Mastering Exit Planning: Fletcher Brown on Success Strategies

Wayne Zell interviews Fletcher Brown about exit planning and the influence of his father's book, "How to Run Your Business So You Can Leave It in Style." They summarize the seven exit-planning steps, BEI services and membership benefits, and Fletcher's vision. Topics include BEI's PlanIt software, building an exit-planning process, and the value of monthly technical webcasts and coaching. They also outline key skills for exit planners and share contact details for follow-up.

Key Points

• Understanding and defining exit objectives is crucial for business owners to successfully transition out of their companies.

• Growing business value and minimizing risk are essential steps that often require motivating and retaining key employees to ensure the business can operate without the owner's daily involvement.

• Implementing a structured exit planning process with clear deliverables and ongoing coaching can significantly enhance the likelihood of achieving a smooth and successful business transition.

Timestamps

0:00 Introduction of Fletcher Brown and his journey in exit planning

2:34 The significance of "How to Run Your Business So You Can Leave It in Style"

6:00 Overview of the seven steps of exit planning

17:29 BEI's services, membership benefits, and Fletcher Brown's vision

20:38 Fletcher's experience and introduction to BEI's planet software

23:19 Developing an exit planning process

25:19 Monthly technical webcasts and coaching for BEI members

26:01 Key needs for an exit planner and contact information

27:12 Closing remarks

Quotes

"Transferable value means having a company that can run without the business owner making daily decisions."

- Fletcher Brown

"It's important for owners to find community outside of the business because there's more to life than just working in the business."

- Fletcher Brown

"If family's involved inside of the business and they start early, make sure they leave and go work for somebody else for a period of time."

- Fletcher Brown

"If I take a step back, if I'm an exit planner, I really need three things: a defined process, a deliverable, and some coaching or training."

- Fletcher Brown

Transcript

Wayne Zell: Welcome to Blueprint for Wealth, your fast paced video cast designed to help you realize your personal dreams of wealth and freedom. And we always feature entrepreneurs and special guests who tell their stories of entrepreneurship. And today with me is my special guest, Fletcher Brown, is the CEO of the Business Enterprise Institute. Welcome Fletcher. Thanks for being a guest.

Fletcher Brown: Wayne, thank you for having me. So first,

Wayne Zell: tell us a little bit about how you got into exit planning and how you became the CEO of BEI. I know it's it's a story. Start at the beginning. Give us a little bit of background on that.

Fletcher Brown: It is a story. It's a story that I never thought I would be able to write. It's a great story. It's one that I didn't think I would ever travel. It's an interesting path to get to this particular point.

I think a lot of owners have had that same experience in their life. You know, the Business Enterprise Institute started out of my race car garage, and that's how I grew up. I grew up racing cars, decided to become a firefighter in an EMT because I can drive an ambulance quite fast at that particular time. And that's what I thought my life calling was. And the true life calling happened on a Thursday when the phone rang, and I thought it was someone who wanted to sponsor me and picked it up.

And it was my father. And he said, Hey, I've got I just wrote a book called How to Run Your Business So You Can Leave It in Style, which I think most owners have probably seen of or heard of. And he just wrote this book and he needed some place to store it. And what was interesting is that this book contains seven steps for business owners to follow to successfully transition out of their company. And at the time, we called it exoplanning.

And so every time you hear that term exoplanning, what was coined by my father, right? So he had been working on this process, massaging it through his estate planning practice. He was an estate planning attorney in Denver for thirty years and had written this book about twenty years before he published it. You know, as most authors do and writers, they sit down and they kind of toil away at it and tinker and and play with each paragraph until it's just perfect. Right, Wayne?

You just wrote a book, so I'm sure you're very familiar with the challenges that come with writing.

Wayne Zell: It's tough.

Fletcher Brown: So he he wrote the book. Right? And and it contains seven steps, and he published it. And he wanted every owner to understand that there is indeed a path. There's a path to achieving your objectives and living your best life.

