You Need More Time to Consider Your Exit Planning Options

December 21, 2009 by

 It will take years to transition your business to the next generation or to prepare it and yourself for sale. When owners finally act on their exit plan, more years have passed. Meanwhile, the people involved are aging and getting closer to their next transition.


Business owners who are committed to a transition/ succession plan often want to give back and leave a legacy. When they take the time to think more broadly and long term about what’s next, the idea of giving something of enduring value — beyond their business — is important to them and to their family.


What’s the first step? There are ways to start planning for that right now.


First, seek out other business owners at networking events and peer-to-peer groups in order to begin a quality dialogue about transition steps.


Second, take time away from the business — it need to be a profitable concern that runs without you. It must have responsible managers who are capable of running it for at least short period of time. Use this time think about life without the business and what it means to you. Think broadly about what this change means to your family and employees.


Finally, gather input from trusted advisers to the business, such as financial planners, tax experts and exit planning advisers.


There’s more clarity and freedom when a person can look at the future phase of life by planning ahead. What business owners need now more than ever is a vision of the best paths for both themselves and their businesses.

 

Don’t delay — start thinking and talking about your exit planning options in a proactive, systematic manner without rushing to the market with a business that’s not ready for sale.

 

Filed Under: coaching

I’ll Begin My Exit Plan Next Year – Are You Putting It Off Again?

December 14, 2009 by

Indecision or putting off succession planning is a high risk decision. A major risk of delayed your exit planning is the potential loss of talented people. Without the clarity of a long-range vision or expressed potential in future opportunities, the good people may think they have no reason to stick around. Or they may be lured away by a job that appears better, without knowing the opportunities of their current position to someday move up or own the company.


What’s more, it takes years to develop people for higher responsibilities, and not every employee is going to work out. Business owners need multiple candidates over multiple years in order to see who is best suited as successor. This can be further complicated if family members are involved.


Another risk of putting off succession planning is that financing the sale of a business takes more time that you might think. Instead of one year to prepare a business for sale, two or three years could be required. Few transactions will be funded with cash and conventional loans, so more will require financing by the seller.


Businesses that go up for sale today may have terms such as 10-year amortization and mid-term balloon. The result is a longer payout time for the sale.


The seller-financing issue leads to a third risk: a longer time to feel financially secure enough to retire. This is a delay that affects lifestyle choices and can be affected by health and other aging problems. A formal succession/ exit plan will provide the guidance to successfully transition your business.

Filed Under: coaching

F.E.A.R. Is It Affecting Your Business?

December 7, 2009 by

 Lately I’ve seen business owners who remind me of deer in the headlights. They are frozen by the unknown. They are frozen by the fear of the unknown. Business owners are stuck in these uncertain times due to uneasiness and, for some, a deep, gut-level fear. The combination of negative influences in the economy has triggered a series of emotionally based decisions by many otherwise rational, intelligent leaders.


Unfortunately, these decisions will not sustain business momentum and will further delay many owners’ exits. That’s a double whammy for baby boomer owners seeking to retire in the coming years.


Small, privately held businesses can be susceptible to owners’ abrupt, nervous reactions in the marketplace, in addition to the inaction of owners taking a passive position. You’ve probably heard more than one business owner say, “We’re not making any new investments right now.” Others are saying, “I’ll just wait until next year for doing my exit planning.” Let me be clear, we consider F.E.A.R. to be False Expectations Appearing Real and so should you.


When it comes to succession planning, though, the risks are always higher when a decision is deferred. That’s true in good times and uncertain ones.

Filed Under: coaching

Get Yourself the Best Options – Plan Ahead to Exit Your Business

November 30, 2009 by

Chances are pretty good that your departure from the business will be accomplished in phases. It’s often a big help to selling a business if the former owner is willing to stay around in a defined capacity while the new owner acquires an in-depth knowledge of all the systems and processes. This can also help you make a gradual adjustment if you’re retiring or planning a ‘holiday’ from owning a business for a time.

Always keep in mind that circumstances can change. You might find that you want to sell out well before you’d intended, or even that you want to stay on for a longer period than you anticipated. Just remember to always keep the business ready for sale with the books up to date and an accurate valuation possible.

Whatever your plans may be, exiting a business doesn’t have to be a trying or negative experience. Succession planning is simply a part of making progress to an eventual goal or a way to take advantage of new opportunities. Being prepared with a sound exit strategy means you can enjoy your business ownership secure in the knowledge that you’ll be able to leave when you’re ready, not because you have to.

