Excerpt from my book.
1. The dream of many entrepreneurs and often times their spouse is to save the business for the kids. A few important questions first, before contemplating selling to your kids.
Answer All These Questions
a. Do they want to take over? Have you actually sat down with your children and asked?
b. Are they old enough right now to have the conversation?
c. Are they involved in the business today, either full or part time? Or even interested?
d. Are they qualified to run the business today? Working in the business is very different from working on the business. Are they even qualified to do the job they have now in the company?
e. Could they be qualified over time and with the right support? Can you afford to wait?
f. Can they afford to buy the business? The fastest way to kill a business is to give it to someone. You've heard the joke. How do you make a $1,000,000 business? Give your kid a $3,000,000 company. Sad but true.
g. What about the children who elect not to be involved? What do they get?
h. There are so many more questions you will need to ask them and yourself.
2. Someone still has to run the business day to day. Unfortunately you have not planned for this. If you have a larger company you may have staff to run the show for you. Typically if you have a smaller company, with under $3 million in annual sales the staff relies upon you for many of the day to day decisions and the business can stutter when you're not available.
3. You're overwhelmed by the process and don't have a qualified, experienced transition team in place. You think you have trusted advisers to help with the process but sooner than later you will discover they can't help you if they have little experience buying and selling businesses. I need to reinforce this!
4. Your partner has a different agenda and doesn't want to sell. Or at least not right now. Not for the price you think is reasonable. This is when you realize you and your partner have not had the heart to heart conversation you've been meaning to have and just how important it is. Get on it now!
5. In order to take advantage of the capital gains and other assorted exemptions, you need to have planned well in advance. In fact, there is so much wealth management planning you need to do, you should have started a few years ago. This financial planning and tax advice is about moving the proceeds from the sale of your business to your personal side. Only advisers with the proper experience can do this. We've all heard about the Owner who sold his company for $4 million and then wrote a cheque to the government for $2 million because he got the wrong tax advice. It happens all the time.
6. Your partnership agreement is out of date or nonexistent. Try getting an agreement where all partners are happy, after you've been working together for years. You will suddenly realize how different your respective views are on the business and life in general.
7. You've been taking money out of the business in various ways and that has to be normalized. In other words you have been using the business as your personal piggy bank and now you have to show your financials to prospective Buyers. They will be looking into every line of your reporting and will want to see the real story. No, you can't fool them!
8. Sales have been stagnant for too many years. Usually because you chose to stop growing. You were thinking, more sales means more work, more trouble and why bother when you're taking more than enough cash out of the business to pay for your lifestyle as it is. It may be catch up time!
9. There is no viable candidate internally to transition to. If there was, they would have raised their hand by now. Or maybe you just haven't been listening and someone terrific for the job is right in front of you. They may require some training, mentoring and management support but they do exist.
The list goes on and on. Makes you question whether selling even makes sense. Well here is one more sobering thought. Likely 80% of your wealth is wrapped up in the business. Kind of like having all your eggs in one basket. It's your move, what are you going to do?
We Have Much To Be Thankful For
I'm thankful for:
As a family business owner, you should be thankful for:
Food For Thought
Perhaps it's time to consider moving along. Make room for someone else to experience the extraordinary challenges, rewards, ups, downs, good experiences and bad that come with running a business.
After all, there is nothing more humbling, enriching or thrilling than sitting at the head of the table leading a successful business.
This year please give some serious thought to your transition.
Thank you, Eric Gilboord
Ask any employee of an established small or medium sized family business what they would do if the owner closed down and then decide on your next step very carefully.
In my experience, owners of smaller businesses typically with $1- $3 million in annual sales generally have 10-20 employees. Theses smaller companies, many of which have been running successfully for 30 years or more, are seriously considering shutting down and each one will be putting 10-20 families at risk.
All you will accomplish with the proposed tax plan is to give them no choice and a convenient excuse to do so.
What we should be doing as a responsible community, is to find ways to keep their doors open. We need them to grow their companies, hire more people and successfully transition the business to new younger owners.
