From Learners to Exit Planning Leaders with BEI

As an advisor to business owners, you know the importance of helping your clients plan for the future. At BEI, we understand having the passion you have to help your clients reach their post-exit goals. Additionally, we believe that the way to position yourself as an indispensable advisor is two-fold: gaining the knowledge and expertise to inform your advice, and having the tools and framework that will guide the Exit Plan to successful execution.  

Growing & Protecting Business Value with BEI

You've helped your business owner clients set goals for the day they leave their businesses, quantified their resources today and gathered the financial data on what resources are needed on the day they exit.  Now what?  It's time to take action! As your clients’ most trusted advisor, you have the tools and knowledge to help owners with bridging the gap between where they are today to where they need to be in order to exit their businesses with financial security. 

ESOPs In Action and Establishing a Legacy

Fri, 05/12/2023 - 08:00

Written by: JDewing2

What is an ESOP?

Employee Stock Ownership Programs (ESOPs) have become increasingly popular among companies as a way to engage and retain employees while also providing a unique ownership structure. 

This exit path allows employees to own shares in the company they work for, which can result in significant benefits for both the business and the community it serves. 

In this blog post, we’ll explore two examples of ESOPs in action within the Colorado community. 

Benefits of an ESOP: 

The main benefit of an ESOP is that it incentivizes employees to work harder, stay with the company longer, and feel more invested in its success.

ESOP guru and BEI Member, Kelly Finnell had the opportunity to work with Denver Restaurant Group, Edible Beats, to create an ESOP for its employees. 

Kelly and his team at Executive Financial Services  worked to develop an ESOP for Edible Beats Founder, Justin Cucci, and his hard-working team of 325+ employees. Here’s what Kelly and his team were able to accomplish with Edible Beats through the creation and implementation of an ESOP: 

  1. Employee Benefits:  Employees earn shares based on their tenure and salaries. More responsibilities come with a higher salary, and employees in turn get more shares within the company. 

At Edible Beats, every employee regardless of tenure was eligible to be included in the plan. According to Founder, Justin Cucci, new employees must wait a year from the start of employment in order to get vested, and will earn 25% of their shares each year after.  

  1. Improved Retention: ESOPs are a powerful tool for employee retention. When employees feel like they have a stake in the success of the company, they are more likely to stay with the business for the long-term. This reduces turnover costs and ensures that the company retains valuable talent.
  2. Increased Motivation: ESOPs can be a powerful motivator for employees. When employees own a piece of the company, they are more likely to take ownership of their work and feel more invested in the success of the business.

Cucci spoke about how life changing it can be to own shares in a company. Equity provided from shares can assist in purchasing a home or a business down the road. 

“The only thing the shares can't do is be transferred or sold to another person. Shareholders who want to disinvest must sell their shares back to Edible Beats”, wrote Linnea Covington.

  1. Heightened Productivity: Companies with ESOPs often see an increase in productivity. This is because employees feel more motivated to work harder, are more invested in the company's success, and have a greater sense of ownership.

“For Cucci, creating the ESOP means he doesn't have to sell off Edible Beats in pieces, or to an owner who may dismantle the business that he built so carefully. Eventually, the idea is to have the Edible Beats restaurants completely employee owned.” 

For more details on Edible Beats and their recent ESOP strategy, check out this article from Restaurant Hospitality written by Linnea Covington: Denver Restaurant Group Offers Stock To Employees.

Building a Sense of Community: 

So, how does an ESOP positively impact the community? Let’s take a look at a long time Colorado favorite, Beau Jo’s Pizza. 

Chip Bair, the owner and founder of Beau Jo's pizza restaurant in Idaho Springs, announced at the 50th anniversary celebration that he’ll be selling the business to his employees through an Employee Stock Ownership Plan (ESOP). 

As a Colorado institution that’s served approximately three million pies over the years, Beau Jo’s move to an ESOP will ensure that the business will remain in the hands of employees who have helped make it a success over the years. 

