Over the next 10 years, baby boomers, who own 70 percent of the small businesses in the United States, will be looking to retire. That’s good news for companies such as RSI & Associates, which evaluates and prepares businesses for sale. It’s bad news for retiring boomers, born between the years 1946 and 1964, who will be competing for buyers among a shrunken number of potential investors.
“The supply of businesses for sale will be up and the pool of potential buyers low,” said Gerald Brown, owner of RSI & Associates in Corpus Christi. “This is going to be a major economic issue soon.”
That pool of potential buyers mostly hails from the kids who followed the boomers known as Generation X. Raised by highly competitive boomers, Gen Xers tend to separate work and life and not be so interested in owning their own companies, according to recent polls. They are more interested in making money to fund what they really love rather than looking to love their work, analysts say.
Buyers will be out there, but the competition to get their attention will be stiff. To successfully exit your business and transfer it to the next buyer, you will need to be ranked among the top tier, Brown said. Which is where a business like RSI & Associates can make a difference.
Plan an exit strategy
RSI determines the value of a business and helps owners increase that value by implementing solid operating procedures and structures, known as an exit strategy.
Brown has been in the business of evaluating businesses for sale and transfer since 1993. He and his wife, Renee, started RSI (retirement, succession and investment) as a management consulting firm in Corpus Christi when he first discovered his love for the valuation process.
“I just really developed a passion for business evaluation,” he said. “What I really like to do is exit planning. It’s a positive atmosphere. The owners’ goals are usually to move on to the next chapter of their lives. Our goal is to help them get there.”
RSI & Associates also does Small Business Association evaluations for lenders across the country as well as market planning. But what it does best is help a business owner turn the company he or she has built into something that is self-sustaining and transferable.
“Sometimes, everything in a business hinges on the owner’s presence,” Brown said. “Since it’s structured that way, we have to change that so that it is more of a self-sustaining entity instead of a company that is all about the business owner. That’s not transferable.”
Deep in the heart of business
One of the first steps is to analyze the business owner’s objectives.
“We get to the heart of the business owner — what’s on his heart,” Brown said. “Does he say ‘the fact that I own this company defines me?’ Is there an emotional attachment?”
Lenders are looking for infrastructure and economic soundness in a business.
“They need to know a business can go on without the business owner,” he continued.
RSI’s customers come from across Texas, the United States, Canada and Mexico but, until recently, not the Coastal Bend. Five years ago, Brown had only one Corpus Christi client. With the current economic boom, his local customer base is growing. Most of the local business is in estate work, although he has done some exit planning in the area.
Expertise pays off for retiring clients
Brown has become a well-known expert in his little-known field. His list of speaking engagements and published articles and seminars is extensive. He especially enjoys public speaking, and his own exit strategy involves more free time for that and other interests.
“My goal now is to structure the company to add a couple of staff appraisers where I don’t have to get my hands on every appraisal,” he said. “I want to structure it so that it can operate with limited involvement from me. That’s another option for business owners they don’t often think about.”
A well-structured company with a well-planned exit strategy will stand out in a competitive marketplace. That’s the heart of Gerald Brown’s business.
RSI & Associates
6000 South Padre Island Drive, Suite 250
361-994-8095
clientservices@value-solutions.com