You are running down a dead end road and nobody will benefit.
Finally, you have forgotten that you work for us. This is not a dictatorship. The boomer aged owners of established businesses built this country over the past 5 decades. My guess is they will not let you destroy all their hard work.
Your pledge during the election was to tax the 1%. Success in small businesses comes from saying what you do and doing what you say.
Advocate for family businesses, Eric Gilboord
Please share this article.
I will consider all serious requests for writing, interviews or speaking engagements to discuss this subject in more detail.
NOTE: My subject matter expertise is NOT financial matters. I will speak or write on the impact of this proposed legislation on business owners and employees.
Thank you, Eric Gilboord
It's not necessarily a bad thing if you're doing what you love. Work the hours you want and make the money that affords you the life you desire.
This is commonly considered a lifestyle business. The Owner grows the company only as far as he/she is comfortable managing. Typically, but not aways, lifestyle companies do under $3 million in annual sales. That doesn't mean they couldn't do significantly more, just that the Owner(s) have chosen not to.
What Owners Think
When it comes to selling, they have an idea of how much more cash can be taken out of the business and what they think it could sell for. Owners think they'll stay around for a little while and that should be all the new Owner needs to transition the company.
What Buyers Think
To a Buyer this is considered a lifestyle business and a risky investment. The big question they will be asking is this. Can the business survive or thrive without the Owner? The Buyers are thinking, what if the Owner gets hit by a bus or gets sick or just quits?
Need To Do
What Owners must do is make sure the business runs without them.
More To Do
What else can an Owner do to evolve beyond the lifestyle stigma? Execute on the ideas placed on the back burner. Look into buying one or more of their competitors. Provide incentives for staff to help with the growth plan.
Mostly because none of us really know how much is needed to live out our life in real comfort. When you think beyond your immediate requirements, the needs of parents (senior care and medical bills etc.) children and grandchildren enter into the mix. Who knows what our government will do to make things even more difficult. How much is needed to retire? I don't believe anybody really knows and erring on the side of more is not a bad idea.
Sell for More
For Owners of companies, with annual sales, in the $3 million and under range; which is the bulk of small business, this is what what you might want to consider. As you run things now, you will likely be able to sell for 3-4 x ebitda. While that can be a considerable amount of money to supplement your retirement fund it isn't the whole enchilada.
What Both Want
Buyers are typically looking for companies with at least $10 million in annual sales. If you can grow your business to over $10 million in annual sales organically or via acquisition and increase the value by improving each of the departments you may be able to sell for possibly 6-7 x an even bigger ebitda.
I don't know about you, but that's life changing money to me and my friends.
So what are you going to do? Sell at the size and operating style you are currently or put some energy into the company and go out on an amazing high.
Out of Steam
I get calls regularly from Owners who know what needs to be done to go big. They just don't have any steam left or are simply using their steam with caution. At WarrenBDC we can help shape and execute the vision you have while supplementing the team you require to reach your goal.
What you thought were your only choices for selling are actually much more exciting than you had ever imagined. How about a partial sale? Where you can be part of the future, but only doing the things you love to do.
If you're up for the challenge, email me at email@example.com to schedule a call and let's talk about going out big.
Make every day count, take action now, Eric
As Mike Tyson so eloquently observed "everybody has a plan until they get punched in the face".
You've been putting off transitioning the company for so long that it's now the accepted status. Or you promised your spouse, the team, your advisers and most importantly yourself, five more years and you're out.
But suddenly circumstances change and you're faced with an unsettling feeling in the pit of your stomach. You want out, but you're trapped, for at least a period of time. And it's always longer than you want it to be.
Could be changes in the business environment, new competition, higher interest rates, cross border restrictions or you fill in the blank _________________________.
Personal reasons rank equally high as business or higher. Grandchildren are at that age where you can't afford to miss a minute of the fun.
It's a family business and the patriarch or matriarch passes on. Now everyone in the family wants their share. Active in the business and non active family members all want what's theirs and to make their own decisions. And rightly so.
