EP. 16 They Always Think They Have More Time Featuring: Dianne Kelley
Dianne Kelley has watched a lot of owners wait one year too long. She’s a CEPA in Tucson who has worked beside business owners for 35 years. She has seen a son walk away from a succession plan, a widow give a family company to charity, and a couple learn after twenty years what their business was actually worth. She has also seen an owner realize he still had something to teach. You’ll come away understanding why your role isn’t your identity, and why the plan has to start before anything goes wrong.
The Exit Series is produced for general informational and educational purposes only and is not investment, legal, or tax advice. Views expressed are those of the host and guests and do not necessarily reflect those of any affiliated firm. The host is associated with an SEC-registered investment adviser; nothing herein constitutes an offer or solicitation of advisory services. Guests are not necessarily clients.”
Dianne Kelley: Well thank you, Bob. Yeah, I have a passion for small businesses. I had been actually in the last thirty years I had focused on employee benefit plans, which gave me a lot of opportunity to talk to business owners and work with their employees at the same time. And you know, it became very evident that they were neglecting things that they needed to pay attention to. So in 2016, shortly after Obamacare came out and really kind of decimated the health insurance business. I decided to branch out more into the exit planning. I didn’t even know it was a thing at the time. So I kind of created my own wheel, as it were, and created Fresh View Business Solutions and put down all the things on the wheel that the business owners weren’t paying attention to that they needed to have an order in order to have a saleable business at some point and make a successful exit and through that I found out that it is a exit planning is a thing and somebody introduced me to the Exit Planning Institute and I decided to go ahead and get certified so I am now certifiable.
Bob Roark: Yep, there’s some of that going around. Well,
Dianne Kelley: Yeah, yeah. So
Bob Roark: excellent. Well you wrote that early in your career you were told there’s no room for women in sales in our industry. Tell me about what that day was like.
Dianne Kelley: Yeah, so you know, as as life would have it, I kind of fell into the insurance industry and started working for a very large national company as their office manager. And about six months in, I decided I was on the wrong side of the desk. And I saw the freedom that the agents had and the income that they made and the flexibility and and actually helping people with their financial future. And I thought, gee, that looks really great. I’d I’d love to do that. So I spent about six months reading everything that came across, all the trade materials, magazines, everything that came in, learning the business, and then decided I would tell them that I wanted to go into sales. And at that time, that company was run by what’s called a general agent, and he was the general agent over of all of Arizona. So I was young, twenty-three years old, and this is a sixty year old man. No offense to anybody who’s that age I am now. But you know, it was kind of intimidating for a young girl. And so I finally mustered up this the courage to send him a letter. It was like an eight-page letter, but it was more like a business plan. This is what I want to do, this is why I want to do it, this is how I want to do it, and send it to him. And crickets, no response. So two weeks went by. And again, I mustered up the courage to make a phone call, got him on the phone, and I said, Did you receive my letter? And he said, Yes, I did. I said, and and he said, To quote, there’s no room for women in sales in my industry. I I have to admit I was pretty floored. I was like, What? So at that point, I was very disheartened and talked to a couple of the agents at my current location for that same company. And they said he’s not gonna change his mind. So they kind of introduced me to a couple other general agents for other companies that they thought would be more amenable to a woman agent, which is crazy, right? But as it turned out, I did go into what’s called pre-contract training with one of those carriers and still wasn’t real enthused. And then again, as you know, Providence would have it, my mom was talking. coworker down here in Tucson. I was up in the Phoenix Market at the time. And mentioned to her I was trying to get into sales and and the issues and she says, my husband’s in insurance. Let me have him talk to her. So he called me and I was so tired of the whole game. And I’d taken like three aptitude tests, passed them all for different companies. And I said, Fine, fine, I’ll talk to your general agent. Well I went down on a Saturday and he greeted me at the elevator and I was taken aback because he was young. And so I went up and had the interview and took the aptitude test again and and he hired me. So and I was the only woman agent for many, many years, right? But they treated me great. I was treated like royalty. really. The the the guys there were all very supportive. In fact at one point a doctor that I was out prospecting, came back to my office and my manager called me into the office and he said, Did you just meet with Doctor So and so? And I Yes, I did and I thought, God, what did I do wrong? And he says, Well, he called the office and said he loved the program but he didn’t want to work with a woman. So I told him that if he didn’t want to work with you, we didn’t want to work with him. That was the kind of support
Bob Roark: Yeah.
