Celebrating spousal support in your business

Valentine’s Day isn’t just for romance.

It’s also a day to express appreciation.

Who better to thank than the spouses who stand beside or behind us in our businesses.

Our life partners often don’t get the recognition they deserve. In family businesses, it is often the wife who does not take a formal salary or title.

And when they don’t work alongside us in the business, what they contribute to its success can be out of sight, out of mind.

Business owners tend to work long hours, especially in the early years. Moreover, when we enjoy what we’re doing, we don’t even notice how much time we’re putting in and how much energy we’re expending. Suddenly it’s 9 o’clock at night and we’re still in the office or store.  When was it we said we’d be home?

Arriving home, we find it hard to break the connection to our business. The issues of our day still draw energy—like the TVs, computers and other plugged-in devices that continue to draw standby power even though they’re turned off.  Our brains are still receiving work signals while we should be tuning in to our significant others.

In some ways, they are our standby power, allowing us to achieve our dreams, helping us to hold it all together, through the uncertainties, the ups and downs, the ebb and flow of money. In owning your own business, you are paid only after all of the other expenses have been paid.

A supportive family is essential—it may be your name on the business, but owning a business is truly a family undertaking.

I have been very fortunate over my many years in business to have a wife who rode the financial ups and downs and put up with the long hours and extensive travel with understanding and without complaint. I believe that without this support at home it would have been impossible to have achieved the same business success. Thank you, Gayle. And Happy Valentine’s Day!

What about you? Has your spouse contributed to your business? Want to publicly thank them? Go ahead—use our comments to do so.

Seasonal businesses: your pace or mine

What about owning a small business that only operates at certain times of the year—say a tour boat line in Canada?

I saw an article recently about owning a seasonal franchise and it prompted me to put together my own list of pros and cons to owning a seasonal business that buyers should be aware of.

Being the former owner of a tour boat line in Canada I have lived through them.

Owning a seasonal business: the pros

1. During the off season the owner can work on business planning, marketing programs, operating systems and procedures, documentation, research and so on without the pressure of managing the day-to-day operations.
2. The off season provides time for rest, contemplation, leisure travel and activities, and to get re-acquainted with family and friends.
3. The off season provides time for meeting with industry peers, trade associations, suppliers, strategic partners, and for traveling to research potential business improvements.
4. The off season may allow the owner to escape unpleasant weather conditions.
5. Recruiting and training can be done in advance of the busy season when there is time to do it well.
6. Servicing and upgrades to systems and equipment can be done during the off season without time pressure.
7. Some people thrive on being the hare rather than the tortoise.

Owning a seasonal business: the cons

1. Start up at the beginning of the season requires working capital in excess of what a non-seasonal business would require.
2. Start up requires a significant expenditure of energy is a short period of time.
3. The resources allocated to the business are only earning a return during part of the year.
4.  A system or machinery breakdown during the busy season is more costly and thus the risk is higher.
5. It is more difficult to retain good employees in a seasonal business.
6. The level of activity in a seasonal business must be much higher during the season to offset the slow or down time and so may require long hours and greater endurance from the owner.
7. The level of stress dealing with a flurry of activity during the season can be higher.

In the end it is a personal choice based upon the owner’s values and what he or she enjoys.

How about you? Have you operated a seasonal business? What did you like best about it?

Expect an exciting year for small business ownership in Canada

Exciting ride ahead

This is the first Friday of 2012 and as I work through my e-mails, I’m weighing this brand new year and what it will bring. I expect it to be much better for most business owners than 2011.

The American economy is showing signs of improvement, there is increasing demand for Canadian oil and gas, the potash industry in Saskatchewan is doing well and it would appear that the U.S. housing market has finally bottomed out.

Canadian banks have become more aggressive in the provision of Canada Small Business Loans, employment here is forecast to improve and small business owners are anticipating a better year in Canada.

At the same time, the economy in Europe is shaky and is probably in for a very tumultuous year.

Our current government in Canada has not provided any indication of support or programs that would have a positive effect on small business, but they have maintained low interest rates and a sound banking system. At the same time, we have many business owners past 65 and looking to retire, with many leading edge baby boomers in the same frame of mind.

I expect this to be an interesting and exciting year for small business owners.

With volatility comes opportunity for those who recognize it and are able to act quickly on the changes in the marketplace. For business owners who are considering selling their business this year or the next, now is the time to get focused on the value drivers that will increase the value of your business.

Whether it is increasing sales/profits, eliminating customer or supplier concentration issues, improving the systems that operate your business, or improving hiring and training practices, the time to focus on these factors is now.

Many of us make New Year’s resolutions.  Few keep them.  If your New Year’s resolutions did not include a goal for your business, make this goal now. Ensure that your goal is a SMART goal— Specific, Measurable, Achievable, Realistic and Time-Based.

