2024 State of Succession and Exit Planning in Hort. Industry : simplebooklet.com

What is the state of exit orsuccession readiness for businessowners in the horticulture industry? PivotPoint Business Solutions conducted the State ofSuccession and Exit Planning in the Horticulture Industry Surveyto bring clarity to two crucial questions for business owners:Finding answers to these questions is challenging. PivotPointbelieves it is because owners are too busy working in the businessto work on planning for their future and that of the business.Additionally, many owners are reluctant to discuss the “end game”or leaving the business.Consequently, if an owner or business faces one of the dreaded 5D’s – death, disability, disagreement, divorce, or distress – thelikelihood of a successful financial outcome for the owner and thefuture viability of the business may be at risk.The survey results and supporting analysis by PivotPoint’shorticulture team, provides owners with a much-desired baselineacross the most significant drivers of business value. This helpsowners assess where they and their business stand compared totheir peers, answering the question:How do I transition out of mybusiness “without regrets”?“How ready are we for exit or succession?”

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We extend our gratitude to our sponsors—Greenhouse GrowerMagazine, Advanced Grower Solutions, and BEST HumanCapital and Advisory Group—for their support, guidance, andexpert perspectives throughout the survey process.Together, we are dedicated to helping owners transition out oftheir businesses “without regrets” and ensuring the horticultureindustry remains vibrant and profitable for years to come.Enjoy the insights!

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SurveyOverviewSurvey invitations were sent to 1,104horticulture growers, retailers,suppliers, and garden supply ownersbetween March 25 and June 5, 2024.The survey aimed to capture insightsinto the financial readiness of theowner, business readiness andattractiveness, and the readiness of theowner for their next chapter. A total of 138 responses were received. A demographic breakdown ofrespondents can be found in the Respondent Profile section of thisreport. As the first-ever industry-wide survey focused on exit andsuccession planning, we were thrilled to exceed our survey goal of 100responses by 38%. Exit Planners consider these the “three legs of the stool” all crucial forachieving a successful exit. We also used the Value Builder System™ 8Drivers of Growth to identify key operational areas needed toaccelerate growth as owners prepare for eventual transition or exit.We are confident the State of Succession and Exit Planning Survey willbecome a valuable resource for horticulture business owners and arecommitted to continuing to evolve our insights. As we prepare fornext year’s survey release, our goals will be higher, our data andfindings even more robust, and our recommendations furthervalidated so they will be even more impactful to your business andyour future!138 Respondents

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Horticulture business owners, likemany others, start with dreams ofsatisfied customers returningrepeatedly for their products andservices, praising the quality,service, and price. However,reality sets in with productiondelays, employee issues, qualityconcerns, and customercomplaints, which can makebusiness ownership feel more likea constraint than freedom.

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YOUR FREEDOM POINTis the moment when selling your business provides you withenough financial resources to do whatever you want. It's thepoint where you can live the life you’ve always dreamed of, onyour terms. Most owners face the challenge of exiting at “theright time”. Staying too long can lead to diminishing returnsand increased risks, which can erode an owner’s financialbenefits from the business.No54%Yes46%Do you have a formal estimate ofvalue or business valuation?

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Question: "Have you had an estimate ofvalue or a formal business valuationprepared for your business?"Findings: Only 46% of respondents havehad an estimate of value or a formalbusiness valuation, and 57% of thesevaluations are updated "only whenneeded."Without knowing your business's value,you can’t determine your freedom point.Every owner should prioritize at least anestimate of value for their business, if nota full valuation, and update the valuationat least every two years. Often, ownerslearn their business is worth less thanexpected. Although your initial valuationmay not meet expectations, the resultswill guide operational focus to acceleratevalue over time.The survey reveals that business owners in the horticultureindustry have significant work to do in defining their FreedomPoint. Three questions were asked to measure how "ready"horticulture owners are to determine their Freedom Point:BUSINESSVALUATIONIt isn’tuncommonfor an ownerto learn theirbusiness isworth lessthan whattheyexpected.Estimate of ValueFormal BusinessValuationHave Both I Don’t Have Either20% 13% 13% 54%Have you had an estimate of value or a formalbusiness valuation prepared for your business?