Dianne Kelley: I got at that point. So they had my back. you know, we fought through a lot of that those days. That was the in the late seventies, early eighties. I can’t say that it’s entirely gone in that industry, but it’s certainly much better and there’s a lot more women in and we do very well, by the way.
Bob Roark: Unsurprisingly, unsurprisingly.
Dianne Kelley: Yeah.
Bob Roark: You know, after doing this for thirty five years, what keeps you in the room doing what you’re doing?
Dianne Kelley: Well, again, I I love helping people. That’s kind of my MO. And I’ve spent a lot of time in this industry. I’ve seen a lot of things. I know what good and the things that we prevent from happening to families and to businesses. should business owner die or become disabled, that can obviously cripple the business if not sink it overnight. So using the insurance products and other financial services. to shore them up to make sure that they have a plan should they have to exit involuntarily, right? Everybody wants to exit on their own terms, and that doesn’t always happen. So we’ve had business owners have heart attacks, business owners get cancer, I mean, you name it. I mean, you know, they’re not invincible. They think they are, but they’re not. But you know, so all these things to do that drives me to make sure that we get the message out to the business owners. And that they understand that they do need a plan, regardless of where they are in their business life. They can be starting out in the beginning, in the middle, or some to somewhere towards the end. But if they don’t have a plan and something happens, it it’s devastating for everybody.
Bob Roark: You know, in with respect to the the business owner exit side, talk to me about an owner that called you too late in the scheme of things.
Dianne Kelley: Well, it wasn’t even that he called me too late, it’s that
Bob Roark: Yeah, I think it’s true.
Dianne Kelley: he didn’t listen to me when I mentioned it to him and sat on him for two or three years. so this is a true story. So I was working with this this father who had his son set to be his successor, and the son was basically running the business. The father was still there on a daily basis, and I said we need to start planning an exit and he goes, Well, you know, he’s already in there. I said we need
Bob Roark: Yeah.
Dianne Kelley: to start moving him. into other roles and get him out of the day-to-day stuff so he can actually move into a business owner mentality. It it takes a mindset, right? You can’t just walk into it and and expect to know how to run a business. So anyway, he put me off and then another time I went back and said we’ve got to get going on this exit plan. And he brings out a book and I tell you it’s about three or four inches thick, lays it on the desk in front of me, said, I have an exit plan. And I looked at him and said, How much did you pay for that? And he said, I’m not telling you. I said, okay, number one, it’s more than you needed. You did not need that kind of complicated plan. He was a very simple business and and I knew the pieces that he needed to do to make it successful. Number two, I said, who’s going to execute it for you? And he says, I guess I am. And I said, Well, I’m here if you need help, but I’m going to charge you a fee. And he says, I’m not paying any more than I already have. I said, Fine. So again, fast forward two years ago in July, I get a call from him that he’s shutting the company down because his son got his wife got a new job and he moved out of out of the area, decided he no longer wanted to take over the business. And in conjunction with that, one of his other problems is his his His clientele, his customer base was too highly concentrated with one or two, lost the key client at the same time, which decimated the business. So unfortunately, he closed that business and he was left with two yards with antiquated equipment. That’s it. His wife cried and she said, I know you tried to help him. And I said, I tried to get him to to move ahead with this. And then again, unfortunately, he passed away this summer.
Bob Roark: Yeah.