Wayne Zell: So he he shipped the books to you. Tell us a little bit about how that, how that worked out. I mean, you've got a garage. You're, you know, you've got your race car. You're thinking maybe a couple of boxes.

Fletcher Brown: Couple of boxes, right? Yeah, let's put them in the back next to some used race car tires. Why not? I can certainly store these dad. Not a problem, right?

So wrap on the garage door, we rolled up the next day and it's a semi truck. It's got 16 pallets of books. And I'm thinking to myself, this is not I didn't understand what my father was saying when he said, hey, can you store some books for me? And that's really that's how BEI or Business Enterprise Institute began. We began out

Wayne Zell: of 16 pallets of books. Yeah, that's what? How many thousands of books?

Fletcher Brown: I mean, there's there are let's see. So there's 12 cases per row. There are 10 rows. So there's 120 cases, right? And there are 15 books in each case.

Oh, my gosh. Yeah, somebody's got to do the math. That's more than I can do off of

Wayne Zell: my computer. 1,600 times 16. Yeah. Okay. Whatever.

That's a lot of books.

Fletcher Brown: Right? It's a lot of books.

Wayne Zell: Yeah.

Fletcher Brown: It's a lot of books. You know, and I mean, not to go too far off into the weeds, but at the time, this was before Amazon. This was before, Barnes and Noble. This was at a time when, you know, the late nineties when you wanted a book, you went down to your local mom and pop bookstore and you ordered a book. And so the reasoning behind this was to have the ability to ship out all of the books to all of the bookstores across the country who were ordering overnight.

So overnight, we'd come in and there would be a fax with a list of 500 or 700 orders that we would fulfill that day and ship them all out. But it was interesting because we started shipping books, and then our phone would ring and it would be a business owner who would say, Well, I just read about the chapter that that talked about motivating and retaining key employees. How do I do that? Because I don't want to lose my I don't want to lose my COO. Or I just read about the chapter that discussed ESAPs.

Tell me more about this. Or I just read about the chapter that said, I can, in fact, transition this business to my two boys who are involved in the business. How do what are the steps to do that? And so we started to receive phone calls. And from that, we put together material and a training program and a path.

And we built BEI into what it is today, which is the preeminent leader of exit planning knowledge and coaching to advisors and business owners. And so that's that is our entire purpose. We want to make sure that every owner understands that there's a path that you can travel that's based solely on your objectives. Right. That will help you get to the end point, whatever that may look like for you, right?

Because every owner is different.

Wayne Zell: I read the book back in probably February ago, and it's a great book. And while it was written in the 1990s, it still has relevance today and it it really outlines the seven steps. So, tell us about the seven steps of exit planning. As an exit planner myself and as a member of BEI for full disclosure, I was attracted to BEI because of the book and because of the platform and the and the advisers by the way are extraordinary. I've met, you know, gone to the national conference, had an opportunity to speak there.

The advisers are really top flight people all across the country who really focus on exit planning. When you talk about exit planning and you talk about the seven steps in summary, what are the seven steps?

Fletcher Brown: Yeah, well, appreciate all the kind words. And I think that what's most unique about this process is that all of the advisors who incorporate the seven steps into their practice area share a common idea. And that is that they want an owner to benefit from their life's work. So nobody shows up with a preconceived idea or solution. We're not trying to take a round peg and shove it into a square hole here.

And so that really encompasses the methodology or the idea behind the exit planning process, which is to first understand. So step one is to understand what are the business owner, what are your desired exit objectives? And every owner has three core objectives along with many others. But the three main objectives that every owner has are number one, how much longer do you want to work in the business versus operate it? So there's an ownership timeline and an operational timeline that we want to define.

The second one is how much cash do you need to receive from the sale or transfer of your business to maintain your lifestyle indefinitely? So what's that total dollar amount? And the third one is who do you think you would like to transition your business to? And you can prioritize that list. Maybe it's I've got two kids and I'd like them to take over.

