” – Albert Einstein

It’s tempting to tell a little white lie.

We’ve all done it at some point. Fudged on our SAT scores, the salary of your latest job offer or the time you got up last Saturday.

This week, a successful client of mine, told me that what differentiates his team from the competition is that they are brutally truthful in all matters, even when it leads to a major financial setback.

Your life is built upon a foundation of fundamental values. One of these is honesty.

How solid is your foundation?

C.J. McClanahan
Reachmore Strategies
317-576-8492
cjm@goreachmore.com

Presented by T. Ray Phillips

MMS, Inc., a computer service business, had survived recent industry turbulence through the persistent efforts of its owners, Ralph McMillan and Janet Shaw. In fact, MMS had enjoyed good cash flow for the past three years and its future looked rosy. Successfully meeting these challenges made Ralph (age 59) more anxious than ever to leave the business and Janet (age 48) more than ready for Ralph to leave. But neither owner had a clear idea of how to proceed, who to ask for guidance or even how to take the first step.

Janet and Ralph had to find the starting line before they could run the course to the successful dissolution of their partnership.

Ralph’s Tasks

First, Ralph must assess his income needs and timing of his exit. He must determine how much of the purchase price he needs (or wants) on the day he leaves and how much he is willing to receive after he leaves (a Retirement Needs analysis). This is a very different question from how much his interest is worth yet the questions are related because the cash Ralph needs must be attainable from the sale of his interest.

Second, Ralph must obtain an independent valuation of his ownership interest.

Note: Ralph is unwilling to leave unless he exits with full value for his ownership interest (hence the need for the valuation) and unless that value is enough to meet his retirement needs (hence the need for a retirement income needs analysis).

Janet’s Tasks

Janet wants to balance the risk/liability she and the business will assume in Ralph’s buy-out with the opportunity for continued growth in the value of business interest. Since Janet is likely to be unwilling to buy Ralph’s interest—if doing so puts her (or the business) at too great a financial risk—she must secure a professional’s projection of the company’s future cash flow.

This cash flow projection with enable Janet to determine if the business will likely have enough cash flow (after Ralph leaves) to finance the purchase of Ralph’s interest without stifling the growth and prosperity of the business.

Ralph’s Exit Plan Design

Ralph’s Exit Plan should be designed to:

Use the available cash flow in the most tax-efficient manner possible.
Plan the long-term ownership structure of the company.
For example, after Ralph is gone, what does Janet (the remaining owner) intend to do with the business? Does it not make sense to consider her future exit when Ralph’s exit is being designed and implemented?

Ralph’s Alternatives

As Ralph contemplates his exit, perhaps Janet should consider:

Selling all of the ownership to an outside party. To do so, the business must be marketable and Janet (and perhaps even Ralph) may need to remain for a year or more after the sale. In this scenario, Ralph has a better chance of receiving at least the bulk of the purchase price.
Selling Ralph’s interest to key (or all) employees. This strategy depends on the existence of motivated management willing to assume ownership. Often, a partial sale to a younger management group (keeping control firmly in the hands of the remaining principal owner) makes great sense. This strategy starts to pave the way for the eventual sale of the remaining owner’s interest to this group, can be a great motivation tool and handcuffs this management team to business.
Selling all (or just Ralph’s interest) to an Employee Stock Ownership Plan (ESOP). This design can potentially offer tax and cash flow savings for both Ralph and the buyers.
These are just a few of the many ways to design the exit of a co-owner.

Before any group of co-owners can create a successful exit plan they must employ professionals to:

Assess the departing owner’s needs (a retirement income needs analysis);
Secure an independent valuation of ownership interests; and
Assess the remaining owner’s risk tolerance (dependent on a cash flow projection).

DISCLAIMER: The information contained in this article is general in
nature and is not legal advice. For information regarding your particular situation, contact an attorney or tax advisor. This newsletter is believed to provide accurate and authoritative information related to the subject matter. The accuracy of the information is not guaranteed and is provided with the understanding that none of the providers of this newsletter, including Business Enterprise Institute, Inc., is rendering legal, accounting or tax advice. In specific cases, clients should consult their legal, accounting or tax advisors.
The example provided is hypothetical and for illustrative purposes only.
It includes fictitious names and does not represent any particular person or entity.

To contact T. Ray Phillips Re: subject matter in this article, call
(317) 208-6312 OR e-mail trphillips@finsvcs.com

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Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS under circular 230, we inform you that any U.S. Federal tax advice contained in this communication, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any matters addressed herein.

In keeping with the theme of the New Year and getting your ship sailing in the right
direction, making necessary and often tough changes and decisions, this week I’m
going to take you behind the scenes of how I get so much done and manage so many
different projects, businesses, income streams, and relationships.

The short answer is, I work. Hard, long, often, relentlessly. But, that’s not the
sexy answer you are looking for and to leave it at that wouldn’t be telling you all
the truth.

My business is pretty much divided right down the middle in terms of getting money
and fulfilling for the money we get. My primary responsibility is being me, going
out and getting clients and expanding relationship into bigger opportunities,
creating enough demand to raise fees and become more valuable.