This is when the 'now what do I do' kicks in. You haven't really planned ahead and certainly not for a much shorter time frame. Reality steps in and punches you in the face. Making decisions when you're dazed, confused, and pressured typically never ends well.
Regardless of the reason for a change of heart, when it's time to sell, the clock starts ticking. You can't stop it or change it back, time continues moving forward and eventually you will run out.
The point is, start getting ready today. Because even if you know the punch is coming, likely you won't see it until it's too late.
Make every day count.
Take action now, Eric
Browse through over 125 of my past emails click here.
It's the middle of Summer and the time for reading couldn't be better. Read for help with making better decisions. Read to learn how to establish a solid footing as you go down the road you've chosen and read to find comfort while making important decisions. Read now to take action in the Fall.
In conversations with my readers I've learned that many of you save these weekly emails electronically in a file. Others tend to go more old school and print them out to save in a binder.
It seems the ideas, suggestions and tips I write about have a value and for that I appreciate your acknowledgment.
In the spirit of sharing something of value with others, I'd like to direct you to a link where you can read or reread many of my past emails.
Please visit My LinkedIn Article Section. There are over 125 emails all in one place.
Thank you to all of my readers who responded to the last email and took action by reaching out to speak with me. I believe those I spoke with would agree they received answers to their questions and solid direction regarding selling or transitioning out of their company.
The offer still stands, call or email. A five minute telephone conversation could make a huge difference in the success of your next steps.
Make every day count.
Take action now, 'Coach Eric'
Contact me at firstname.lastname@example.org or 416-270-2466
If you're a business owner today it's not easy. The world is changing crazy fast. Decisions need to be made quicker, the implications can be more impactful and it seems like every day there's another new challenge you know little or not enough about.
So what's an Owner to do? Start by admitting you don't know and follow immediately with identifying someone who can help. If it was your golf swing or getting in shape you'd know where to go. If you wanted travel advice, it's pretty simple.
But when it comes to your business, your baby, the passion of your adult life. (Ok one of the passions of your life.) At least some of the decisions coming up are key and will affect you and others long term. So who you consult with is as important as the decisions you make.
Most Owners will do the knee jerk move and call their Accountant or Lawyer. But is this an appropriate time for their services? Are these questions outside their areas of expertise?
A business coach is a great choice. A coach or coaches could be helpful by providing insights, specific expertise, connections, objectivity, emotional support, cheerleading and a laundry list of other things.
But what kind of expertise do you require? Depending on where you are in the life cycle of your company will impact who should help you. Is it a start up coach, grow and improve coach or a start down and get ready for transition coach that would better satisfy your needs? As you drill down the choice will become easier.
Make a decision and try it out. If the choice is correct, next time a challenge pops up and it will, you can say to yourself - I don't know, but I know who can help me.
As a starting point, I am available for a no charge call or meeting to discuss your current situation. We could end up working together or not. At this point what you need is to drill down, talk to someone who is a good listener, impartial and able to bring fresh eyes to the conversation. I'm sure some new insights would also be welcome.
Often accused of being inside my readers' heads, I tend to understand quicker and more easily than others what you might be going through.
Offering to help you is my way of saying thanks for being a loyal reader and for graciously maintaining our relationship.
So feel free to give me a call or send an email and let's talk about you.
Make every day count.
Take action now, 'Coach Eric'
A great question and we get to answer it more often than we think. It's typically our choice and we live with the consequences. We also sometimes bring others into the result and are therefore responsible for the impact of the answer on their lives.
So regardless of whether you're making a poor choice in clothing and embarrassing your spouse or a business decision that affects the entire company you need to decide.
Would you rather be the one who says I wish I had or the one who says glad I did?
Take action now, Eric
If you want to 'Get The Triple Effect' - Sell your business for 3 times more and 3 times faster.
Purchase my book from Amazon.ca or Amazon.com
Ask yourself right now. Who would you rather be?
We all have wants and needs but are we really ready to do what it takes? In this information age there is no shortage of experts, coaches, mentors and a myriad of ways to get the answer to how do I achieve X.