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FILLINGTHE GAPQuestion: "Do you have a price orestimated multiple of EBITDA in mindthat you’d like to get for your businesswhen you sell it?"Findings: Fewer than 46% ofrespondents have a price in mind fortheir biggest asset and driver of networth.The lack of formal valuations maycontribute to this. Combined withknowing your business value,understanding your net worth outsideof the business will help you knowwhat you have today and what youneed for tomorrow. It is impossibleto fill yourfinancial gapwithoutknowing whatyou havetoday andwhat you needfor tomorrow.Do you havea price orestimatedmultiple ofEBITDA inmind thatyou’d like toget for yourbusinesswhen yousell it?46%54%YesNo

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Know your business's current value.Understand the financial resources needed foryour desired lifestyle.Identify the gap between these two figures.THE P INTTo achieve your Freedom Point, it's essential to:By addressing these factors, you can make informeddecisions and plan for a future where you live the life you'vealways dreamed of, on your terms.Question: “Who do you consider to be your most trustedadvisor?”Findings: Many owners are unaware of how much they needfrom their business to confidently live life in the long term andare often too busy with day-to-day operations to focus onpersonal financial planning. Only 12% have a financial advisorthat they consider a "trusted advisor".A Certified Financial Planner® who understands your goals,financial situation, and business strategy can partner with youto identify financial gaps and protect what you have today,while you work to achieve your long-term financial goals.PERSONAL FINANCIALPLANNING

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If you are the “King or Queen” ofyour business, if may bechallenging to implement yourexit or transition plan. Owner-centricity, or the owner’s trap, isone of the biggest value “killers”in the eyes of potential buyers,who want to ensure the businesscan operate independently ofthe owner. Therefore, it’s crucialto have the “right people in theright seats” to lead dailyoperations. Customer loyaltymust be tied to the business,not the owner. Processes needto be well-documented,learned, and shared to ensure aseamless operational transition.

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With multi-generational, family-owned businesses makingup much of the horticulture industry, it’s common to seeowner-centricity as a major hurdle to creating atransferrable business. Many owners started young in thebusiness and have led through various economic andbusiness cycles, forming many of today’s operationalstrategies. These owners hold a wealth of insight. If theirknowledge isn’t shared across the team, the value of thebusiness will likely suffer. 5%28%38%15%14%TargetedProduct Mix OtherExceptional &PredictableService LevelsBrand &Reputation inthe MarketsWe ServeCommitmentto CustomerSatisfactionWhat do you believe to be yourstrongest competitive advantage?

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We explored how owners address theowner’s trap with questions to measuringtheir influence and control in the business. Question: “What do youbelieve to be your strongestcompetitive advantage?”The majority (38%) perceivedbrand and reputation as theirbiggest advantage, followed bya targeted product mix (27%),exceptional and predictableservice levels (15%) andcommitment to customersatisfaction (14%).You want your competitiveadvantages to be associated withyour team and the businessrather than tied to you as theowner.COMPETITIVEADVANTAGEIf an owner’sknowledgeisn’t sharedacross theteam, thevalue of thebusiness willlikely suffer.

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TIME WELL SPENTBuilding ateam thatcan functionwithout themManagingfinancials andcash flow Documentingstandardoperatingprocedures58% 45% 43%Findings: 58% of owners ranked wanting to spend more timebuilding a team that can function without them, followed bydocumenting standard operating procedures (45%), managingfinancials and cash flow (43%), and upgrading technology orsystems (38%). Despite this, owners spend an average of only 8%of their time on human resources and people development.If building a team is truly the top value driver, owners need toprioritize making it happen.Question: “Which business issues do you feel you need to focuson to increase the value of your business to a potential buyer?”Upgradingtechnology orsystemsHumanresourcesand peopledevelopment38% 8%Which business issues do you feel you need to focus on toincrease the value of your business to a potential buyer?

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Findings: 64% of respondents have not taken a vacationlonger than two weeks in the past two years. Fortunately, wesee that 26% of owners have taken a two-week vacationwithin the last year.A proper work/life balance is essential for owners and theirfamilies. If an owner can take a two-week vacation without thebusiness suffering at all, it is likely the right management team isin place. 43% of respondents have never taken avacation longer than two weeks.4Question: “When was the last time you took a vacationlonger than 2 weeks?”WORK/LIFE BALANCE

