Listen to this audio recording of the Roundtable Discussion On Business Transition live and online April 18, 2018. With Eric Gilboord, CEO of WarrenBDC and Elisabeth Colson, Commercial Lawyer with Devry Smith Frank LLP
I didn't start out to become a family therapist. It just happened. If you're the Owner of a family business perhaps you can relate to this week's message.
Working with family business owners is fun, challenging and very rewarding for me. Their business and personal lives are intertwined. More interesting is when you add in partners (and their families) who also own and run the company. Another layer of complication. Blood family or work family they typically interact very much the same. They are family and that means holidays and special occasions together, personal conversations and typically some fighting. Sometimes resolved and sometimes not.
If they are fortunate, respectful of each other and work hard at it the experience can be quite wonderful. If not it can get messy. As with any family dynamic everyone has their role and typically home actions are seldom different from work actions.
To keep the peace, you've learned to accept and deal with their peculiarities, their specific needs and the lack of change - no matter how hard you try to accommodate them. People don't change and hoping they will is a common theme in family businesses. Sometimes it only affects the family. Often the behaviour can reach into the success of the company and have a very real negative impact on non family/owner staff.
At some point you will determine that it's time to deal with the idea of transition. This is where I come in. If you think what I've written so far is even close to the truth wait until you start the transition process. The opportunity for challenges multiplies exponentially. Issues and ideas that have been tabled in the past, now need to be dealt with. Ambitions come out and the jockeying for position heightens.
Family therapy is only one part of the process, but it can be as key to your success as cash flow, sales & marketing, human resources and production. You will be riding two sides of the same sword, family and business.
You may think you have the family side handled until the serious conversation starts about the business. Who will run what, who gets what and about a thousand other things you never thought you would be dealing with. This is why I take on the role of a 'family therapist' as well as a Transition Advisor.
To address the many family and business issues that can come up we've created the Custom Transition Roadmap. In our process, both sides are covered and one without the other is not advised. Remember it's a 'family business'.
If you'd like to know a little more about our Transition Roadmap please click here.
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.
In many cases what today is a thriving multi-million dollar business started out as just a seed of an idea from the Owner. Carefully and skillfully tended it grew and thrived. Business Owners in transition often seek a Buyer who will tend their garden with the same care. A2E
Business Owners need to ask themselves this one question. The answers will come to them lightning fast. What stupid things am I doing to screw up a potentially successful sale or transition of my business?
February 2, 2018
After speaking with several of my readers and clients about their holiday break, I learned that the common theme was using the time to think.
With a nod to Jeff Foxworthy the comic, here is my list.
If you're thinking about running out of time, you might be ready to start transitioning.
If you're thinking about who could carry on your legacy, you might be ready to start transitioning.
If you're thinking about staying or going, you might be ready to start transitioning.
If you're thinking about growing your business way bigger, you might be ready to start transitioning.
If you're thinking about what your life will be like after, you might be ready to start transitioning.
If you're thinking about spending more time with family, you might be ready to start transitioning.
If you're thinking about what's going to happen to your staff, vendors and customers, you might be ready to start transitioning.
If you're thinking about how much you don't know about transitioning, you might be ready to start transitioning.
If you're thinking about what a great ride it's been, you might be ready to start transitioning.
If you're thinking about not wanting to stop, you might be ready to start transitioning.
If you're thinking about how to download your decades of experience, expertise and contacts to a successor, you might be ready to start transitioning.
If you're thinking about not knowing where to start, you might be ready to call me. Eric 416-270-2466 or email firstname.lastname@example.org.
Not quite ready?
The world of selling a business is not black or white like some owners think. There are many shades of gray. You owe it to yourself and those close to you, to find out what your options are right now. Listen to my latest podcast now.
Download this free PDF copy of MOVING FORWARD. Please enjoy the benefits of 'Getting The Triple Effect'.
Cheers, Eric Gilboord
Recently I was asked what I thought was the most pressing issue facing Family Business Owners today.
The answer is not singular but covers many aspects of their business and personal lives. So I responded that the multitude of questions they are facing are so overwhelming many Owners are simply putting off the inevitable. That is dealing with transition. At best it's a temporary fix.
As Owners age and realize time is running out they are going into a panic mode. There are plenty of questions, but not a lot of answers. The information is out there however many Owners don't know who to ask. Questions without answers soon become problems.
This past year has been a tumultuous time to say the least. If you're looking for answers and ideally the relief that comes from knowledge that is pertinent to your current situation, let's talk. How about going into the new year with a plan or at the very least some answers.
It would be my honour to assist you with this task.
Wishing you the best of the holiday season and thank you for being loyal readers.
Cheers, Eric Gilboord
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
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
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
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.
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."
The holidays are right around the corner. You have a not too frequent opportunity to speak with your entire family about the future. To talk about the business and what is going to happen.
Scheduling meetings or lunches or whatever to try and get to everyone during the year could be overwhelming. So how about taking advantage of the holidays? When pretty much everyone is already there. As for those who are not, there's always the phone.
No, I'm not talking about starting a bun fight. How about a quiet, private conversation with each family member individually. Take their temperature on how they perceive the business and their role or non role to date. What are their expectations for the future?
The most important interview I've ever done.
What is EBITDA?
Thank you, Not an Accountant
Excerpt from my book 'Moving Forward'.
Commonly abbreviated as EBITDA, it is an accounting measure to calculate a company's net Earnings, Before Interest expenses, Taxes, Depreciation and Amortization are subtracted. Used as a proxy for a company's current operating profitability. Hope this helps.
This post is an excerpt from my book 'Just Tell Me More'.
Lists like this one are usually made up of financial reasons for the failure of a small business. Unfortunately there are also many sales and marketing reasons. Fortunately, there is a positive step that can be taken for each one that will greatly increase your chances for success.
“These actionable tips are the responsibility of everyone who works with you. Make sure they know and understand them. Forward this blog to your team NOW!” EG
1. Face Your Weaknesses. Failure to face up to your weaknesses and a lack of effort to take advantage of your strengths can keep your business in a no-growth mode.
Take two pieces of paper and list your company’s strengths on one page and its weaknesses on the other. Note the ways you can make your staff, customers, prospects, and other business associates aware of each of your strengths. On the page of weaknesses, identify steps to correct each problem. Discuss the points with your staff and develop a schedule to address them. No, it’s not really as bad as you think.
2. Take Action. Talking about the great marketing program you have been developing and following through with it are two very different actions. Implementing the program is the key to marketing success. Plan all you want, but be prepared to act on all the steps you have identified. Don’t be surprised to discover that there are some steps you hadn’t initially considered.
You Can Handle the Truth (about selling your company) I Know You Can
The first thing I'm consistently told by my readers, when we meet in person or speak on the phone, is they respect the honesty and tell it like it is attitude in my writing. I take that as a badge of honour. So thank you.
The truth and cutting to the chase is and always has been important for any successful business owner. I respect you by offering the truth and I expect to receive it back. Trust is earned over time and we slowly develop an honest relationship.
I think you do want it and you can handle it. One of the tools you used to build your successful business was and still is a strong BS meter.
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.