So if the answers are so easily and readily available why don't we just go out and get what we want? As a species we have learned to count on others for far too much. It can come free and typically with no effort. Excuses for not taking action are quickly adopted. Acceptance of not having or not having more is the norm and we slowly spiral down or remain in a state of no change on cruise control.
Many people set goals, work hard, change and adjust to their new circumstances and experience success. Of course these are the 'LUCKY' ones. We know that's not true. They just wanted it badly enough to work for it.
So if others can do it and the help is there for the asking why are you not moving forward? Maybe it's because you don't want to. You need to ask yourself, what is holding me back from having what I want?
Is it simply not knowing what you want? There are many resources to help you figure out what you want. So that's not it. What is keeping you where you are?
When you can answer that single question you may find the path to where you want to be is right in front of you and it's time to take the first step.
As Lewis Carroll said:
'If you don't know where you are going, any road will take you there.'
As The Rolling Stones sang:
'You can't always get what you want, but if you try sometimes, well you just might find, you get what you need.'
Take action now, Eric
If you want to 'Get The Triple Effect' - Sell your business for 3 times more and 3 times faster. Let's talk.
Ask yourself right now, how much do you want it?
Call me directly 416-270-2466 or email for an appointment email@example.com.
I didn't start out to write this weeks email about me personally, but sometimes it just goes that way.
My Father passed away when I was eighteen years old. He was only 51. While not with me physically, he has always been a part of my life. A good and just influence.
He danced to his own music and lived his life as short as it was, his way. Helping people, both friends and strangers, while never expecting anything in return.
He set a fine example of what it means to be a good person and will be remembered as someone who truly cared about others. More importantly, he took action to make their lives better.
I will think of him fondly today, trust I am living a life that honours him and will continue to pass his spirit on to my children and grandchildren.
As written on his tombstone.
'He was never too small for big jobs nor too big for small jobs.'
Something we can all aspire to live by.
It's NOT OK to wait any longer. You can deny it all you want.
If you're a boomer aged business owner (or know one), you know in your heart it's time to start the transition.
More than likely you are already taking the steps needed to move on with the next exciting stage in your life. By your choice or not it is happening. The train has left the station.
10 Ways Boomers Know They're Already In Change Mode
It's been a good run and you accomplished quite a bit with the company but it's time to let go. Get on with your life. I know I hear it all the time, you don't know what you will do if you sell or transition. You also don't know what you'll be missing.
Still not convinced?
Here Are 7 Triggers To Selling Your Business
Anything Sound familiar?
How about you take a comfortable first step. Please feel free to contact me at 416-270-2466 and we can have a brief conversation by telephone. Or email me at firstname.lastname@example.org to schedule a call. I've been told I'm easy to talk to.
If you like, visit our website first www.warrenbdc.com, see who we are and how we might be able to help you move forward.
There are two sides to an Exit Plan conversation: Emotional and Business. It's in your best interest to understand both.
If you're thinking about transitioning out of your company, you need to hear this interview. So grab a cool beverage, sit back and enjoy. Click Here
Family Offices Adding Staff As Direct Private Equity Investments Increase
Found in FIN alternatives Daily Newsletter www.finalternatives.com
May 8 2017 | 9:03pm ET
More than half of family offices now have at least two employees dedicated to sourcing and vetting private equity investments, according to a new survey from Family Office Exchange, and four out of five have at least one.
The data was published in the organization’s 2017 FOX Global Investment Survey, which polled 118 family offices on a number of issues including asset allocation, performance, passive versus active investing in long-only equity, investment trends, current economic outlook, and financial challenges.
Other highlights from the survey:
What do you do when someone lets you down?
Hey, stuff happens and people (associate, employee, supplier, customer, family or friend) can fail to deliver. When they miss a deadline, it's not always their fault. Could be their associate let them down, illness, or just mother nature/the universe messing with you. But did you get a call or email saying there was a problem?
Is it consistent, do they let you down over and over again? Is it something different each time? Maybe they don't care about you or are they driving you away consciously or subconciously?