Dianne Kelley: So two years out of the business and with nothing really to show for it. And I don’t know that that had anything to do with his untimely death. He was still fairly young. but it it’s a sad story, and that’s what I want to try to avoid. Now on the other side, we have good stories too. So there’s a large contractor in Arizona and they’ve been around for many years. I did not know this until I sat down with the daughter of the founder. And she said the year before her father had a sudden heart attack and passed away, he had purchased a large key person life insurance policy on the company. And she says, without that, I don’t believe we’d be here forty years later. Because it allowed them to restructure, it allowed them to pay their vendors, pay their employees. I won’t say that the transition was seamless, but without that capital, they probably wouldn’t be here forty years later.
Bob Roark: The stories are too common, I think.
Dianne Kelley: Yeah. Yeah. Any of us who work in this realm have seen it, heard it. And the hard part is they get the business owners to move because they always think they have more time. Okay? And they may not have tomorrow, much less
Bob Roark: Mm-hmm.
Dianne Kelley: two weeks, right? So it it’s that sense of urgency
Bob Roark: Yeah.
Dianne Kelley: that I try to instill in them. You don’t know what’s gonna happen. And if it happens, even if you get sick, you’re still on this earth and you’re sick and you can’t run the company. What then?
Bob Roark: You know, in in thinking about approaching the exit with one of the owners that you’re working with, what does that last week before the close look like from your perspective?
Dianne Kelley: Well, I’ll tell you again, it comes down to a lot of mindset. We do a lot of work with the owner in advance because they have to know what their what next is. And I think that at that point where it’s becoming a reality, it’s not just the financial end of it. It’s the what am I gonna do from the board? Who am I? And they tend to confuse identity with their role as the business owner. Okay. it’s their role to be a business owner, but that’s not who they are. But many of them lose who I am along the way because their work has been all they’ve known and that’s all they have in their life. So making sure they know what’s next and that they have a purpose and they have a plan and they have a reason to get up in the morning is probably even more critical than the financial side.
Bob Roark: You know, when when you’re sitting across, you know, from a business owner that’s exiting, is it escape or destination? What are you usually sitting across from?
Dianne Kelley: Yes. Yes. you know, a lot of times they they are tired, they’re burned out, they feel like they’ve missed out on a lot of things in their life because they’ve been running the business probably more so than they should, if they haven’t done all the things to get themselves, as I put it, out of their own way. so that would be the escape. they’re eager to have more time, more flexibility in their time. which hopefully they’ve also built into the business. So this is not something like it it’s a cliff that they’re going off of, but a gentle roll down a hill. Because if it’s a cliff, then that causes other problems. the destination is I wanna travel, I wanna play golf, I wanna do all the things, and that’s fine and good, but again, that only lasts for about six months. And if they don’t again have a purpose, a reason to get up in the morning that that gives them more of a value in their life, okay, that that whole thing’s not gonna work. And so many business owners who exit, even if the exit is successful financially, regret it within the first year.
Bob Roark: You know, I in thinking about that business owner
Dianne Kelley: Yeah.
Bob Roark: that might say something along the lines of I have no idea what I’m gonna do. How do you approach helping them starting to frame up what they might do?
Dianne Kelley: Yeah, that’s a really good point. So a true story, I was referred to this business owner by his counselor. So that tells you something right there, right? And I met with him and his wife in the counseling office, and the father, the owner, felt like he was getting pushed out. His son was running the business and he says, He’s gonna get it when I die. What’s his rush? Okay. And so I started asking. I said, Well, you know, how’s your son doing? He said, He’s doing a good job. I said, Good, that’s to your credit, right? You trained him, he learned from you. He says, That’s right. And I said, And I’m sure you’ve trained a lot of other people along the way. It’s an age fat company, so largely young men. I said, You’ve trained a lot of other men along the way how to do the trade and how to run the business and all the things. He says, Yes, I have. And I said, Why don’t you take all that knowledge and go at the community college or a high school’s trades program we have here in Arizona called JTED and start talking to these young people about the opportunities in trades and running a business. And he goes, That’s a great idea. It was like the light bulb went on, right? I still have value, I still have something
Bob Roark: Mm-hmm.