But if they can't, maybe it's two kids a key employee or two key employees. And so maybe there's some sort of management team and family buyout scenario that we can help facilitate. Or maybe that becomes too complicated and we could sell it to all of the employees through an ESOP. Or maybe that doesn't get us the dollars quite in a way that we want to or within a time frame. And so we can help go to market and sell the business to a third party, whether that's a strategic buyer or private equity or a financial buyer, whoever that may be.

And so you can see there's a whole variety of potential transition paths here.

Wayne Zell: Right. So you identify the owner's exit objectives, and then what's the next step?

Fletcher Brown: So step two is to really understand the current financial reality and the financial picture of the business. So we need to look at what is the business worth today. We need to do a valuation. We also want to understand what is the business going to be worth in the future at the time that the owner wants to exit. So we want to look at five year projections. And we do that because we want to understand the delta, the gap between where the business is worth today and where it will be worth when the owner is ready to exit.

Wayne Zell: Mhmm.

Fletcher Brown: And so if an owner says, I want to exit in three years and I need two million dollars to live off of for the rest of my life. And we look at the projections and we say, Well, based upon where your business is today and where it's going to be in three years, you might only be at 1.5 million. We have a five hundred thousand dollar gap. And so now what's really important is for the owner to understand that we've got a gap and the reason why we have a gap. So then the third step is to grow business value, and that's what we use to close that gap.

Wayne Zell: Mhmm. That's very important.

Fletcher Brown: It is. So now that we understand that there's a gap, the next thing is to understand, okay, how do we grow the business value by five hundred thousand dollars in three years? And so we look at profitability, we look at the strength and diversity of the customer base, we look at the strength and diversity of the revenue streams. We look at the ownership structure and the organizational structure. We also look at what we call the sustainability of the business. So how is the company going to run itself once the owner is gone? And these are the drivers of business value. And so once the owner understands that these are the things that drive business value, the next thing is that we start to understand. What recommendations should we put forward that will improve these particular drivers?

So maybe it's like improving profitability. Maybe you have unnecessary overhead. Maybe it's like improving the customer base diversification. So maybe you're too dependent on a few key customers. And if one of those customers left tomorrow, it might be a disaster for your business. So we want to look at improving that customer base. Or maybe the owner doesn't have any bench strength. Maybe all of the key decisions are running through the owner and there's no depth in the organization. And so one of the recommendations might be to hire a key executive or a COO to help run the business and take some of that pressure off of the owner. Those are the kinds of things that we're looking at from a recommendations perspective.

Wayne Zell: Okay. So now you have a list of recommendations that will help close the gap and improve the value of the business. Then what's next?

Fletcher Brown: So then we move to step four, which is prioritize and select those recommendations. Because as you can imagine, when we go through that process, we might have eight or nine or ten recommendations that come out on the other side. And not every owner is going to want to implement all of those recommendations. Maybe it's they don't want to do it or they don't have the resources to do it or they don't think it's important.

Wayne Zell: Right.

Fletcher Brown: And so now what's important is for the owner to really understand what is the impact of each recommendation and to help prioritize and select those that make the most sense to them and that will help them achieve their exit objectives.

Wayne Zell: Mhmm. Right. And then what?

Fletcher Brown: So step five is to implement the recommendations. And this is where we bring in the advisor team. We might bring in a CPA, we might bring in a marketing person, a banker, an attorney. These are the people who are going to help implement the recommendations. And remember back to step three, we talked about the drivers of business value. The owner doesn't want to be involved in implementing those recommendations. The owner wants someone else to do it.

Wayne Zell: Right.

Fletcher Brown: And so that's what the advisor team does. The owner is going to communicate with the lead planner, and the lead planner is going to manage all of the recommendations and make sure that they're implemented according to plan.

Wayne Zell: Okay. Excellent. So now you've implemented the recommendations. What's the next step?

