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Spring Training

John Kielich, CPA - Managing Director for Kolb+Co. M&A Advisers   email | bio 
LeAnne Foster, CPA - Senior Associate for Kolb+Co. M&A Advisers   email
March 2010

Baseball players are in full swing at various sites in Arizona and Florida for Spring Training. These players will spend countless hours going through conditioning and skill drills followed by the exhibition season to get them prepared for a 162 game season. This routine of preparation has been repeated for a long time, and thus, must be a fairly successful method.

Can you imagine if the team members were allowed to show up only a week before the first official game of the season? You wouldn't know if the pitcher and catcher could work well together, if the first baseman can stretch enough to stop an overthrown ball or if it would be best to have the center fielder and left fielder change positions. There is no way to know how the players function as a team without giving them the chance to spend a lot of time together learning about each other's strengths and weaknesses. You need to be able to identify what skills need to be added to the team and also to know where to look for replacement players should someone get injured. Preparing the team for a successful season is all about giving them the training and tools they need to be self-sufficient on the field.

These same planning and preparation techniques directly correlate to practices that should be in place within your organization. Taking time to prepare and condition your company to run smoothly without your coaching is an imperative part of succession planning. Lack of preparation and conditioning by a business owner is terribly common, because business owners are too busy working. In addition, many business owners ignore the fact they do not know what they want to do with their business when they want to or are forced to quit working. Most owners cannot imagine not working and find it hard to plan for something they cannot even picture ever happening.

Why is it so important to know how you can exit your business? Let's go back to that sports analogy.

Scenario 1

Let's say you want to sell your team. Your team made it to the playoffs last year, and it is a sure thing that you will make it all the way to the World Series next year. There are certain things a prospective buyer will want to know such as whether or not the team can function independently of you. If the team can, then it is worth a great deal. If the team relies on you to plan their every move and cannot function without you, then your team is not worth much since you, the business owner, are the source of the company's revenue due to the team's dependence on you.

Scenario 2

Again, you want to sell your team, but now let's say that the team made it to the playoffs and has a great coaching staff. You, the team owner, have stepped back more and more over the past several years letting the coaches lead the team. The coaches enjoy their jobs immensely and have no desire to work elsewhere. This is a valuable commodity to take to market. The prospective buyer has likely been watching the team for many years and can see the team is self-sufficient and can operate well without you.

Selling a business that can run itself speaks ever so loudly to a potential buyer. The value rests in the company and not solely with the owner. Do you have this team in place? If that approach doesn't work for your business, which plan would work? Do you need to be looking for an internal buyer and spend time training and equipping them to buy the business from you?

There are many ways of exiting a business. The question is, as a business owner, what are you doing to be prepared for the transition of your business? Do you take time every year to prepare yourself and your team for game time? Have you set a time at which you will move on and are waiting for the day? If you are in one of these situations, think about the need for an annual "spring training."