Skip to main content

How to Plan for Your Small Business Life Cycle with Arete Advisors

Published Jan 10, 2020 by Kelsey Seeker

On this video edition of Small Biz Insider, David Tolson discusses the value of life cycle planning for your business. He is the managing partner at Arete Advisors, a full-service wealth management firm.

Here are the top 5 takeaways from David Tolson: 

Your business value is more than just profitability.
The biggest challenge businesses face throughout their life cycle is creating value. several factors determine your business’s value, not just how much you sell or how many deals you close. One of the key indicators is your net promoter score. It’s an index to gauge how many of your customers are likely to recommend your business.  

As you grow, make sure to professionalize your business.
If you can professionalize your business by putting systems and processes in place and strengthening your management team along the way, it’ll retain more value and be easier to run. Banks and investors use these factors to evaluate whether a company will succeed.  

Being dispensable is a strength, not a weakness. 
As the business grows, you need to become comfortable with not managing the operations personally so that the business can run effectively. Rely on your management team and the systems you’ve built. Business owners may not like to hear it, but if it’s all about you, then when you’re gone, so is your business.

Small business owners typically have 80-90% of net worth tied up in their business. 
If all your wealth is concentrated in one asset or one industry, there is a substantial probability that things may not work out the way you want them to. De-risk your personal finances by transferring some of the value out of the business and into your personal side over time to protect yourself and your business. 

Anxiety and stress are common throughout the life cycle of your business but can be managed.  
Understand that starting a business is stressful as owners work to elevate their idea and create value and that stress continues as the business grows. Eventually, stress will no longer revolve around survival but complicity. Setting up those processes and systems early on will help alleviate the stress of complexity as the business matures.
 

Small Biz Insider is 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.

You can also listen to David Tolson’s podcast here.

You can find our other Small Biz Insider videos, podcast episodes and small business resources here.
 

Related News

Public Policy

Lawmakers Eye Texas High Schools for Workforce Solutions

3/19/25
Texas is a global powerhouse, and Houston is the welcoming committee for many companies looking to settle in the Lone Star State. The strength of our workforce is one key issue that continues to drive economic growth. Lawmakers are looking to increase the pool of homegrown talent through House Bill 120 (HB 120). This comprehensive reform bill will increase funding for career advising, strengthen programs that prepare graduating seniors for careers, and boost funding for facilities that expand career educational programs in public schools. The Partnership is supporting HB 120 this session. Here’s a look at the bill and key areas of interest in workforce development: High School Advising Program Establishes a program for districts and charter schools to provide college and career advising. Requires partnerships with institutions of higher education or workforce organizations. Limits advisors to a caseload of 200 students, prioritizing grades 11 and 12. Introduces a funding allotment of $50,000 per full-time equivalent advisor. Gradually reduces funding after five years unless districts meet performance benchmarks. Funding Changes for Career Programs Allows funding to support high school graduates for up to two years in postsecondary education or vocational training. Increases funding for students in P-TECH and New Tech Network schools from $50 to $150 per student. Provides additional funding for students enrolled in dual credit programs post-graduation. New Facilities Funding Expands definition to include facilities renovated for high-cost, undersubscribed career and technical education programs. Increases funding cap from $100 million to $150 million. Expands Eligibility for Rural Programs Allows districts to continue participation regardless of enrollment size. Expands retirement system eligibility for employees of coordinating entities. Modifies grant funding allocation and eligibility for performance agreements. Requires R-PEP partnerships to offer specific career pathways, including computer programming and skilled trades. Military Pathway Grant Program Establishes a grant program for school districts to implement JROTC programs. Requires districts to administer the Armed Services Vocational Aptitude Battery (ASVAB) test annually. Provides career counseling based on ASVAB results. Grants are set at $50,000 per district, with a total funding cap of $2 million annually. Because of the variety of programs and funding changes, lawmakers are proposing a phased-in approach to gradually implement these programs through 2027. Contingency funding will be included in the budget proposals that have yet to receive a floor vote in either chamber. Both HB 120 and the General Appropriations Act (Senate Bill 1) must pass for these reforms to be fully implemented. The Partnership is also supporting Senate Bill 1826 by Sen. Charles Schwertner, which is also designed to strengthen Career and Technical Education programs in Texas. For more updates and alerts on the Texas Legislature, click here to sign up for our weekly newsletter.   
Read More
Economic Development

Abbott Names Water Infrastructure, Workforce Development Among Priorities in State of the State Address

2/3/25
Governor Greg Abbott named two of the Greater Houston Partnership’s Executive Priorities as emergency items for the Texas Legislature during his State of the State address Sunday. The governor said he wants lawmakers to immediately begin working on solutions to strengthen the workforce, improve the resilience of vital infrastructure, and make a Texas-sized investment in water security. The Partnership supports significant state investments in water infrastructure to ensure reliable supply, upgrade aging systems, and sustain economic growth amid rising demand. Workforce development is another key priority, advocating for stronger collaboration between education institutions and industry to create clear pathways to high-quality jobs. In a sweeping speech covering everything from the border to breaking ground on a Texas stock market, Gov. Abbott said lawmakers should deliver policy solutions that expand the "Texas Miracle." Education, water, and resiliency are key components of that vision. After the speech, Gov. Abbott released more details about the emergency items. To reach the goal of a "Texas-sized investment" for water, lawmakers must develop a solution to invest $1 billion every year for 10 years to address water supplies and repairs to existing infrastructure. By naming these issues as emergency items, lawmakers in the Texas House can debate legislation on the House Floor before the 60-day bill-filing rule. However, policy issues not designated as emergencies cannot be considered by members of the Texas House until after March 14. Last week, Lt. Gov. Dan Patrick outlined the first batch of priority bills expected to be filed in the coming days. Highlights from that list coincide with Abbott’s emergency items, including: $2.5 billion for water investment Improving the resiliency of vital infrastructure, specifically water and power Strengthening accountability measures in public education The Texas Senate is already reviewing at least one of the governor’s emergency items. Meanwhile, the Senate Finance Committee is making steady progress in hearing testimony from various state agencies about funding requests for the 2026-27 biennium.  Later this month, the Texas Education Agency is scheduled to testify in the Senate Finance Committee. That hearing will likely reveal more about funding for the governor’s emergency item related to “life-changing career training” in public schools. Sen. Charles Schwertner and Rep. Gary Gates, both representing districts within the Partnership’s footprint, are set to introduce legislation authorizing funding for programs related to welding, health care, and other industries where high school graduates can directly enter the workforce.  One final highlight from the State of the State address is the governor’s declaration to create a Texas Cyber Command. The governor stated this new agency will strengthen the state’s resilience against cyberattacks. This command will train and recruit to protect infrastructure from digital warfare and criminal actors.   Click here to read the governor’s complete State of the State address.
Read More

Related Events

Workforce Development

UpSkill Works: Understanding AI

Artificial Intelligence (AI) is transforming industries, but how does it really work, and why is it such a game-changer—especially in workforce development? This session, featuring experts from Accenture and Google,…

Learn More
Learn More
Executive Partners