Published Jul 11, 2019 by Maggie Martin
The Small Biz Insider podcast is part of a digital series from the Greater Houston Partnership, where we highlight the innovative business owners, entrepreneurs and leaders of the greater Houston area making a big impact in the small business community.
On this edition of Small Biz Insider, host Maggie Martin sits down with David Tolson. He is Managing Partner at Arete Advisors, a full-service wealth management firm.
Here are 5 takeaways from our conversation with David Tolson:
Your personal financial plan is just as important as your business financial plan. You may have an elegant, robust business plan for your business, but don't let personal finance become an afterthought. Make sure your personal financial enterprise has just as robust a business plan as your business does.
Think about your exit strategy - your succession planning - early in the process. Whether you want to be out of your business in 6 months, 2 years or 20 years, start with the end in mind and back up from there. One of the pitfalls for small businesses is that many owners put off this planning until they’re emotionally ready to be out of the business. Time is your friend if you use it in your favor, but it can be your enemy if you wait too long.
Know what your business is worth and what determines that worth. There are certain aspects that affect how an outsider will view your business. That includes value, growth and net income, but also customer concentration and recurring revenue. What do your customers really think of you? What does your back office look like? Are your financial books in order? What do your contracts look like? Ensure that every aspect of your business is well-managed.
The crown jewel of any business is a strong management team that can run things in the owner's absence. A good management team includes a visionary. This is someone who gets the vision, where the company is headed and what that means for goals. But Tolson cautions visionaries often aren't great at execution, so you also need someone who can make the big ideas happen.
One of the biggest pitfalls to avoid is customer concentration. A lot of businesses work hard to get that first sale, and that customer buys more and more. From a cashflow standpoint, that may work. But owners are one industry cycle, one corporate reorganization away from losing that client. So it's critical to keep specific customer concentration to a manageable amount. No one customer should have more than 10-15% of your revenue.
Listen to this and other episodes of the Small Biz Insider podcast here. Learn more about the Partnership's other small business resources.
Subscribe to Small Biz Insider through these popular podcast players:
Listen on Apple Podcasts Listen on Google Podcasts Listen on Spotify