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Apr 16, 201912:51 PMExit Stage Right

with Martha Sullivan

Is artificial intelligence the right solution for you?

(page 2 of 2)

As discussed in the Know When It's Time to Harvest post, decisions such as this cut to the heart of whether a business owner has gas in the tank to continue to grow his or her business or whether he or she wants to move on and do something different. When you choose growth, you know that your return on investment will take time. You are presumably OK with that. You are willing to put in the time, energy, and capital, and wait for the return.

However, many owners — baby boomers in particular — are feeling the gas gauge sliding toward “E.” According to the Fourth Quarter 2018 Market Pulse Survey published by the International Business Brokers Association in conjunction with M&A Source and Pepperdine Private Capital Markets Project, retirement is the number-one reason driving business owners to sell their businesses. The number-two reason cited was burnout.

I believe labor shortages are fanning the flames of burnout. It impacts our employees, sure, but what about the impact on our owners and therefore the business? When owners are burnt out, efficiency, decision-making, effectiveness, and profitability all suffer. These symptoms show up in the financial statements quickly, creating a direct and negative drag on the value of the business. Buyers focus on the last 12 months of results. They don’t give extra credit for the fact that your company has kicked tail for nine of the last 10 years. If the last or current year financials are showing signs of burnout, the price will go down. It’s best to go to market when results are trending up, not down.

If you’re considering automation as a solution to your labor shortage challenges, you know it’s a complex decision tree. Where does your company fall in the scheme of future automation and artificial intelligence? Where do you sit personally, as a business owner, on the question of investment and energy? What is your plan?

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About This Blog

Spending half her career as an advisor to privately-held and family businesses and the other half in CFO/COO roles, Martha Sullivan is a partner and the succession planning practice leader in the business transition strategies group at Honkamp, Krueger & Co., P.C. She and her team have extensive experience assisting business owners achieve their personal, business, and transition goals. “Don’t think of the 'exit' from your business like it’s a four-letter word. Make it your next adventure!”

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