Dianne Kelley: to give. So I don’t know if he actually went and did that, but the brothers and he eventually they reached a a good decision and exited. so hopefully he found his purpose.
Bob Roark: You know, thinking further about the business owner, when the business is the owner’s retirement plan and the numbers don’t seem to work, what does that conversation sound like from your perspective?
Dianne Kelley: Number one, they waited too long. So back to that. I firmly believe that if a lot of business owners have been building wealth outside their business, in addition to running and building the business, that during COVID, a lot of those businesses that had to shut down would still be in business because the owners were 100% dependent on that business for their own livelihood. Okay, so if they had had separate wealth set up on the side, which we also helped them do to start making that type of inroad, they would not have been so destitute at that time to have lost all their revenue because the business lost it. They could have supported that business maybe with the the PPP loans and the idle loans, but a lot of them were using that to live off of. Right? They did keep their
Bob Roark: Mm-hmm.
Dianne Kelley: employees on, but they weren’t growing the business. So it really even after that there are still many more that could not survive. So it’s really important for the business owner to not just build wealth inside the business, which eighty percent of their wealth is tied up in it, you know, if they don’t d diversify and get it out of the business. And we have ways to help them strategies. We have tax strategies.
Bob Roark: Yeah, I think
Dianne Kelley: So we can actually reduce their income tax and the savings can build their own wealth on the side because we can actually teach them How to take money out of their business tax free.
Bob Roark: You know, you’ve I’m sure dealt with families where the owner had no plan. What happens to those families when the owner is just didn’t plan?
Dianne Kelley: Well, it’s devastating to the families. So I was at a networking event
Bob Roark: Yeah, yeah.
Dianne Kelley: telling somebody what I do, and he says, that happened to my old boss and he died, and because there was no plan, the business went into probate,
Bob Roark: Mm-hmm.
Dianne Kelley: which meant even his wife could not access any of the assets. And that is number one expensive, number two, time. It takes forever to get that out of the court system. And so it all is lost. All those years of whatever you’ve put into that building that business is gone overnight. So that is worst case scenario. Another one, I was interviewing a young lady for a job with one of my clients, because they do a lot of things, and I asked her why she left her previous employment. And she says, Well, my dad started the company, my brother and I worked for him, dad got cancer. Dad died and mom inherited the company. Now, mom had never worked a day of her life in the company. Okay. Two years later, she says, I don’t want to do this anymore, and she shut the company down. So I said to the young lady, I said, So you mean you sold off assets? You had a fire sale? She goes, Well, kind of. We gave most of it to Habitat for Humanity. I said, Well, they probably love that. Mom got a nice tax deduction. Meanwhile, you and your brother have nothing. show for it and you’re out looking for jobs. So I told her what I did because she didn’t really know at that point. And she says, where were you two years ago when dad died? I said, no no no. I said ideally you needed me before dad got sick. At the very least after he got diagnosed, they had seven years, Bob. We could have done a whole lot
Bob Roark: Yeah.
Dianne Kelley: of planning, bumped the mom out, and the kids had still the company today. And it was a viable company.
Bob Roark: Not an unusual story, unfortunate, but not unusual. You know,
Dianne Kelley: Yeah.
Bob Roark: pre-sale, there’s a lot of different folks that are interacting with the business owner. Of that group, who disappears from the owner’s life after the deal closes?
