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.

The wrong price can be a big mistake

Too high is bad; too low is bad.

If the price is too high, buyers don’t think you are serious and won’t investigate the opportunity.  The offering can become inactive or worn-out, and has to be taken off the market or dumped below the market.

If it is too low you will leave something on the table.

Most sellers do not know the market value of their business. 

Unfortunately, the explanation isn’t always an easy one.  The truth is if you ask 10 people you probably will get 10 different answers on the valuation of a business.  There are a number of methods:

·         Book Value

·         Liquidation Value

·         Price to Earnings Ratio

·         Discounted Cash Flows

·         Etc.

The easy answer is, “Your business is only worth what someone is willing to pay you and what you’re willing to accept.”  The long answer is a lot more complicated.

The basic criterion of most buyers is return on investment (ROI).  This number will vary depending on risk, perceived inflation and other subjective and objective perceptions about the business and related market conditions.

One of the most effective valuation methods is known as “cash flow” since it considers the cash flow ‘return’ and selling price ‘investment’ in the equation.  Buyers typically are comfortable with this method because, at the end of the day, although they are buying a company, what they really are buying is its cash flow.

With an understanding of a business’ actual cash flow, different multipliers can be applied to determine a fair market range of value for the business.  Multipliers vary depending upon the type of business.  Of course many other factors can affect the multiplier.  For example, new products in the pipeline, strong market share and a diversified customer base positively affect the multiplier.

Conversely, out-dated inventory, declining market share and the risk that key personnel could leave the business and disrupt operations could have a negative impact.  Why?  Because they relate to risk, the higher the risk the more likely the buyer will insist on a higher ROI and lower multiple.

You’ll notice that this method contains no mention of the ‘terms’ of the transaction.  This is an incredibly important factor and needs to be considered in order to ‘prudently’ position your business to sell.   And one to be discussed in a future blog. 

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.

Is Your Decision to Sell Firm?

One of the biggest mistakes business owners can make is the lack of a ‘Firm Decision to Sell’.  My advice… If you have not deliberated and come to the firm decision that you are going to sell, don’t start the selling process. 

Preparing to sell your business means more than simply straightening up the files and getting up-to-date with your bank statements.  In order to get the best price there a number of steps the Seller needs to take.  Often those steps may seem time consuming; however, done properly they can lead to improving their management practices and ultimately improve the desirability and value of their business. 

Plus, once a Seller and Buyer come to an agreement, often times the preparation to help sell the business can help the deal close quicker.

The #1 question buyers will ask is ‘Why are you selling’.  Sellers must always know their reason for selling and it must be firm in their minds.    Most sellers are motivated by reasons other than money.  For example, a pending retirement, a critical illness to themselves or family, pressure from a retired spouse, and burn-out are just a few popular reasons. 

Money and the right price are important, but if the Seller is not mentally prepared to sell, don’t.  

Selling a business can be a complex legal, financial, and emotional process.  Most know a successful business sale needs a motivated Buyer, but equally important it needs a motivated Seller.  A motivated Seller is someone who has a definitive objective in mind, someone who understands what’s involved in the process and someone who has a desire to reach the finish line. 

Don’t make the mistake to think this means a Seller will need to sacrifice on their business value.  It is a necessary ingredient to a successful transfer.

A business broker is a professional that Sellers should turn to for assistance when deciding to sell or as they deliberate over the prospect of selling.  This will give the Seller an opportunity to learn about the process, how Buyers are likely to view their business and prepare them to maximize their value.  

Also, not only does having a third party represent their interests indicate that they are taking this venture seriously; it can often lead to a number of buyers being interested in their 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.