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Findings: Only 34% of owners with asuccession or exit plan have shared itwith their management team, whileanother 30% stated that somemanagement are aware. Your keymanagement team is integral to yourtransition. Train and mentor them to beyour replacements. When activelyengaged, your people will reduce ownerdependence and enable the business tofunction well in your absence.Additionally, 47% of respondents do nothave a plan to inform their broader teamabout the intention to exit the business.Bringing the plan to the team can becomplicated. It is helpful to bring in anexpert to craft the message you want toshare, including individual impact. If youhave a plan to reward key employees fortheir loyalty when transition occurs,employee engagement will likelyincrease. Question: "If you have an exit plan, is yourmanagement team aware of your plans?"SHARING YOUR PLANSWhenactivelyengaged,your peoplewill reduceownerdependenceand enablethe businessto thrive inyourabsence.Have not sharedHave sharedSome Are Aware34%36%30%If you have an exit plan, is yourmanagement team aware of your plans?

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A potential successor or buyer will value yourpeople, especially considering the labor challengesin the horticulture industry. An in-house HR professional or an outside HRpartner is crucial and worth the investment. Therole will help your business be competitive inattracting and retaining the best talent andmonitor the ever-increasing stream of laborregulations.Commit to transparency. Open communication willfoster greater certainty and purpose amongemployees, increasing their commitment to thebusiness. THE P INTWhen employees know there is a plan for the future withbenefits for them, they are more likely to activelyparticipate in the transition process.Invest in hiring top talent, at market rates. It will decrease owner dependency and boost company value and sales price.

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Technology can be one of thelargest capital investments in abusiness, yet many owners fail torecognize the vital link betweentechnology and a company’sprofitability. Leveragingtechnology to boost efficiency,standardize processes, improvequality, optimize cash flow, orpromote customer satisfactioncan be the difference betweenaverage and exceptionalprofitability. Implementingtechnology that supports strategyand automates operations canalso significantly enhance abusiness’s attractiveness topotential buyers.

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Business owners need to understand that the standard forevaluating technology is set by potential buyers. It’s irrelevant if thecurrent team is comfortable with the technology or if it wascustom developed by the owner.What is deemed “acceptable” by the team might be seen asmerely “adequate” or possibly a “value-destroyer” by a potentialbuyer. Having technology that is widely accepted industry-wide,and a team trained to use it effectively, can significantly enhancebusiness value. What is deemed “acceptable” bythe team might be seen as merely“adequate” by a potential buyer.When we looked at where owners want to invest to increasebusiness value, surprisingly 38% ranked technology investmentsas a priority. This technology disconnect led to a deeper look intohow technology can impact business value.73%of owners consider their technology “acceptable”15%of owners ranked their technology as leadingedgeThe survey revealed that...

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Question: "How are the systemsand processes for operationalfunctions documented andshared?Findings: The majority (61%) havedocumented processes either onpaper (30%) or online (21%).However, 37% have notdocumented their processes atall, with 11% relying on memoryand 27% on verbalcommunication.The processes a business uses areoften influenced by theirtechnology, staff habits, andculture. Documented SOPs helpstandardize tasks, simplifyonboarding or transitioningemployees, and provide a valuableplaybook to the new owner on howto run the business.DOCUMENTEDSTANDARDOPERATINGPROCEDURES(SOPS)37%11%27%No DocumentationRelying on MemoryVerbal Communication

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Question: "How do you most often measure customer satisfaction?"Findings: Customer satisfaction ranked as the lowest competitiveadvantage by respondents (14%). The process for capturingsatisfaction information remains manual with 60% of respondentsgathering customer satisfaction feedback verbally and 28%relying on their “gut” feeling.This creates a question about why this information isn’t prioritizedmore. Automated solutions can regularly connect with customers,gather crucial satisfaction data, and provide actionable insights tothe team giving owners qualified and quantified data to share withpotential buyers. CUSTOMER SATISFACTION Question: "What percent of your revenue is recurring?"Findings: Of the respondents, 35% reported that more than 25% oftheir annual revenue is recurring, while 40% reported less than 1%recurring revenue.Higher recurring revenue can trigger a higher offer for the businesssince it is predictable, except when it’s dependent on the owner’srelationship with customers. A loyal customer is a returningcustomer and potential buyers will scrutinize loyalty and satisfactiondata during due diligence.CUSTOMER LOYALTY