Dianne Kelley: Well, good good question. a lot of times they’re accountant, right? So their their deal is done. they’re commercial banker, because now they don’t have a business. a lot of times they’re business attorney because they’ve got all the agreements, they’re done, they’re walking, they’re out in retirement. But the the harder part really is that none of these advisors are working together, even during the process. So you’ve got the accountant crunching numbers over here. You’ve got the financial advisor waiting for that big sale so they can invest it all, right? And then all the other pieces aren’t working together. So as I call myself the quarterback, as the exit planner, I like to come in and coordinate all the pieces. And if they aren’t going to play nice and they aren’t going to involve in the process, we’ll go find somebody who will. Because it’s super important that everybody’s on the same page supporting that business owner.
Bob Roark: On kind of the flip side, tell me a story about one of the owners that exited where the exit went the way that you would look you planned it or the planning intended.
Dianne Kelley: Yeah, so I’m not a big fan of private equity coming in and buying companies, but in some cases that’s really their best option. So we had a pest control company here in Arizona that all all the other pest control companies, there wasn’t really a good fit for what they were doing. So they did sell out to a private equity and the owner got a very nice walk away deal and didn’t have to stay on. after the purchase, which is ideal and is living a happy life. So I think that you know it can be done. I prefer to see a local company sell to a a local company and most of the business owners I know want to keep it more of the the low key family style that they’re used to running because it’s their legacy. But in some cases the private equity is is the better option for them or a large out-of-state company coming in and buying the little one. Which a lot of that’s happening unfortunately. And I have clients telling me every day, I’ve got all these private equity people calling me all the time. And I said, Don’t do anything. Call me, let’s figure it out. We’ll we’ll get you ready and then we’ll find a good buyer for you.
Bob Roark: All right, on the flip side, one of them that didn’t work. What broke?
Dianne Kelley: Well, this one happened just recently and they started too late and they had crossed over the one million dollar revenue mark quite a few years before I started working with them and still treated it as a mom and pop. Okay. So they were still running the show and the company was named their names, okay, which is
Bob Roark: Mm-hmm.
Dianne Kelley: again another no-no. And we did the valuation and the wife cried. She says t after twenty years, that’s all it’s worth. And, you know, I wanted to take the time to get them aligned so we could drive the value up of the business, but at that point they were just done. You know, psychologically, emotionally,
Bob Roark: Well,
Dianne Kelley: physically, they were done. They just wanted out. So they didn’t want to take the time it would take and the investment to make sure that they got it valued higher and they could have a bigger, better sale. So they had to take what they could get.
Bob Roark: Yeah. You built Elder Care Council of Arizona for twenty years. What did your own exit teach you about the work you do for others?
Dianne Kelley: Well, very interestingly, that was a non profit or not for profit, I should say. and I started it because I knew that as my clients got older they would need certain services and I wanted to align myself with good quality people in different areas like home health care and we had a gentleman in there who owned a a mortuary and funeral home and all the things that they need, you know, as they age out way out. And You know, so basically what happened is when I started focusing on the exit planning as opposed to working with seniors and in the Medicare space and everything, I just basically turned it over to them. which to point it’s a really good point because I think it during COVID basically it collapsed. So it they kind of disbanded at that point, but it did serve a really good purpose during that time period. And you know, I knew that i I would I I shouldn’t be the only one running it. So I definitely made sure that we had succession in there when I was involved. So we had a lot of different presidents and and board members and everything that took over and did a really good job. And I think everybody benefited from it. I know the clients did.
Bob Roark: You know, l looking at the various advisory teams, what’s the one gap in the advisory team around a selling owner that no one seems to fill?
Dianne Kelley: The exit planner because they need a quarterback. They need somebody in there with eyes on all the pieces and making sure that nothing’s getting overlooked and the attorney’s not gonna do it, the the you know, MA’s not gonna do it, the accountant’s not gonna do it, the banker’s not gonna do it. You need somebody to really take a hard look and do the initial assessments to find out what those gaps are. and then get the right people and resources in to fill the gaps. So that’s kind of how what I like to do is come in there and find out what the missing pieces are and then get those filled as quickly as possible so we can start moving that needle.
