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?
Excerpt from my book Moving Forward ' Get the Triple Effect - Sell your business for 3 x more and 3 x faster.'
If you don't prepare properly, the fallout will be far worse than you think:
1. Your spouse/family will be left to run or sell the business. Your spouse may be forced to work with your partner. That goes two ways. How would you like to be in the position of working with your partner's wife? Sobering thought isn't it.
2. Company value will drop dramatically because you are not there to run it. In many cases you are the business. Want to find out if that's true?
3. Your employees may end up out of work.
4. Customers are not quite as loyal as you think.
5. Competitors will be circling your customer list within minutes.
6. In case your big plan is to die with your boots on. Good luck. You will likely be leaving a legacy and a mess. They'll definitely be talking about you. Maybe just not in the way you hoped.
If you don't want this to happen you have 2 choices:
1. Sell now, knowing it will be significantly harder than you thought, and you will realize far less payment for the business. The terms of the sale may not be exactly what you were hoping for, or even close. You'll have little choice and be forced to be content with the deal however it turns out.
2. Start getting your business ready for a successful sale or transition and have the future you always thought you could have. Become a company desired by Buyers. Sell for the amount you wanted or possibly far more. Sell on your terms.
You can't properly do #1 or #2 without a plan and a team to implement it. It's really not much more complicated than that.
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
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 firstname.lastname@example.org.
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?
"The distance between insanity and genius is measured only by success."
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.
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.
Whether you're exiting a business or just living your life!
Boomer Business Owners Are Missing Out On Cashing In,
Unless They Start Preparing Properly for Sale
TORONTO, ON, March 31, 2017 - Boomers (born 1946-1964) own about 63% of private companies in both Canada and the United States. Of the businesses available for sale, 70-80% don't sell. Incredibly 44% of Owners say they aren't familiar with their transition options, 24% do know what their choices are and 32% are not sure. As for getting help, 88% have not yet established a formal transition team.
Author Eric Gilboord says "Owners need to get started now, preparing their business and themselves for transition." Or the impact on their personal finances will be devastating. Many Owners are carrying on business as usual. The current thinking of many smaller Owners is to take as much money out of the company as they can for the next few years, and then sell for what they can get or simply close down. Neither solution is in their best interest."
My son and I got into a conversation about Trump the other day. And of course the inevitable what do we do here in Canada about our own leadership.
As we talked I realized that our discussion was less about the specifics and more about our own generational concerns and how the implications would affect us personally.
So with that clarity I understood we likely would never agree on everything and we both need to work hard to appreciate the impact the upcoming changes will have on each other.
It's easy to get caught up in the day-to-day only to miss the big picture. Consequently, opportunities can disappear as quickly as they came. As a business Owner, this can be an easy trap to fall into. We all do it. I'm not suggesting you ignore the small stuff, just don't get personally involved in every decision. Have someone else take care of it.
Why would you hand off important and not so important decisions? Because if you and your staff continue to run the business as if you're the only one who can make the right choices or solve the problems, you will live to regret it. If you don't already.
Eventually the reality will hit you, you're not running the company, it's really running you. Instead, you should be thinking about the bigger, more important issues. Like how exactly you're going to get out.
Some food for thought before handing your business over to a next generation family member.
I remember meeting the Owners of a small business. He had worked hard and the company had provided his family with a comfortable life.
There were 3 sons. One worked occasionally in the business, wasn't suited to take over and never really did much with his life. A second son had other ambitions and enjoyed a very successful career in law. As for the third son, unlike his brothers, he worked in the business full time, made a living and started his own family.
So when it came time to think about transitioning and rather than selling the company to an outsider, the Owner along with his spouse made a decision based on emotion and blood.
You can pick up a copy at Amazon http://www.tinyurl.com/buybreathe
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.