Filed Under: coaching

Prove the Profitability

November 23, 2009 by

Be able to prove the profitability of your business. Most owners of small businesses use them to provide for a range of non-operational expenses. Make sure you keep supporting records of all these expenses as prospective buyers will be as unimpressed as taxation authorities by claims without adequate documentation.

Your bookkeeping should be easy to understand, consistent from year to year, and maintained in such a way that any prospective buyer will be convinced of its authenticity. This will also make it easier to get an accurate valuation when determining an asking price. Your exit strategy must be planned and documented. Family business succession planning experts tell you: If it is documented the value of your business grows. Showing growth is very attractive to buyers of your business.

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You Built It….Now What Do You Do With It?

November 16, 2009 by

Many small business owners have the goal of handing the business over to a family member when they reach a certain age. That’s fine, but will that person be able to run the business then? Does he or she need particular qualifications? Will he or she need special training before they can take over? All this has to be thought through years in advance. It’s time for the business owner to be making a plan for succession management.

Other considerations will be based on your own importance to the business. If it literally can’t get along without you because of your expertise or some other factor, what happens if you’re forced to exit by illness or accident? Your plans for the value of the business when you leave it could be totally negated unless you’ve planned for such a contingency.

If your intention is to sell the company at a certain point in time your strategy will be to enhance the value of the business between now and that date by increasing the worth of its assets. How you do that depends on many factors, but for some firms it’s going to require a sustained drive for a larger customer base and/or an expanded range of products. For others it can mean an emphasis on research and development to develop and patent new products or processes.

To get the best possible price when selling the business it’s essential to maintain accurate and verifiable records from day one. Most buyers looking to purchase a business generally want to see at least three years of financial information.

 

 If you haven’t considered these questions, you likely don’t have a plan for succession in your business. This lack of planning for succession is putting you, your company and family at risk. Find time to at least consider the full potential of that risk.

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When Is the Right Time? Exit Your Business on Your Terms…

November 13, 2009 by

One of the most overlooked questions in any small business is “When do I get out of it?” There’s no easy answer to this question, but it’s something every business owner needs to know and plan for succession.

Part of every business plan should be an estimate of the lifetime of the business. Are you in it for five to ten years with the idea of selling out for a profit at a predetermined time? Is it meant to be a family business you want to pass on to your children when they’re able to take it over?

An exit strategy or a succession management plan may also become necessary because you no longer enjoy owning the business. Circumstances change and for many entrepreneurial business owners once the excitement of getting the business ‘off the ground’ has faded there’s insufficient satisfaction to be gained from just running it.

Many key decisions of your business will be determined by the strategy you have for your exit from it. An example of this is financing. If you only plan to be in the business for a few years your financiers will want their money back quickly and your business structure will have to be able to ensure this. Your plan will answer their questions. A formal exit strategy not only helps you to decide on the right time and place. If done properly it builds the value of your company and provides security for your and your family.

Filed Under: coaching Tagged With:

Looking for Opportunity in a Challenged Economy

October 19, 2009 by

 

Now for my 6 practical ideas to help you thrive in economic winter: 

#1. KNOW AND WATCH YOUR KEY FINANCIAL NUMBERS, especially cash flow.  With tight credit and less options available for cash, you need to be keenly aware of your cash position.  It should be checked at least monthly, and maybe even weekly and daily depending on your business.  You also need to be proactive in planning your cash flow and set logical trigger points in your budget to drive your business decisions.  When the plane is in the fog, you need to fly by the instrument panel and not the way you feel. 

#2 MAKE CUSTOMER SERVICE A TOP PRIORITY.  Delivering value is imperative.  Customers will be considering what is valuable and important in their life and what is not.  Mediocre service and a lax attitude is not a good thing in any economy, but it will destroy your business in tough times.  Your current loyal customers are your lifeline – hold them close and treat them accordingly.

#3 SELL, SELL, AND SELL SOME MORE.  Now is the time for you to focus on getting that sales conversion rate through the roof and massively increase sales.  Increasing sales is the means to increasing cash flow.  If your business is near capacity, then INCREASE YOUR PRICES.  That will create more profit, increase cash flow, and also free capacity for value based (not price based) buyers.

#4 TRIM THE FAT. It’s time to take a close look at your cash flow, budget, and team and trim away the excess.  But it’s not time to get out the hatchet and start to fearfully chop and destroy your business in a panic.  You need to be a surgeon and strategically dissect away the little foxes that eat the vine. 

#5 LOOK FOR GREAT PEOPLE. The market will likely be flooded with great people looking for a job opportunity.  Many larger organizations will downsize, and turn some great people out into the market place.  If you have been challenged to find great employees in the past, this may be the time. 