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Engage an experienced, objective outside resourceto conduct a technology assessment. They canevaluate and advise on critical areas for a futuretransition, benchmark against accepted industry-wide platforms and best practices and create a planfor migrating to a new technology set.Don’t feel constrained by current technology,staff habits, and culture when creating SOPs.What works for your team may not work forothers. View the SOP from an outsider’sperspective to minimize learned dependency andreduce mistakes, misunderstandings, andmisalignment.Work to minimize owner dependency withcustomers. Ensure that customer loyalty is dueto non-owner factors like breadth and quality ofproducts and a customer-first mentality thatdrives exceptional satisfaction.THE P INTTechnology can drive consistent processes when appliedthoughtfully. Highly customized technology can be a red flagfor buyers who lack in-depth knowledge of the business,team, or client base. To assess your technology solutions,consider the following steps: Properly identifying and documenting relevant SOPs andusing technology to automate and enable operations willstreamline processes and boost customer satisfaction,thereby increasing future business value.A loyal customer is areturning customer.

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The time of year can significantlyinfluence whether businessowners are thinking aboutexiting. After a particularlyhectic or challenging season,there is often an uptick inowners wanting to discuss theirexit plan. Once the stress of theseason subsides, many revert totheir usual routines and ownersfind themselves once againimmersed in running theirbusiness, preparing for anotherhigh season, with no exitstrategy in sight. This cycle iscommon and difficult for ownersto break.

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3On average, owners rank their readiness to 1We asked a straightforward question for the initial measurement ofhow seriously horticulture owners have prepared for their transition: 4% of respondentsare personallyready to exit today16% of respondentsare not prepared at allHow many respondents feel they are personally ready toexit today and how many are not prepared at all? Only 4%of respondents feel personally ready to exit today, while16% are not prepared at all. These results are not surprising given the current state of the industry.Strong performance often makes owners feel they have ample time toplan for the future, but the opposite is actually true. Strong performance means higher offers from potential buyers,whereas during downturns, the value buyers are willing to payplummets. This initial understanding of exit readiness prompted us toexplore several factors that speak to business and personal “readiness”.

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10transfer their business to new ownership as a Question: "What is your horizon for transition or exitfrom your business?"Findings: Surprisingly only 6% of respondents want to exit now.10% plan to exit within two years, 35% in 2-5 years, and 49% in 6+years. Meanwhile, 66% of respondents have annual revenue over$2 million, with nearly 50% having a pre-tax profit of 10% orgreater.A thriving industry with strong revenue streams and goodprofitability reduces the urgency for an exit “by choice”. However,many exits are forced by chance—due to unexpected death,disability, disagreement, divorce, or distress. Alternatively, a greatoffer from a buyer might prompt an exit. Owners need to be readyto exit when the time is right, whether by chance or by choice. TIMING FOR EXITNow< 2 Years2-5 Years6-8 Years> 8 Years6%10%35%15%34%What is your horizon for transition or exit from your business?

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72% rated the need tohave an exit plan as amoderate, high, orvery high priorityNearly 60%do not have adocumented exitplan or strategyQuestion: "Do you have an exit plan?"Findings: Nearly 60% of respondents do not have a documentedexit plan or strategy. Despite the lack of urgency, 72% ofrespondents rated the need to have an exit plan as a moderate,high, or very high priority.Exiting the business can be daunting, but with the right team ofexperts and alignment with stakeholders, creating and executing aplan is achievable. STATUS OF THE EXIT PLAN

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Question: “On a scale from not prepared at all to prepared to exittoday, how ready do you personally feel to exit your business?”Findings: Among the 138 respondents, only 4% feel prepared to exittheir business. 22% have started considering exit, and 58% haveinitiated conversations with family, management, and trustedadvisors about their exit strategy.Overall, 62% are “thinking” about exit, yet many haven’t fully leveragedthe people crucial for a successful exit—management, often includingfamily, and trusted experts or advisors. Owners frequently hesitate toinclude their team in exit discussions for fear of creating panic thatcould lead to unexpected departures. If you manage your businesswith the end in mind, exit discussions become routine. The teamunderstands the importance of building business value, creating ameasurable incentive to contribute and reap the rewards of the endgame – the eventual sale or transition to family or management.PREPARED AND SHAREDQuestion: "What do you plan to do after you exit yourbusiness?"Findings: The majority of owners, 58%, want to travel and 54%want to spend more time with their family. Health is a priority for31% of the respondents. Giving back through philanthropic orcharitable work is pulling on 30% of respondents, while 20% arebeing drawn to the boardroom and classroom where they canshare their business and horticulture knowledge and expertise. This is a boon for the companies, universities, colleges, and schoolsthat can tap into the wisdom of horticulture owners. Additionally,15% of respondents expressed a desire to start or purchaseanother business. Owners who are pulled to something post-exit,rather than being pushed out of the business, will find greaterhappiness and success in their next phase of life.WHAT’S THE PULL?

