Timing Is Everything

Selling the business you worked long and hard at building is no easy decision. 

Many business owners seem unable to let go of their company and wait too long. Some lose their entrepreneurial drive and the business starts sliding. Or the market starts to change and the company loses value. To get the maximum price, owners need to do some serious planning to prepare selling the business at its peak.

Planning for what is typically the biggest financial event of your life is worth your time and effort.  It should not wait till the day you hand-over the keys.

Why is planning so important?  It illustrates who you are and where you want to be, it will help you prioritize, it guides you along the way, and it keeps you focused.  Most importantly, it can help protect and perhaps build value in your business.

In the early stages of your plan you should document your goals.  More than just daydreaming about the day of retirement, actually write down what your income needs will be.  Start to quantify what you need from the sale of your business and establish your optimal age to execute your plan.  Know Your Finish Line!

Your goals should include more than just numbers.  What are your personal goals?  Is the business’ legacy important to you?  What about your kids, how would they be impacted by your transition?  Decide what is optimal and work from there.

Once you have decided where you want to be, start working on step two, diagnose your business.  We’ll talk about this step in more detail in future blogs.

Along the way secure the services of a good business broker/exit planner to help you navigate through your exit plan.  Sound guidance when it comes to goal setting, strategic planning, and the step-by-step execution of your plan can go a long way to maximize your financial payout and achieving the goals you originally documented. 

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 every Tuesday.

Bereavement is a Symptom

With the growing number of owners of established businesses reaching the retirement age of 50 years old or older, it is likely that many will be ready to leave their business within the next decade or so.  What have you done to plan for that day?

Planning for what is typically the biggest financial event of your life is worth your time and effort.  It should not wait till the day you hand-over the keys.

Exit planning is not mysterious, time-consuming, nor just a clever way to sell you another product.  It is, however, a way to help you achieve your financial and lifestyle objectives.

One of your first steps in your plan should be to take a hard look at yourself!

Building a business is an emotional commitment.  Your whole life is wrapped up with your business.  Your partners, suppliers, customers and staff become part of your extended family.  Many business owners mourn the loss of status and purpose that running a company can bring.  Most imagine that financial security is what they wanted, but find out establishing, building and meeting the challenges along the way mattered most.

Business owners who successfully and happily make the transition typically have plenty of friends, hobbies and outside interests.  They devote more time once they have left their company to these efforts.  They donate their money and more importantly their knowledge to good causes.  They spend time with their family and devise a worthwhile second chapter rather than a desolate retirement.

If you do not prepare yourself for life after your business transfer, you will not truly enjoy the fruits of your labour. 

Take the first step in your plan and image what your days and weeks will be like without being first to the shop…. How will you feel?  What hobbies would you spend more time at?  Are their charitable causes you could devote a regular part of your week or month too?  Have you discussed your plans with your family?

Finally, secure the services of a good business broker/exit planner to help you navigate through your exit plan; it can be good preventative medicine.  Although there are no guarantees, sound guidance when it comes to goal setting, strategic planning, and the step-by-step execution of your plan can go a long way to maximize your financial payout and minimize the likelihood of seller’s remorse, after you transition out of your business. 

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 every Tuesday.

Interesting, perhaps comical business quotes

For business owners the day-to-day operations of their enterprise can be exhausting.  Long hours and hard work are all part of the typical week.   So, when you have a chance to ponder the thoughts of others, take a read through some interesting, perhaps comical business quotes.   

Enjoy, and I would love to hear some of your favourites…

·         “Golf is a lot like taxes… you drive hard to get to the green and then wind up in the hole.” – Anonymous

·         “More and more these days I find myself pondering how to reconcile my net income with my gross habits.” – John Nelson

·         “He ended the job as he began it; fired with enthusiasm.” – Don O’Shaughnessy

·         “They usually have two tellers in my local bank, except when it’s very busy and then they have one.” – Rita Rudner

·         “Statistics indicate that as a result of overwork, business owners and executives are dropping like flies on the nation’s golf courses.” – Ira Wallach

·         “Tell your boss what you really think about him and the truth shall set you free.” – Patrick Murray

·         “People should be less concerned with the difference between good or bad and right or wrong and more concerned with sense and non-sense.” – Carl Jung

·         “They were a people so primitive, they did not know how to get money, except by working for it.” – Joseph Addison

·         “An Economist’s guess is as good as anyone else’s” – Will Rogers

And my current favourite…

·         “I want a one-armed economist so that the guy could never make a statement and then say ‘on the other hand…’ ” – Harry Truman

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 every Tuesday.

Does Your Business Have Inadequate Financial Records?

It’s probably safe to say, most people realize private businesses’ accounting records are kept to minimize taxes whereas public companies’ records tend to maximize earnings. 

This seems logical considering the average business owner would much rather pay as little as possible to Canada Revenue considering all the hard work they put into their business. This, on the surface, can seem problematic when you go to sell your business.

If tax records are the only ones you keep, your company is going to show minimum taxes and minimum earnings.  This makes for lower valuations, since Buyers will determine what they are comfortable paying for your business based on those earnings.

What is the solution?

The answer isn’t to pay more taxes, but rather to keep records so that they can be recast to show the business’ actual cash flow.

Unusual expenses, such as your teenage daughter’s cell phone, the antiquities you had shipped from South America for your home den or your spouse going to a convention as an assistant, should not be mixed in the advertising and promotion account.   Such expenses should be kept in separate accounts or religiously logged to allow future recasting. 

When should you start doing this?

Yesterday!  This should be done even if you are not contemplating selling now.  Buyers will typically want to recast for a minimum of the previous 3 years and many times for up to 5 years.

Are you positive that your business will not be transferred in the next 5 years?

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 every Tuesday.

There's no perfect business

There are some that are better for you than others.

The key is to find the right opportunity for you as a Buyer, and make it your perfect business.  Once a buyer has decided to do this, the question then becomes “What business is the perfect opportunity for me?”

Ask yourself “What is my reason for buying a business?”  The honest answer is sometimes hidden beneath our needs and wants, but the eventual outcome must address your underlying motivation for buying.

Ask and answer the following questions, before you start shopping… Is there a minimum level of income you require?  What level of cash do you have available for both the down payment and closing expenses?  What timeframe are you working with, are you a buyer today or in 6 months?  When would you be available to run the business?  Are you going to work in the business full-time or is you goal to be an absentee owner?

Then make a list of all the business types that do not interest you.  This will narrow the field and keeps you open to opportunities that you may have otherwise over-looked.  When shopping for a business opportunity knowing what you specifically want is great, but not a necessity.  Many buyers are not able to narrow their interests when they begin their search.

Once you complete the above start your search by scheduling an appointment with a business broker.  They can show a buyer a variety of businesses that are legitimately interested in selling and help them through the purchase process.  With plenty of businesses to choose from in today’s market, it is more important than ever to make sure that their efforts remain focused on choosing the right business for them.

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 every Tuesday.