inc 5000

LBAHS Makes the 2019 Inc. 5000 List

Inc. Magazine unveils its annual list of America’s fastest-growing private companies – the Inc. 5000. For the sixth time, LBA Haynes Strand appears on the 2019 Inc. 5000, Ranking No. 4291.

Inc. magazine today revealed that LBA Haynes Strand is No. 4291 on its annual Inc. 5000 list. This is the most prestigious ranking of the nation’s fastest-growing private companies. The list represents a unique look at the most successful companies within the American economy’s most dynamic segment—its independent small businesses. Microsoft, Dell, Domino’s Pizza, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names gained their first national exposure as honorees on the Inc. 5000.

Not only have the companies on the 2019 Inc. 5000 been very competitive within their markets, but the list as a whole shows staggering growth compared with prior lists. The 2019 Inc. 5000 achieved an astounding three-year average growth of 454 percent, and a median rate of 157 percent. The Inc. 5000’s aggregate revenue was $237.7 billion in 2018, accounting for 1,216,308 jobs over the past three years.

“The companies on this year’s Inc. 5000 have followed so many different paths to success,” says Inc. editor in chief James Ledbetter. “There’s no single course you can follow or investment you can take that will guarantee this kind of spectacular growth. But what they have in common is persistence and seizing opportunities.”

More about Inc. and the Inc. 5000

Methodology
The 2019 Inc. 5000 is ranked according to percentage revenue growth when comparing 2015 and 2018. To qualify, companies must have been founded and generating revenue by March 31, 2015. They had to be U.S.-based, privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2018. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2015 is $100,000; the minimum for 2018 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons. Companies on the Inc. 500 are featured in Inc.’s September issue. They represent the top tier of the Inc. 5000, which can be found at http://www.inc.com/inc5000.

About Inc. Media
Founded in 1979 and acquired in 2005 by Mansueto Ventures, Inc. is the only major brand dedicated exclusively to owners and managers of growing private companies, with the aim to deliver real solutions for today’s innovative company builders. Inc. took home the National Magazine Award for General Excellence in both 2014 and 2012. The total monthly audience reach for the brand has been growing significantly, from 2,000,000 in 2010 to more than 20,000,000 today. For more information, visit www.inc.com.

The Inc. 5000 is a list of the fastest-growing private companies in the nation. Started in 1982, this prestigious list has become the hallmark of entrepreneurial success. The Inc. 5000 Conference & Awards Ceremony is an annual event that celebrates the remarkable achievements of these companies. The event also offers informative workshops, celebrated keynote speakers, and evening functions.

business succession why

Business Succession Planning: Why is it Important?

You may know what business succession planning is but do you know why it’s important?

It’s January 5th and I get a call from a client who wants to sell their business. They had a great holiday break and decided they no longer want to run their business. They do not want to deal with the headaches, stress, and people issues that accompany being a business owner. As their business advisor, I make the following statements and ask a few important questions:

  • Have you met with your financial planner to see if you have enough to retire?
  • Do you know what your business is worth?
  • Your business had a really bad year 2 years ago. Remember, almost all buyers will look back 3 years. This will hurt the value in the sale.
  • Does your executive team know?
  • Have you thought about incentivizing them to stay with the buyer?
  • What are you going to do next?
  • Most buyers of businesses your size, will use a loan to buy the business, and will require you to be out of the business in less than a year.

The list continues during the next few discussions with the client. It’s clear they have not thought of any of these, however they want to sell anyway. During the process, the valuation is lowered by the bad year they had, and a few members of the management team leave as they hear of the sale. The transaction closes after months of trying to sell and going through due diligence with a couple different buyers.

This scenario happens every year. Business succession plans help make sure that if you wake up on January 5 and decide to sell, you have the opportunity to easily answer these questions and many more. Having a plan in place will help you maximize the exit value when the times comes, and also make the process of selling or transitioning much easier for the business.

Contact us for a no-cost consultation to find out if your business is ready to be sold.

succession plan getting started

Business Succession Planning: Getting Started

The best time to have a succession plan in place is the day you start your business. If you do not already have a succession plan in place, today is the day. While many business owners believe getting started is difficult, it is quite simple. The majority of people think it can wait because it’s too big of a topic to cover. When creating a plan, remember to keep it simple and aim for progress, not perfection.

First, business owners need to consider what would ideally happen under two scenarios, retirement and death. The first is easier to think about for a lot of people, so we’ll start with that one and cover death in another post.

When considering retirement, business owners should think about it at least three to five if not ten to twenty-five years in advance. According to the Department of Labor, it is never too early to start planning for retirement. First, talk with your advisors and family, 3-5 years out. Your team of advisors should include your CPA, Attorney, and Financial Planner.