That’s all another way of saying creating chaos, running around causing trouble, and
doing a whole of stuff then having to figure it out after the fact. That’s the way
it goes if you want to get a lot done, we are valuable to a lot of people, and
create above average income.

But, there is after all another side to the business. You can never fully do the
“work on the business” versus “in the business” thing entirely. It’s impossible.
At least someone has to pay attention to the details, deliver on the goods, fulfill
for the money.

Without some backend support, someone taking care of the ying while you’re out
yanging…you’ll go nowhere fast and hit a ceiling in your business quickly leading
to frustration and unhealthy stress. I say unhealthy because too many people think
stress is avoidable and crumble under pressure. Not so. Everything happens under
pressure and stress is inevitable but it doesn’t ever have to be unhealthy.

Back to my point, and my brother, who is my business partner and really life partner
as friend and confidant. I mean, he keeps me alive, out of jail, and relatively
sane.

Yet, I seldom see him, less than once a month now, this year. We talk one
structured time each week and have more random conversations about football and
politics than business, because we have a system for working together, for building
businesses.

We divide things right down the middle both using our own specialized and developed
skills, maximizing our talents, things we prefer to be doing, we do.

Ryan acts as COO and master implementer and I as CEO and Spokesperson, Celebrity
Talent, and hired gun locked in a cage to produce what’s needed for everyone else to
be able to work their magic.

One without the other can’t survive.

Now, you can serve both roles yourself as long as you clearly identify BOTH roles
and divide and conquer with your own time and effort.

Okay, let’s keep this short and sweet, here are my rules of engagement for getting
things done and working through others.

1. Reprioritize Weekly – what can NOT go undone another day
2. As tasks and opportunities expand and you create more you must delegate
responsibility…you can only handle so much, bring on people to help you
3. No Two People work on the same thing – a critical reason why Ryan and I are
rarely in the same place, that would mean only one thing is getting attention
4. Have a diversified business model – some intense labor with high dollars, and
other limited effort for less. For example: my monthly workshop versus private
client business development. Neither could exist without the other – and I couldn’t
exist by doing just one of them all of the time
5. I must dictate my agenda, my to-do list (and my TEAM’s agenda) without exception
6. You must understand opportunity cost and know what your time is worth – and
therefor what an project/opportunity must be worth to say “yes”
7. Be obsessed with results – good or bad – often it’s a fear of an outcome that
prevents us from taking action, eliminate that fear

My team, all of them, are key people in every way. Without each person I could not
perform at my best without a doubt.

And, here’s the big and main point for you this week – YOU MUST BE OPERATING AT YOUR
PEAK and DOING THE HIGHEST LEVEL WORK YOU ARE CAPABLE OF all the time, that’s the
key and secret to achieving maximum results and profits and creating more
opportunities for yourself.

January is one of my favorite months. The feeling of renewal and rebirth that this season brings can be life-changing for so many. For others, especially as we get older, we get stuck back in our grooves.

Why do people as they seem to get older find it tougher to reinvent themselves? To get out-of –the-groove so to speak? Why are the people that are able to reinvent themselves seem to be geniuses that change the world? Ghandi, Nelson Mandela, Muhammad Ali, Madonna, and even Tony Robbins seem to keep themselves relevant through the times when the “norm” is to have “your time, your glory days” and move on.

Steve Jobs had a theory that as people get older, they become more and more engrained in patterns, and these patterns cause them to start to limit their ability to think creatively. The range of their thinking would become smaller and smaller.

These patterns become our groove, they are comfortable and safe, at least we feel their safe. But are they? Is it safe to get grooved in a career, your role in a business, a business model, a certain kind of product or even an economy?

I love working in technology because the very nature of it forces you to turnover old grooves and think in different paradigms almost every day. You can’t get in a groove in this industry. If you do, the world just passes you by…which is pretty much the way it works anyway, right?

What I mean is, are you stuck in an old job groove? an old economy groove? an old business groove? an old relationship groove? or a even an attitude groove?

A new year is not just a new way to date your checks (if you are still stuck in the groove of writing checks, that is). It is the chance to commit to throw yourself into something new. You are not a train, you are built to create, to solve problems, to produce.

You are designed for greatness by your creator. If you are not making the impact of Mother Teresa or M and M, it’s because you are playing a smaller-than image of which you were created. A groove to deep could be your grave or worse yet, the death of your dreams.

Let this New Year bring the rebirth of your dreams, the creation of a new life, of designing the health, wealth and abundance that you and your family deserve. Here is why I think the older we get, the more we get caught in the groove: it comes down to our ego.

Our ego holds us back and here is why: the history of us according to us becomes our reality. We use our reality to create the reasons for who we are and why we are in a particular station in our life. Good and Bad. We get our ego tied deeply into this perception that we become rigid and defensive of our perception of who we are.

And thus the groove, the more hurt we have recovered from, the deeper the groove…the more pain we have suffered, the deeper the groove…the more we have been attacked, the deeper the groove.

Look, I am not saying there are no positive grooves, ones of success and of love and abundance, I am saying we that more than not, our grooves cause us to be more and more inelastic in our ability to reinvent ourselves to become bigger than our situation.

So dance to the groove rather than get stuck in it.

Tony Scelzo
Rainmakers Marketing Group
317-216-6345
Tony@gorainmakers.com