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A documented exit plan should be part of yourongoing business strategy. Like any other businessgoal, exit plans need to be updated and progresstoward the end game should be reported.Involve your family and management team in exitplanning as early as possible. They will understandthe importance of building ongoing value in thebusiness. You’d be surprised by the increasedcommitment and effort from management oncethey are part of the discussion and have “skin” inthe game.You need a purpose in life post-business ownership.It has been proven that retirees without a purposehave a higher occurrence of depression and healthissues. You deserve more!THE P INTTiming is crucial when it comes to exiting your business,whether transitioning to the next generation, selling internallyto management, or externally to a third party. To prepare:For years, you’ve put your blood, sweat, and tears into yourbusiness. Exiting without regret means starting early, having anend game, and bringing all relevant stakeholders together toachieve your goals. Owners who are pulled tosomething, rather than beingpushed out of the business,will be happier and moresuccessful in post-exit life.

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If there is one word to describethe horticulture industry, itwould be “family”. Much likeagriculture, horticulture consistsof farms and businesses thathave been family-owned forgenerations. In fact, 91% ofsurvey respondents representfamily-owned businesses. Whenit comes to creating asuccession or exit plan, uniqueconsiderations involvingexpectations and emotionsarise and cannot beunderestimated.

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91% of businesses representedin the survey are family-owned and operated.It is estimated that trillions of dollars will be transferred from babyboomers to younger generations through 2045. Research indicates thatfamilies avoid talking about wealth and business transitions due to thecomplexity, emotions, and stress of these conversations. Though it’s human nature to avoid conflict, addressing these issues earlyand often is crucial for ensuring the well-being of your business, team,and clients.Likelihood Business Survival Through Generations 30%survive into the 2nd generation12%survive into the 3rd generation3%survive into the 4th generationSource: Exit Planning Institute

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Question: "What generation owner are you?”Findings: While 39% of businesses are first-generation, well over50% are second (37%), third (16%), even fourth (6%) generationbusinesses.Impressively, two businesses in the survey are even beyond thefourth generation. Given most businesses do not survive beyond thesecond generation, these numbers highlight how horticulturefamilies are dedicated to growing and running a business.GENERATIONAL IMPACT39%37%16%6%2%First GenSecond GenThird GenFourth GenBeyondFourth GenWe aimed to measure how many companies haveplanned successions and understand how ownersare managing the succession conversations: What generation owner are you?

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Question: "Do you have family interested in taking over yourbusiness, and if so, who are they?"Findings: Almost 50% of respondents have family membersinterested in leading the business, with 42% being children and10% being siblings or extended family.This means 50% of respondents may need to consider aManagement Buyout, an Employee Stock Ownership Plan (ESOP),a third-party sale, or liquidation. For those whose business nameincludes their family (33% of respondents), a name or brandtransition might be necessary for a smooth transfer. A strongowner-centric brand can negatively impact the sale price due toconcerns about customer and team retention post-exit. PROBABILITY OF FAMILYSUCCESSIONQuestion: "If you have family interested in your business, haveyou started talking about succession?”Findings: Among those expecting family succession, 55% havestarted these conversations. This first step is vital tounderstanding and addressing family expectations anddifferences.The remaining 45% may either feel they have time or believe theconversation may be confrontational. When you do have theconversation, the family often feels included and closer creating apositive outcome. THE TALK

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Starting early. Initiate succession conversationswith your family well before you plan to exit. Thishelps identify potential friction points early on.Seek professional help. Engage a trustedfinancial advisor or exit planner who is notemotionally invested in the wealth and businessconversation to prepare the family and facilitatethese discussions.Consider alternatives. If no family members areinterested, explore an Employee Stock OwnershipPlan (ESOP), Management Buyout or third-partysale to avoid liquidation or a “fire sale”.THE P INTFamily succession is complex and stressful. Tonavigate this, we recommend:Family involvement is critical to post-exit happiness. Bystarting conversations early and addressing potential issuesthroughout the process, you can avoid regrets and ensure asmoother transition.55% have startedhaving familysuccessionconversations