I'd like to suggest a question to ask yourself. Do your plans for the future of your company include selling while at a peak in value?
Some companies we meet with at WarrenBDC, show neither top or bottom line growth. Owners have instead, resorted to stalling growth and squeezing whatever cash they can from the business. Some Owners are tired and lack the energy or incentive to continue growing their business, let alone sell it. They think they'll have enough to live on in retirement but continue to come into work more out of habit than to make a real difference. Often working is the result of not having an alternative way to spend their time.
Sound familiar to you or is it someone you know?
"The distance between insanity and genius is measured only by success."
As a trusted adviser, are your BABO clients stuck on when to start transitioning their company?
The biggest challenge today for boomer aged business owners is in taking that first small step toward selling their company. Realizing a successful sale or transition is key to their future. As hard as this is to believe for them, they will not live forever. Owners don't know what they don't know. They are the least prepared for the single largest sale they will ever make. It's time to shed some light and bring owners up to speed on transitioning out of their company.
My new book is available now on Amazon. Makes a great gift for your BABO (boomer aged business owner) clients or prospects. Ask about quantity orders email@example.com
1. Patience - Often times it takes years to launch a new idea and still more time to be successful at it. You have little real control over the thinking of others. Be it the world, family, friends or business associates. Some will come around to your way of thinking others will not. You know it's a great idea but 'they' may not be ready for it. The world is not on your clock.
2. Persistence - If you really believe in what you're doing you will not give up. Changing your thinking, adjusting the measurements, and revising your plan are all part of the process. Giving up is not.
Free samples has several meanings and offering stuff for free can often result in different outcomes.
You can get a free sample at the deli counter before you buy. Usually you're there to buy so it makes sense to offer free samples. Sure someone might take advantage but typically the ratio of buying vs taking is low.
Free on the other hand, as in download this stuff free, take this free pen at the trade show, come to this free event or take an hour of my time for free has less attraction to real Buyers and usually appeals to Takers.
Takers go for anything free or close to free and place little value on what they're receiving. It's appropriate to lower your expectations and anticipate a lesser quality of response.
The past year has been an interesting time for me. Lots of changes, including how I work, who I work with and how much I enjoy my work. Yes it is true, if you really enjoy what you're doing it's not work.
This is not without the obligatory surprises, tests of will and oh crap did I just make a huge mistake lightning bolt. So how have I managed to soldier through the challenging times? Good question. While it's exhilarating enjoying the highs, it can be tough dealing with the lows.
Here is my mantra. "I don't know, I'll figure it out."
Next time you're faced with an overwhelming challenge, don't curl up in the fetal position and try to ride it out or yell at the innocent party who just asked you a simple question.
Embrace the situation, take a deep breath and say "I don't know, I'll/we'll figure it out."
Interesting, I just had an epiphany while writing this post. It's no longer always I, it's now we. As more great people join our company I have become part of the 'we'.
Something for many of us to think about.
Answer a question, make a pitch, request a sale, get an opinion, show someone how to do something. If you can't make the message clear, communicate it quickly and say it simply so anyone can understand, then you're not ready.
I used to say, explain it to me like I'm a six year old. So here goes.
Grandpa and Grandma, are mixed up and sad about closing their store. Let's make them happy.
Know a 50+ owner of an established business feeling 'a little mixed up and maybe even sad about transitioning out of their business'? A friend, spouse, parent or client.
If yes, please click here and find out how to help make them happy again.
I've found that as you age, balance requires more attention. Please enjoy this short slide presentation on using Tai Chi principles to improve balance. You don't need to do traditional Tai Chi to enjoy the benefits.
How do I figure out what my business could sell for?
Thanks, Wondering How Much
We happen to offer a confidential, blank, DIY template form you can download and fill out with your Accountant on our WarrenBDC website. Click Here
Remember this is only an indication of the value of your business. A proper valuation by a licensed Business Valuation specialist is still necessary. WarrenBDC can help with that.
Eric's Latest Book Moving Forward
Written specifically for Boomer Aged Business Owners. One of the biggest events they face today, is to sell or transition out of their company.