#6 LOOK FOR OPPORTUNITY TO BUY DISTRESSED BUSINESSES.  There will be some great small businesses that will be for sale.  Entrepreneurs who are looking for opportunities will be ready to take advantage.

Finally, this is the time to strengthen your relationships with your business support team.  If you don’t have an accountant, financial advisor, business coach, and attorney to walk with you through this storm, go find them.  It is important that each support team member also carries an “opportunity” perspective as well.  A great set of advisors provides that outside perspective and balance to help you make the best decisions.  Champions have always surrounded themselves with great people.

So look for the abundance of opportunities in this challenging season, and get ready for a great spring!  Remember, you WILL find what you look for. 

If you would like to learn more about maximizing the performance of your business call Ohio Business Coach, Ralph Berge, 440-838-0991, Business Coach of Akron Canton.

 

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Are You a Miner or a Whiner?

October 14, 2009 by

 

In many ways economic cycles are like the seasons of the year.  It appears that we are headed for a heavy (but improving) economic winter season.  Winter is not bad.  It just requires preparation and an appropriate response to make it good.  In fact, if you like winter sports like skiing, you look forward to the fun that comes with the change of season.  

A fundamental principle for facing any challenge is to understand that the circumstances are neither good nor bad.  It is your response to circumstance that turns that circumstance into a fun adventure or a devastating disappointment.  It is essential, especially in challenging times, to be ready to create, change, and innovate.  People who are filled with fear, worry, and distress are not in a creative frame of mind.  Remember that spring will eventually come, and how you respond in winter will prepare you to plant in the spring. 

So first, let me offer some thoughts about mental attitude.  A positive attitude is the number one ingredient for thriving in these tough times – not just surviving, but thriving! Difficult times provide an opportunity for you to become a leader.  As the majority moves down, you move up, which makes you attractive.  Times like these provide a platform to display character qualities like perseverance, hope, and determination. Hardship and difficulty will either make you bitter or better.  It is how you choose to respond that determines the result. 

Perspective is a key.  Do you see problems, challenges, or opportunities?  The fact is you will find what you are looking for!  Are you searching for a dirty piece of coal or a beautiful diamond?  Are you a whiner or a miner?  

If you would like to learn more about maximizing the performance of your business call Ohio Business Coach, Ralph Berge, 440-838-0991, Business Coach of Akron Canton.

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Keep Marketing Despite an Ever Tightening Budget

October 5, 2009 by

If, as a result of the current economic times, you find yourself heavily cutting back on your marketing budget, it does not mean that you also need to cut back on your marketing campaigns.  Marketing is paramount in these times of economic distress.


How do you keep your marketing efforts alive despite a dwindling budget?

“That’s a good question, Ralph…”

There are many marketing activities available that are free or have a minimal cost with a relatively high return that businesses can effectively employ to remain in front of customers and keep competitive.


Here are my top seven low/ no cost marketing ideas that can help you survive and even thrive through these times.

1.       Networking – Networking with local business groups, local ‘service’ groups such as The local Chamber of Commerce, Round Tables, Lions etc, or even at your children’s school or the church, etc. is a great marketing technique that does not cost a thing.

2.       Referral policy– Ask your existing customers to recommend you to a friend and, if necessary, give them some form of reward (high perceived value to them, low cost to you) for doing this.

3.       Targeted Direct Mail – A carefully written letter sent to a targeted list and then followed up to increase response rate can work wonders for your business.

4.       Marketing Collateral– Leaflets promoting all your services included with invoices or direct to your customer base is a cost-effective marketing technique.

5.       Email Newsletters– While it can cost a bit to set up a template, email newsletters come with only a small cost to use as long as you have the time to write the content yourself. There is no postage associated and these are free to send.

6.       Free Poster Signs– Post signs on your vehicles – you have a free poster site, why not use it!

7.       Internet/Online Marketing: There are a  plethora of free/ low cost options available online, such as blogs, social media, membership communities like Facebook, MySpace, Twitter, etc. where you can market your products and services. YouTube can be used effectively to demonstrate your product and with the help of social media tools, these videos can reach a newer, wider audience.

It is important to remember that “axing” your marketing budget does not mean that you also stop your marketing activities. The biggest mistake business owners make during a recession is to cut or stop their marketing activities. Using these free, low cost marketing techniques will help you and your company stay afloat during these chaotic times.

If you would like to learn more about maximizing the performance of your business call Ralph Berge, 440-838-0991, Ohio Business Coach

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