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Last Update: Sunday July 25, 2021

Key Idea: Walk Away (1)

Close the doors. In this video, you'll first meet Joseph Johnson, still working at age 96 years old.  He worked until he was 101 and died at his desk.  Then you meet Ray DiSanto (pictured here).  His company had an excellent reputation --  the pride of Providence and his 40+ employees -- and it all  just melted away when he died suddenly.  More... 

Key Question:


Close the doors. This is your right. You own the business and you can close it down.

Q:  Why would anyone miss the opportunity to get cash for the business they had worked hard to build?

A:  First, because the business is more than money to many owners. In the case of Joseph Johnson, and many others we might add, he probably thought that if he sold the business or passed it on to someone, he would die.

Getting up everyday and having a place to go and things to do is what kept Mr. Johnson productive until he was one hundred and one years old. He used the business as his medicine. The business was his vaccination against death.

Bonnie Brown, a family business consultant based in Oregon, told us that "The senior leadership of a family-owned business stays active in the business because they can't think of anything else to do with their time." Ebby Halliday told us that at 90 years of age she still goes to the office every day because there is nothing she would rather do.

Second, because they think it is of no value to anyone but them. And part of that thinking is they are sure that there is no person on the planet who would possibly want to take over all the headaches of the company and at the same time pay money to take over!

Third, because most people act as if they will live forever. We protect ourselves mentally by not thinking about death or debilitating disease. We learned that Ray DiSanto died suddenly with no succession plan. He had 40 employees and plenty of happy customers! Surely he knew his company had value. Surely he knew it could have been passed on to employees or to an entrepreneur interested in harbor construction or in the infrastructure development of Providence. Ray must have simply thought that he would always be around to lead the company and that was a dire miscalculation.

Think about it

If you died today, what would happen to your business?

Clip from: From Equity to Exit Strategies - 8 Possible Paths

The world:  Most of us small business owners do OK competing with the big businesses in our industries or we don't survive. But when it comes to our exit strategy and succession planning, most of us fall on our face.

This episode is to explore business valuation and exit strategies.

An exit strategy is just like doing a will, but here you try to maximize the dollars you get out of your life's work.   Nobody wants to see you liquidate. That's getting pennies on your dollars. Tangible assets get sold (fire sales) and the intangibles are lost forever. Liquidation is the worst kind of liquidity.  

Most of us will sell our business through merger or acquisition. But, if we get much over two-to-three times sales or six times earnings, we all think we've done very well. Yet, when big business sells, they usually begin at six times earnings. Then we see 40 times and even 300 times earnings on the open markets. Why should we be satisfied with so little?

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We all must prepare today for the invevitable tomorrows.

Small Business Owners Everywhere in the world, We all will exit our business someday.

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Walk Away (1)

HATTIE: Here are your eight choices. Number one. Close it down. Liquidate. Work as long as you are able, then you or your survivors get whatever you can for the physical assets. The results are that you get the least and the company dies with you. There is only the legacy of memories.

HATTIE: (Voiceover) Just around the corner from this "el" (elevated train) stop in a North Side Chicago neighborhood, Johnson Funeral Home does it every day, taking care of the dead and, more important, the living. The founder, Joseph Johnson, has been in the funeral business since 1936.

JOSEPH: I built a business here that's reasonably commendable, but what I do in business is not as important as what I do for others. This is my philosophy: sympathetic, courteous and efficient service. I give it.

HATTIE: (Voiceover) Mr. Johnson kept working until he died at the age of one hundred and one.  We’re sorry to say, his business died too.

(Voiceover) Coastal New England is a watery place. From Boston Harbor to Long Island to Block Island and then inland to Providence, you'll find lots of water, and lots of Ray DiSanto's work.

RAYMOND diSANTO (Harbor Marine Corp.): (Voiceover) We're standing in front of the Providence River and the Port of Providence. The Providence River goes out to the Narragansett Bay and then further on to the ocean. There's a lot of shipping--oil, wood. It's an industrial port.

HATTIE: (Voiceover) Ray's company is Harbor Marine, and he and his crew of 40 do whatever needs to be done on the water.

RAY: (Voiceover) We’re dredging a channel all the way up to the Crawford Street bridge because we’ve already dredged on the other side of the bridge all the way up to Francis Street.

HATTIE: What haven’t yo told me about this business?

RAY: I haven't told you that it's very, very rewarding, especially in the marine business. You can walk around and clear your head. It’s not like being in some building five days a week. I just wouldn’t be able to do that. Isn't it great?

HATTIE: (Voiceover) Ray died suddenly and with no succession plan in place, the company closed its doors.

HATTIE: If you decide to ride down your business and die with your boots on, that’s fine. You made the decision you didn’t look in the mirror and see yourself over 70 years old and out of steam.

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