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At PivotPoint, we understand thedownside of exiting a business bychance. Time is short, emotions arehigh, challenges seem daunting,and regrets loom. It is definitely notthe ideal way to step away from abusiness that represents your life’swork.Exiting by choice—when and howyou want to exit—is ideal. You don’thave to feel trapped. Thehorticulture industry is thriving.Buyers are buying, and if you’relucky enough to have family whowant to carry on your life’s work,profits and time may be on yourside. You simply need to getstarted. It all begins with an exit orsuccession plan.As we look back at the results ofthe 2024 survey, we relied on whatwe considered the mostcompelling measure of the entiresurvey—horizon for exitDepending on where you are onthis horizon, the speed at whichyou work through necessaryactions will vary. If your horizon isshort—it’s time to get busy.If your horizon is longer—you can’tbe complacent, but your pace canbe more deliberate. In either case,you can get it done!Here are our recommendations forall horticulture business owners.These are the keyrecommendations that we believewill have the greatest impact onyou and your business withoutpulling you too far away from theday-to-day.Imagine your next road tripwithout a GPS. You’ll have a hardtime getting to your destination.The same is true for an exit plan. You must have an exit planPivotPoint’sTop Ten

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On average, an owner needs 3-5years to build and execute an exitplan that maximizes value andreturn. 32% of survey respondentsdo not have an exit plan. Evenworse, of those owners who wantto exit in less than two years, 55%haven’t yet started their exit plan. The thought of exiting ortransitioning your business beginswith you. Ideally, you started yourbusiness with the end in mind, butthe survey tells us that likely isn’tthe case with an average businessreadiness score of 3 out of 10.Owners are too busy in the day-to-day, and they avoid thinking aboutexiting. The dynamics of building aplan and readying the businesscalls for a team made up of trustedadvisors, your management, andyour family. Exit planning is a team sportThe good news from the survey isthat team awareness around theexit plan increases the shorter thehorizon.For owners wanting to exit in lessthan two years, 80% respondedthey have somewhat orcompletely shared their plan withtheir management team, whileonly 45% have shared the planwith all employees which isexpected. Once you’re ready, yourintentions need to becommunicated properly to avoidmisinterpretation. It is suggestedthat you bring someone in to helpdeliver the message in a way that isreassuring to all.Communication is key It’s all in the name If you do not have children orextended family interested in yourbusiness, and your business nameincludes your last name, you maywant to consider renaming thebusiness as part of your exit plan.If exit planning is a team sport,then the coach better be a greatleader and communicator.

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34% of respondents reported theirlast name is in the business name.76% of these owners, do not havefamily interested in taking over thebusiness. When a buyer looks atthese businesses, they will beprone to believe the owner is thebusiness.Questions about how the brandwill fare after the owner leavescreates uncertainty and likely alower sales price. A gradualtransition to a new company namethat is introduced with purposecan be a positive experience foryour team and your customers.Even if you have family ready totake over the business, have acontingency plan. What you thinkwill happen, may not.Do not wait until exit to focus onyour own personal financialstrength. This is one area wherewaiting too long makes it difficultto catch up and hit post-exit goals. It was wonderful to see that manyrespondents named their spouseas their most trusted advisor. In life,that is great. In business, it’sprobably not the best choice.While your spouse should offeradvice and support, in most cases,it takes an experienced team tohandle the more complex aspectsof exit. A business owner needs an exitplanner, personal financial planner,attorney and/or a CPA on their sideto have the best chance ofcompleting the important exitsteps.Your spouse is not yourtrusted exit advisor Prioritize personal financialreadiness On a scale of 100, the averagefinancial readiness score ofrespondents was 58. Only 12% ofrespondents stated they are 100%financially prepared for exit. 27%ranked themselves over 80%. If youaren’t 80% or above, you need afinancial planner.

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If you picked only one, we wouldrecommend an exit planner orfinancial advisor. They are theadvisors most likely to look at yourentire strategy.The owner is not king. It is thecustomer, at least in the eyes of abuyer. A company is moretransferrable if it has highcustomer satisfaction that hasbeen measured andcommunicated.Only 7% of respondents do awritten client satisfaction survey,the majority being owners whowish to exit in less than two years.The rest gather feedback verbally.It is nice to hear customers singingyour praises, but it does not meetexpectations of a buyer interestedin understanding customer loyaltyand predicting repeatable futurerevenue. Surveying customers canbe affordable when using onlinetools, and the best practice is touse the Net Promoter Score asyour measure. The customer is king Survival of the fittest Take a break. A company thatcannot survive without its ownerwill be difficult to sell. Focus ondecreasing your involvement inday-to-day operations. We knowit’s hard, but you need to get yourteam ready, and test run them foryour exit. Take that vacation and do it oftento decrease owner-centricity. If youfind the business suffers whileyou’re gone, you likely don’t havethe right people, haven’t mentoredthem, or entrusted them withenough authority. The balancing act To balance immediate profit andfuture investment, consider yourexit options and timeline.Reinvesting in people, technology,and advice enhances yourbusiness’s appeal and value topotential buyers.