This move demonstrates Bair's commitment to the community and his employees who have helped make Beau Jo's a beloved institution over the past half-century. Here’s how: 

  1. Community Involvement: ESOPs provide local employment opportunities to community members and support the local economy. Idaho Springs, CO, has faced an economic downturn as mines across town shut down over the years. Luckily, the newly employee owned pizza joint also calls Idaho Springs home and has been able to provide jobs for many that lost their jobs of the years, establishing Beau Jo’s as a pillar in the community. 

In an article published by Jason Blevins for The Colorado Sun on Employee Ownership and Creating a Legacy, Jason wrote about an Idaho Springs Local, “Alex Dunn worked at Beau Jo’s during college and in the summers when she was a teacher. She started working full-time at the Idaho Springs restaurant 17 years ago and now she is the general manager.” 

Leaving a Lasting Legacy

In addition to the benefits mentioned above, ESOPs are also a valuable tool for building a lasting legacy. ESOPs can help to paint the picture about: 

  1. Long-Term Perspective: When employees own a piece of the company, they tend to take a longer-term perspective. This means that decisions are made with the future in mind, rather than just short-term gains.
  2. Succession Planning: ESOPs can be an effective way to facilitate succession planning. By gradually selling shares to employees, business owners can ensure that the company stays in the hands of those who are committed to its success.
  3. Increased Value: Companies with ESOPs tend to be more valuable, as they have a committed and motivated workforce. This can result in higher profits, which can be reinvested in the business, the community, or other initiatives that support the company's long-term success.

The Bottom Line

An ESOP can provide significant benefits for both the business and the community it serves. They can improve employee retention, motivation, and productivity, while also stimulating economic growth and community involvement. Additionally, ESOPs are a valuable tool for building a lasting legacy.


Learn More About The 2023 BEI Conference

Employee Stock Ownership Plan (ESOP)

Structured Installment Sales: Examples of How, When, and Why to Use Them

Structured Installment Sales have become a hot topic in the Exit Planning world as a solution for business owners during the sale of their business. During this webinar, Aaron Hickey from Brant Hickey & Associates, will walk through the logistics of Structured Installment Sales as well as numerous examples of when to use an SIS. Aaron will provide examples of real estate, land, and business transactions as well as payout periods of short- and long-term durations.  

A Proactive Approach to Exit Planning

Join us for a 30-minute session on Wednesday, May 24 for an overview and practical strategies that will help you take a proactive approach to Exit Planning. As a business advisor, you understand the importance of planning for the future. However, we know that when working with owner clients, it’s essential to choose appropriate engagement methods and provide a framework that allows them to see the greater picture that is Exit Planning.  

Legacy Planning in Your Exit

Fri, 04/28/2023 - 08:00

Written by: JDewing2

Learn More About The 2023 BEI Conference

Business owners work hard to build their business into a successful enterprise. They’ve created a strong culture, built a reputation in the community, and provided jobs for many people. 

But, what happens when it’s time to exit the business? How can you properly plan with your clients to ensure that their legacy will continue, and that their non-financial goals will be met? 

When it comes to building a legacy after retirement, Avoiding Exit Planning Mistakes early on in the Exit Process can save your client both time and money. 

How your client defines their legacy is a major aspect of planning a business exit. Beyond creating financial goals and establishing financial security, it involves identifying non-financial goals for the business, such as preserving company culture or maintaining a positive reputation in the community. Join us as we dive into a few quick tips for defining non-financial goals in your client’s legacy plan.

Defining A Legacy:

Identify the company culture: What are the values that have made your client’s  company successful? What makes their workplace unique? By identifying the company culture, you can ensure that it is preserved after they exit out of the business.

Consider community involvement: Has your client been involved in their local community? Do they support local causes or charities? By including community involvement in your client’s legacy plan, you can assist in ensuring that the business continues to be a pillar in the community. 

When thinking about ways to make a lasting mark post-exit, consider donating a portion of the business’s profits to a local charity or creating a scholarship fund for local students. Planning efforts such as these will ensure that the business will be remembered for years to come. 

Additionally, your client can ensure that their business’s resources are being used to benefit others by dedicating a portion of their profit to causes that are important to the company and its employees. By taking the time to consider the community’s needs, you can ensure that your client’s legacy is a lasting one.