Fletcher Brown: So step six is to monitor and measure the progress. And we do that to make sure that the recommendations are actually moving the needle in the right direction. So remember back to step two, we looked at where the business is worth today and where it's going to be worth in the future. Well, as time goes on and we implement these recommendations, we want to see the value of the business increasing towards that target value. And we're going to measure that along the way. So once a year we might look at an updated valuation. And we might say, okay, last year the business was worth 1.8 million, this year it's worth 1.9 million. We're making progress.

Wayne Zell: Good.

Fletcher Brown: And if we're not making progress, then we need to understand why and figure out what we need to adjust.

Wayne Zell: Right.

Fletcher Brown: And then the last step, step seven, is to transition and harvest the business value. And so this is where we actually go to market and sell the business. And remember that we've built this business to be more valuable, more sustainable, and something that's much more attractive to a buyer. And so when we do go to market and sell the business, we're going to achieve those dollars that we said we needed to achieve in step one.

Wayne Zell: Excellent. So there's a systematic process, a structured process to follow from the very beginning to the very end, all the way through the exit and the harvest.

Fletcher Brown: That's exactly right.

Wayne Zell: You know, I think one of the most important things is making sure that the owner has the kind of lifestyle that they want after they exit. And that's really step one, understanding what their exit objectives are. And I think it's really critical that a business owner doesn't just stumble into an exit, but actually plans it. Let me ask you this, though. In our experience, one of the challenges is when an owner would like their children to take over the business, but maybe they're not quite ready or they're not quite capable. How do you work with families in that situation?

Fletcher Brown: Yeah, that's a very delicate situation. And we deal with it often. What we try to do is help the owner see that we need to look at this through the lens of business and not family. And what I mean by that is that if your kids are going to take over the business, they need to have certain skill sets and certain competencies. And we need to develop a plan that will help develop those competencies so that when it is time to transition the business, we know that they're ready.

And one of the things that we really recommend is that if at all possible, kids should work outside of the business first. Because it's a very different experience for a family member to stay involved in the business from their early twenties up into their forties and their fifties. If that's the only thing that they've seen, their vision can sometimes be limited.

Wayne Zell: Mhmm. And clouded too.

Fletcher Brown: And that's right. That's right. Clouded, shaded, limited. You know, you just don't you don't you don't have the life experience to be able to see all of the moving parts and pieces around you.

Wayne Zell: You worked outside the business for a while, didn't you?

Fletcher Brown: I did. It was the best thing that I've ever done. Really? What did

Wayne Zell: you do outside the business before you came back?

Fletcher Brown: So I worked in BEI for fifteen, sixteen years, and then I started a second company that was in the food sampling business. So when you walked into Whole Foods or Sprouts or Natural Grocers, one of these organic markets, and you saw somebody handing out a sample of food, that person probably worked for us. We had three fifty brand ambassadors all across the country. We did 1,000 in store food sampling events a month, and it was quite successful. And then COVID came along.

Wow. And turns out nobody wanted to take a sample of food out of somebody else's hand during that period of time. Right?

Wayne Zell: Let alone get within six feet of them.

Fletcher Brown: That's right. That's right. So that business evaporated overnight, and that was also an experience to be had. And as that business evaporated, I started to spin up my own consulting practice working directly with business owners to help them create exit plans so that they can transition out of their company, which is something that I've been clearly working through and training advisors on how to do that for sixteen years and now having my own ownership experience of success and overnight I don't want to call it failure, but an overnight change of direction That created a lot of experience. And so then coming into the table and working with owners through their own transitions was very helpful.

Because as I incorporated back into BEI, I now had the baseline level of knowledge of being a planning practitioner. What's the best way to go out and support a client? What are the needs? What are the needs of a planning advisor? How can we make the EI more adaptable and change our software that we have to make it more efficient through the planning process.