Conversation Starters for Your Team of Advisors:
  • What is my business worth today?
  • How much money do I need in retirement?
  • What can I do between now and my retirement date to build the business valuation?
  • What do I want to happen with the business when I retire?
    • Am I passing it to the next generation of family?
      • Will it be a gift?
      • Will it be bought with cash or over time?
    • Am I going to sell it?
      • Who are the potential buyers – individual buyers, financial buyers, or strategic buyers?
    • Should I let the management team run it, but I will own it still?
      • Are they capable?
      • What type of incentives do I need to put in place to make this work?
  • What am I going to do in retirement?
    • Am I going to stop working completely?
    • Will I do some consulting or gig-economy type work?

This is the starting point. Of course, there are many subsets of questions that will drive the conversation. Discuss these topics with your family to ensure everyone is aligned about what retirement looks like from a timing and lifestyle perspective. These questions can lead down many different avenues. Your team of advisors will guide you down the path that best fits your goals. Business succession planning is far from one-size-fits-all plan and more like a custom “one-size-fits-one”. Build a plan to satisfy your desires, needs, ambitions, employees, and family.

Not sure if you have the right team of advisors in place to help? Contact us today!

succession planning untimely death

Business Succession Planning: Unexpected Death

While planning for retirement is a fun part of the succession planning discussion, we must also cover the less pleasant subject of planning for an untimely death. Most of this information also applies to a permanent disability as well. According to Forbes, three out of five business owners are left vulnerable to consequences of an unexpected tragedy.

It’s April 30 and a business owner client of mine (Bill) has passed away and his spouse calls me. The spouse (Maria) is in a panic. She has never been active in the software Bill owned. Bill died of a stroke just 3 days prior. Maria just came to the realization that she didn’t know if there was money in the bank for payroll on May 4.

Together, we went through a series of discussions that day. I was able to give her all the contacts Bill and I shared with the law firm and financial planner. I was also able to provide information for his payroll service, banker, and the bookkeeper that worked on Bill’s software company. Bill’s management team shared the same concern. Who would run the company, oversee decision making, and make sure clients did not leave?

Planning for this situation, is a challenge as people do not like planning for these unfortunate events. However, there are a number of basic questions and scenarios to consider now. This will help make the situation easier on your surviving family members and employees.

Questions and Scenarios to Consider
  • Do you have life insurance in place that goes to the business to provide a boost to the company’s cash flow should something happen to you?
    • These funds could be used to hire a CEO or consultant to run the company while things are figured out.
  • Have you thought about what you want to happen to the business if you pass away?
    • If so, have you documented it in writing and shared it with your spouse, advisors, and/or management team?
      • Things like:
        • Would you want the management team to use life insurance to buy shares from your estate and run the business as owners?
        • Do you want to leave the business to your children and have them run it? Or hire a CEO to run it?
        • Should the business be liquidated and sold through an M&A transaction? If so, how do you incentivize the management team to stay during this time?

It is impossible to plan for every scenario a business could go through but it is helpful to consider a few possibilities. It is a business that you have built and no one knows better what you want the next phase to be of your legacy, than you. Begin this process today. Have discussions and documentation to help build a succession plan that stands up to many scenarios but provides flexibility as your life and business grow and change. Let us know if you need help with your business succession planning – set up a no-cost consultation today!

value in your brand

There is Value in Your Brand

Every year, Forbes releases a list of the world’s most valuable brands for the year. Included companies in this list are: Apple, Disney, Coca-Cola, and others. This list contains the most polished brands, the ones that consumers believe to be the best and have the greatest brand value. Yes, these are large companies but small and middle market companies can learn a lot from these.

First, take a look at the perception of these larger companies. Consider what you immediately think of when you read the company name or see the logo. Does your company have a positive perception in the marketplace? If the answer is no, you need to find a way to change that. Not only is perception a huge factor to your customers and potential customers, but also to businesses that look to make deals with yours and for people who may be interested in purchasing your business. Always remember the impact of your reputation in the marketplace. Are you respected in the community? Do you have great relationships with your client base? Do your clients trust you? Each of these factor into the overall value of your business.

The companies on Forbes’ list are creative and innovative in their respected marketplace. They found a way to differentiate their company from their competitors to stand out. This is another way to boost the value of your company. When buyers are looking for potential target companies for purchase, they are looking for that extra marketable piece that adds value to the transaction. For instance, let’s say a buyer owns a successful website building company and is looking to buy a social media company. Many social media consultants and companies boast the same basic services. However, if one excels at providing SEO services or CRM services – that particular company made itself more valuable then its competitors and is more appealing to buyers.

Are you are looking to exit your business but just now beginning to think about these things? You may have some work to do to create a polished business that will interest sellers. If you are a new business owner looking to retire in 10-20 years, now is the perfect time for you! You should be thinking about the overall value and focus on creating a business that is attractive to potential buyers from day one. It is never too early to start thinking about an exit plan – it will pay off in the long run.

Our team can help you prepare your business for a sale. Reach out for a no-cost consultation with our LBA Haynes Strand Capital Advisors team.