Your Practice as Your Most Valuable Asset

As attorneys, we don't always think of our practice as a business but it is, in fact, the most valuable asset we have. It is important to understand the value of a practice and the right way to exit your business if you feel it is time for a change.   In this episode we discuss: Creating enterprise value while planning an exit strategy What is enterprise goodwill How it’s all about cash flow The three ways to exit a business How a business is valued The importance of mindset The retirement income gap Financial tools for estimating the worth of your business Capturing growth and investing it for the future Security in knowing you can create more The importance of Buy-Sell Agreements  Bio: Michael’s mission is to help associations, business owners, executives and their families make prudent financial decisions to avoid financial failure. Michael coaches his clients on the academics of investing, based upon Nobel Prize economist’s investment strategies and theories. During the exit planning process, Michael help his business owner clients discover their exit objectives. These objectives include identifying how much money they need to receive from the sale of their business to maintain their lifestyle during retirement, identify the most effective way to transfer their business and to whom do they wish to transfer the business. Michael joined Strategies for Wealth in 2004, after personally experiencing their uncommon planning process as a client since 2000. Prior to Strategies for Wealth, he was a partner with Let’s Talk Business Network, an entrepreneurial support community. He began his professional career at Deloitte & Touche and BDO Seidman. Michael received is Bachelors’ of Science in Accounting from State University at Albany and his Masters of Business Administration at New York University Stern School of Business. Michael has been a board member of Marlboro Jewish Center, Special Strides Riding Academy and NIPD/NJ (National Institute for People with Disabilities of New Jersey. Michael and his family work closely with 3Hearts4Paws, a dog rescue in Marlboro, NJ. They have fostered over 100 dogs over the last few years and have 6 rescue dogs of their own. Snip-Its 00:20:11 -  (Michael Ringel) How much is your portion of that business worth? And will that be enough money? Plus your personal balance sheet to be able to produce the cash flow for you in retirement, to enjoy the lifestyle that you worked so hard to achieve? And if it is, that's great to know and that gives you the ability to leave at any time. And if you don't, then you need to do one of two things, you need to save more money. You really need to grow the business to produce that enterprise value such that when you sell your portion of the business that is going to fulfill the gap or you have to reduce the amount of money that you're going to require in retirement. 00:31:37 (Allison) And I wanted the same thing that just about every small law firm owner that I know wanted. I wanted security. I wanted I'm going to I'm going to grind it out for a little while and then I'm going to land at having arrived and it will be easy. And that's the myth that we all reach for. Right. So I had to outgrow that myth. And that only came through working with coaches to really get into my head space and say, wait a minute, you know, the security doesn't come from money in the bank. The security comes from the ability to generate more money when you need it as you need it. And so that is what we ultimately help lawyers to create. And that that, you know, getting out of that that pattern of thinking, you know, X dollars is going to create safety for me is empowering so that they can create that economic safety, that safety net. But recognizing that if that safety net goes away, you're still secure because you can create more. 00:40:04 (Allison) The power is in the plan that comes before the fall because there is always going to be the shit happens moment. And we don't know that it's going to be in the dissolution of the partnership. But much more often than not, partnerships dissolve. So all of you that hear that stat of businesses fail within the first five years in professional practices, it's not often that the lawyer that owns the firm is suddenly not able to own the firm anymore. It's often that there is a business dissolution.