So how can we show up and have members run multiple plans and have layers of project management in there? So as an exit planner, I'm not going to fall behind the eight ball and putting together an exit plan or showing up at the right meeting with the right deliverable at the right time. Tell us about the

Wayne Zell: planet software that you guys have have morphed and implemented recently, actually.

Fletcher Brown: Yeah. Yeah. So the software is is, I think, fantastic. And I say that because I use it with my own clients. And what was so important for me to develop was a tool that I could quickly come back to and advance through a series of recommendations at each meeting as I present that to an owner.

So a different way to say that is when we developed the exit planning process and timeline, there's a set number of meetings that we want to have with every owner. And the reason why there's a set number of meetings is because we charge a project fee. And so we don't want the tail on the consulting dog to get too long. We don't like it because our project fee rate, our hourly rate sort of dwindles out, becomes too low. And frankly speaking, the client doesn't like it because the client is saying, why are we meeting again?

I thought we already talked about this. I thought we already made this decision. And I've been in that spot before. And it's frustrating when we have to go back and re ask the same questions to get clarity. And so the idea behind the software is to move through a series of drafts with an exit plan for an owner to make sure that we're capturing everything that they say they want to accomplish and that we're now making recommendations and narrowing down the number of recommendations that we want to implement with the owner so that when we get to implementation, we have five ten fifteen recommendations that are very easily implemented.

We already know who the advisors are, who's on the advisor team, what's the start date, what's the end date, and an owner says, Well, this is great. I don't have to do anything. If we remember back to step three, growing business value, owners don't want to be involved in that. Well, most owners also don't want to be involved in the implementation of the recommendations. They just want to know what the status is.

Wayne Zell: Right, right. Excellent. Excellent. So what's the future of BEI under your under your stewardship?

Fletcher Brown: Yeah, well, I think the future is quite bright. We are coming back to presenting monthly technical webcasts to our members. And so we have a level 101, which is an introduction to whatever that particular planning topic is, and a two zero one where we take a deep dive. And so if you are new to the exit planning arena or field, 101 is a great place for you to start. If you want to go deep and expand your knowledge.

Two zero one is a great place to continue to do that. That happens twice a month with all of our members. And then we also have ongoing coaching. So we have an exit planning coaching call that happens once a month. And the coaching is specifically designed to center around the exit planning process.

And how do we continue to move the owner through the exit planning process from beginning to end so that the owner has the best experience possible? Because that's what the owner wants. That's what we want as the planner. Want to make sure that we have the right deliverable. And so the right deliverable comes from our software Planet, and we continue to update Planet to make it more efficient and to be able to look at it in a variety of different ways and to really use it as project management.

So I think if I take a step back, if I'm an exit planner, I really need three things. I need a very defined process to keep me on track by way of keeping my owner on track so that I'm meeting their expectations. And I need a deliverable to give to them because I'm charging a fee. But I don't want to spend too much time recreating the wheel. So give me some software to help me present the deliverable.

And at the same time, if I get stuck somewhere, I want some coaching or some training. And so I can pick up the telephone and call BEI and talk to anybody it, no matter where I am in that exoplanning process and get some support.

Wayne Zell: If folks want to get in touch with you, Fletcher, how do they get in touch with you to talk more about becoming a member of BEI or hiring one of the BEI advisors?

Fletcher Brown: Yeah, the best place to start is to go to the website, exitplanning.com.

Wayne Zell: Wow, great URL.

Fletcher Brown: Great URL. That's right. We're never getting rid of that. Exitplanning.com And secondary to that to send me an email fbrown, right? My first initial and last name fbrownexplanning dot com.

Be happy to talk with anybody.

Wayne Zell: Excellent. You've been a very special guest on Blueprint for Wealth today. Thank you for participating and telling us about not only the seven step process, but your background and also the future of the Business Enterprise Institute. Thank you so much for being a guest today.

Fletcher Brown: Thank you, Wayne, for the invite. Was my pleasure.

Wayne Zell: And stay tuned for more special guests on Blueprint for Wealth. We'll see you next time.