The purpose of these articles is to educate both buyers and sellers of the many different issues related to a business transfer. The subject matter includes things like the value of a business, the variables involved in a business transaction, financing and structure of a transaction, planning your exit strategy, etc.
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Tuesday, 16 October 2012
Owner burnout is bad for business
business owners have operated their companies for too long and have lost their
interest or drive.As a result, the
business can flounder and stop growing.Not only do revenues and profits suffer, but the value of the company
goes downhill. And it only gets worse in a down economy.When a business owner hits burnout, he or she
must learn how to deal with it, or take steps to sell the company
story I like to share with clients and prospective clients relates to the need for
business owners to plan their eventual exit from their business.It goes like this….
Claude and Mary are a lovely local couple
married for nearly 50 years, 3 grown kids, and 5 grandkids.Claude started his small manufacturing
business in 1971 in the garage of his home. By 1980, he added a couple of
employees, and started to rent some industrial space in the county. He built a
strong loyal customer base that carried him through 35+ of business, not-to-mention
put his kids through University, and lived comfortably along the way.By 2004, both were 65 years old, their
business was rolling along just fine, sales were approaching $1.5 million and
at the time their business would have a value of $750,000… a perfect nest egg
But they never did sell and their kids had
their own careers and they were not interested in taking over for Mom and Dad…
just a couple of years later, following a stroke and mild heart attack, Claude
and Mary are still working now into their 70’s, albeit at a slower pace.
Last year when I evaluated their business,
it’s value was a mere $40K
This is the classic…
Sell out before you burn out!
There are many tools
available to help individuals get into business, but few that help them get
out.Exit Planning is not mysterious, time-consuming, nor just a clever way
to sell you another product.
Exit Planning is ALWAYS about 3 GOALS….
on the date you choose.
a choice in your successor.
Receiving the amount of MONEY you
there is an almost infinite variety of businesses and business owners, so too
are there many different Exit Strategies. Yet all plans contain several
common elements.It usually takes 3-5 years to appropriately plan
and execute an exit plan, if you haven’t started planning the exit from your
business, it’s never too late to start.
Do you have small
business questions you would like answered about this article or others?Please visit www.VRWindsor.com
or call 519-903-7807.
William Sivell is a
sales representative of VR Windsor Inc., Business Brokerage; his blog appears