Bob Roark: As as you’re approaching the exit with the owner, when you’re in a quarterback role, what does your process look like in keeping everybody on task and keeping the owner informed? What’s your procedures?
Dianne Kelley: Hurting cats.
Bob Roark: Yeah.
Dianne Kelley: Follow follow up, follow up. there there was one point with this one client I just described that had to exit with less than what they wanted and the the financial advisor kind of dropped the ball. You know, he was doing a good job for them, but he wasn’t communicating and I didn’t really know what was going on, so I had to kind of chastise him on that and say, Hey, you know, I’m I’m leading the role here. You need to make sure you keep passing the baton back. ‘Cause sometimes I think they get into that role and they they think they own it, right? And again they don’t have that mentality of team player.
Bob Roark: Yeah. So for the folks that are listening and would like to reach out and find you, how do they find you?
Dianne Kelley: goodness, I’m all over the place. I have people tell me all the time, I see you all over the place. Well, I do I do videos on LinkedIn and Facebook on these subjects. I have a YouTube channel, which I will admit needs to be resurrected. I haven’t done as much there lately. and Instagram and then certainly, you know, I can you can put down my contact information on your podcast. I’m happy to have a conversation with somebody and just let them ask questions. I’m always open to hearing what the business owners are doing, what they want to do, and then obviously seeing if there’s a way that we can work together to get them there. We want successful exits. Not the bad
Bob Roark: Right.
Dianne Kelley: stories.
Bob Roark: Well, you’ve been doing this for a while. What do you now know about business owners that you did not know in your first years?
Dianne Kelley: Well, I think it became apparent really early on that they tend to put it on the back burner. And even when they know that they need to do something like the build so many of them don’t even have a trust. Okay? They don’t even have a personal trust. So they know that they need to do it, but they keep putting it off and putting it off because they always think they have more time. And I I tell them the stories and I I stress to them that they don’t know when their time is up, and if it’s up, They can’t go back and fix it. So I think that’s the hardest thing is getting them off their duff to go actually do the things they need to do because they’re running the business and they also don’t they don’t want to make the investment in the money area because it takes other advisors as well and they do F fees too. So sometimes it’s just that that mental gap of well, what am I gonna get for it? Well, it it’s kind of esoteric where they can’t really see it and feel it at that point. So it’s like out here. It’s not right there in front of You know when it’s right in front of When something happens.
Bob Roark: Yes, you get a wake up call for sure.
Dianne Kelley: Yeah, unfortunately. And we don’t like those wake up calls because sometimes it’s too far down the road.
Bob Roark: Yeah. Well Diane, this has been useful. I appreciate your perspective and experience.
Dianne Kelley: I hope so. I hope they get the message. Let’s get it out there. I’ve got a soapbox.
Bob Roark: You know, and and the reality of the business planning process or the exit planning process is just good business. To be have an exit ready business is
Dianne Kelley: It is.
Bob Roark: you know, and if you have gaps in your planning, you don’t really want to find that out at the deal table for sure.
Dianne Kelley: Not only that, it takes a whole lot more to shut a business down than it does to start one. So if you get in one of those situations with the death
Bob Roark: Yeah.
Dianne Kelley: of a disability or whatever, there’s still bills to pay, there’s still vendors to pay, maybe employees to pay, there’s taxes to pay, all the things. And if they don’t have the liquidity in the business, guess where it’s gonna come from? It’s gonna come from their personal estate, which again comes back to the family.
Bob Roark: Yeah. Well, Diane, this has been a joy. I appreciate your expertise and perspective. This is the Exit Series. If you know of a founder whose sold or is about to, or a broker, an attorney, or a value accelerator who’s been across the table at the closing, or about to. Send them this episode. Subscribe to wherever you listen, and we’ll see you next time. Diane, thanks so very much.
Dianne Kelley: Thank you.
Bob Roark: You bet.