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We’ve saved this as our lastrecommendation as it is cruciallyimportant to everything we’vediscussed thus far. If your businessis not ready for sale or transition,you won’t get full value for it. On ascale of 1 to 10, survey respondentsaveraged a 3 on businessreadiness. No one rated higherthan 6.Those wanting to exit in less than 5years are not ready which meansthey may not sell and if they do,they will likely sell at a discount.Your business is your largest asset!If you do one thing this year, focuson getting it ready so you can exitby choice when the time is right.Business readiness is criticalConsistently allocate profits tothese areas to show commitmentto continual improvement. Toattract buyers, aim to be best inclass, emphasizing reinvestmentover short-term profitability. Investearly and often to ensure yourbusiness stands out when it’s timeto sell.

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Of the remaining 20%, 40% will sell at their desired price with thebalance (60%) selling at a discount. That means, withoutintentional planning, only 8% of U.S. businesses that intend to sellover the next 10 years will sell at their desired price!The primary reason businesses are not selling is because theowner does not have an exit plan. They are not prepared. Theydon’t attract a buyer’s attention and if they do catch a buyer’s eye,the offer is low because they don’t have a firm foundation onwhich to showcase the true value of their business. As an ownerthe choice is yours. Spend time today so you can live out yourdreams tomorrow or take a risk and see what happens.You decide.Several years ago, the SmallBusiness Administration (SBA)reported that over 10 millionbusiness will change hands orshutdown over the coming 10years as the Baby Boomergeneration retires. The ExitPlanning Institute (EPI) lookedat this assumption in its 2023National State of OwnerReadiness Report and estimatedthis “tsunami” represented a $14trillion wealth transfer.EPI believes a staggering 80% ofthese businesses are notsaleable or do not have theproper talent or family pipelineto continue.Without intentional planningOnly 8%of U.S. businesses thatintend to sell over the next10 years will sell at theirdesired price

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Our team at PivotPointtakes pride in our ability to“get” entrepreneurs. Thatconfidence comes from ourteam of advisors who havebought, sold, merged with,and managed numerousfamily-owned businesses.We have lived with andconquered many of thechallenges business ownersface in their business. It canbe exhausting, as well asenergizing, to buildsuccessful businesses thatcreate jobs and advance thecareers of team memberswhile providing a great lifefor our families. PivotPointunderstands the good andbad days of businessownership.When an owner hasinvested their life in abusiness, it is important thatthey move into their next lifeadventure knowing theirbusiness, their team, andtheir clients are in goodhands. That they’ve left alegacy of great products,customer service, and value.Achieving this goal requiresthoughtful operationalgrowth and exit planning tooptimize the value of thebusiness. We are committedto working with owners tohit these goals.Our horticulture expertiseruns deep. We proudlypartner with the horticultureindustry’s top serviceproviders including BESTHuman Capital & AdvisoryGroup, Advanced GrowerSolutions, and Hathaway &Lane as well as financialplanners, attorneys,accountants, insuranceproviders, and transactionspecialists with uniquehorticulture expertise. We live by the motto of“have no regrets”,particularly when it comesto exiting a business.

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We quarterback our clientengagements bringingtogether the people andresources needed to deliverrefined, holistic planning.And, as a member ofAmericanHort, we arecommitted to providingeducation and sharing ourinsights for horticulturebusiness owners across thecountry. We are proud of ourentrepreneurial businessheritage and are committedto sharing what we’velearned with other owners.Learn more about PivotPointBusiness Solutions and ouradvisory team, or access ourlibrary of complimentaryassessments, articles, eBooks,and blogs focused onbusiness growth and exit onour website atwww.pivotpointbizsolutions.comWhat Next?Refined andHolistic ExitPlanning

2024 State of Succession and Exit Planning in Hort. Industry

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