Think about employees: Employees are a crucial part of any business’s success. Consider their needs and concerns when defining your client’s non-financial goals. This could include providing them with job security or ensuring that their benefits are not impacted by the business exit.

Depending on the emphasis you believe that your employees have on the continued legacy of the business, your chosen exit path might inherently put your legacy in the hands of your employees (or children). For example, owners who opt for an Employee Stock Ownership Plan (ESOP) or an insider transfer to a key employee have likely made that choice in part due to the implications that path can have on one’s legacy. 

Set clear expectations: Make sure that all non-financial goals are clearly defined and communicated to all parties involved in     the business exit. This will help ensure that the business owner’s legacy is preserved and that non-financial goals are met. This includes setting expectations with the owner’s family and communicating the goals and how they may impact how they believe this transition will occur. With enough time and proper planning, an owner can meet their non-financial objectives while also meeting the financial goals to provide for their family post-exit. Making any assumptions about how the family feels about this plan and the family legacy the owner is leaving can derail the process, so it’s best to make those intentions known early on.

It is important as the Exit Planning Advisor to be upfront with your business owning client early on in planning meetings and conversations. Complete communication is imperative to form and shape the Exit Plan effectively.

Leaving a Legacy Post-Exit

In addition to defining non-financial goals, it’s important to consider how your client’s legacy will be passed on. This could include passing their business down to a family member or selling it to a new owner who shares the same values and vision for the business. Check out this article from Forbes to see first hand how important planning a legacy can be for future generations. 

Legacy planning is not just about financial planning. It’s about defining non-financial goals and ensuring that your client’s legacy continues after they retire and exit their business. By identifying and contributing to company culture, community involvement, and employee needs, your client can work with you to create a plan that will help leave a lasting legacy and establish the owner as a pillar in the community for years to come.

It’s also important to consider how your client’s legacy will be maintained after they leave. This could involve a succession plan that outlines how the business will be managed in the future. It could also include a plan for ensuring that key employees remain with the company after the owner departs.  

The Bottom Line

By doing your part to help build a lasting legacy, you have the opportunity to be a part of something that will benefit not only your client’s business, but the community around it. From setting up a trust or endowment to providing financial assistance to future generations of their family and others, there is room to be creative in planning for this type of exit goal. As stated in the aforementioned Forbes article, “Don’t wait - life’s too short not to leave your legacy how you want to leave a legacy.” 

Legacy Planning in Your Business Exit

Exit Planning Process: Quantifying Business & Personal Resources

This webinar, which is the second in a seven-part series, will cover the second step in the Exit Planning Process: Quantifying Business & Personal Financial Resources. 

While each part of the Exit Planning Process requires your knowledge and expertise, this step really requires your perspective to give clients an accurate and realistic view of their current resources and what they might need to do to improve business value so they can exit on their terms.   

Discovery Webinar: Take Your Planning Practice to New Heights

As a business advisor, you understand the importance of planning for the future. That’s why we’re excited to invite you to our upcoming webinar, where you’ll discover the latest tools and resources to help you seamlessly integrate Exit Planning into your practice. Led by Doug Easton, BEI’s Practice Development Specialist with nearly 15 years of experience, you’ll learn: 

  • Proven strategies to kickstart the discovery process 

Exit Planning Process Series: Step #1 – Setting Exit Objectives

Helping owners clarify and prioritize the objectives they want to achieve when they exit their businesses often takes more time than any other step in the planning process. This webinar, which is the first in a seven-part series, will cover the first step in the Exit Planning Process: Setting Exit Objectives. While all the steps require your knowledge and expertise, this step really requires your insight: you'll need to listen to what owners say and what they don't say.  

Strategies for Success: Breaking Down Business Continuity

You're invited to an all-new BEI webinar where we will dive into a crucial aspect of Exit Planning: business continuity. For many of your business owner clients, business continuity planning means simply signing a buy-sell agreement early in the company’s life and filing it away. However, most buy-sell agreements alone cannot support an owner’s primary exit goals; namely, selling the business when they want, for the amount they want, and to the successor they choose.