If you are thinking of selling your business, focus your goals and resolutions on the value drivers for your business. Sunbelt can help you with the process of selling and while we will maximize the amount you receive, it will be related to how well you have addressed your value drivers.

Great time to buy a business

For those thinking of getting into business, there couldn’t be a better time. We are at the beginning of a long uphill climb in small business.

Small business buyers generally fall into three categories:

• those who want to purchase a business in order to secure employment and build wealth and security for their family;
• those who want to purchase a business they can substantially improve and then resell;
• those who are seeking rapid expansion or synergies to increase margins and sales for companies they already own.

For individuals looking to purchase a business to provide their own job security and income, the beginning of an up cycle in the economy is a great time to buy. With many businesses underperforming, the cost to purchase is less than it will be two or three years from now. At the same time, you would be buying at the beginning of economic recovery so your odds of success are great. The success rate for Sunbelt clients who buy a business is greater than 98%, however buying at the beginning of a positive economic cycle results in greater success.

For those wanting to purchase a business that they can substantially improve then resell, there couldn’t be a better time to buy. There are currently many under-performing yet fixable businesses available for purchase. This strategy of buy, build and sell has made many entrepreneurs wealthy. Timing is an issue, though, so I would embark on this now.

Companies seeking rapid expansion or synergies are facing many opportunities. Private equity groups are looking for such investment prospects.  Many business owners who are preparing to retire have businesses that are not performing at peak levels; these same businesses would provide the growth and synergies the purchasing companies are seeking. The result is that there are significant opportunities in the small end of the midmarket and capital is available to take advantage of these.

We are anticipating a raft of small Merger & Acquisition (M&A) transactions with financing coming from private equity investors. The very low interest rates and volatility in the stock markets are making M&A investments look far more attractive and in Canada, real estate is already priced at the high end based upon current ROI and forecast interest rates.

Putting all this together, 2012 should be an exciting year for both business sellers and business buyers.

At Sunbelt Canada, we are looking forward to the busiest year we have had in a decade and it’s about time. The systems and people are in place. The training has been done.  The marketing is at hand. We are ready.  And we are pumped!

There will be wild ups and downs in 2012 that will create outstanding opportunities.

Hold on to your hats and enjoy the ride!

Our dive into the four DISC personalities

A "D" finds the deep end and jumps in

Jumping into a pool isn’t top of mind for most of us as we hunker down to face our Canadian winter. But that’s one of the things my team and I were thinking about earlier this week as we learned about the traits and preferences of the four DISC personality types.  Our training leader (Grant Mellow of ActionCOACH) used the pool analogy to help us grasp the differences between each so we could recognize them and adapt. We’ll “dive” into the details a bit later, including some tips you can use in communicating with your own team and customers. First I want to tell you why we were going through this exercise.

Most of you, like me, are business owners. We in particular have to be able to adapt to changing times and circumstances in work and life. Sometimes we need to learn new skills as do our employees. Such changes are harder for some than others. But once mastered, the individual and the business both benefit from the growth.

My recent changes include a series of steps to increase the number of businesses we have available for sale (our inventory) and closings (our sales). Among these are systems and training to better equip our team and their clients for success. The DISC exercise was structured to help us communicate with our prospects and clients in a manner that works for them.

While we’re a professional services firm, we are also a store. When buyers come to us, it’s important that we have the right business to enable them to be successful; to do this, we need to have significant inventory with a mix of every size and kind of business for sale. That was never a problem before the recession. But because of it, many owners have delayed selling, thinking there wouldn’t be a good market. [That’s wrong—businesses are still commanding a good price, although it will shift to a buyer’s market in a few years when baby boomers start to retire.]

No pain just gain —negotiating tips for buying or selling a business

Find options that meet both parties' needs

My wife, Gayle, and I recently celebrated our 35^th wedding anniversary. We’re both strong-minded but we’re careful not to let our differences turn into a contest of wills, where one “wins” and the other “loses”. Yet that’s often what happens to people with opposing interests—in business as well as in life. The steamroller may “win” in the short term, but at the cost of longer-term damage to a relationship they’ll be counting on down the road.

It’s far better to find options that meet both parties’ needs. And that’s where an experienced third party can help.

In the buying/selling of a business, that experienced third party is a business broker trained in guiding buyers and sellers to common ground.  In Canada, individual business brokers often represent the interests of both the buyer and the seller of a business. This is known as dual agency.

I believe the fact that we operate as dual agents with an intimate understanding of both parties’ needs has a lot to do with our success in closing deals. Our goal is to achieve the objectives of both and to protect both, advising what is and isn’t reasonable.

Let’s say you’re the seller. You want to maximize the value of your business while minimizing risk and taxes. When the sale is closed you and the buyer need to be on good terms. You are probably going to train them. You will probably be lending them part of the purchase price. You may even be staying on with them for a period of time.

The purchaser is buying without audited statements, and even though they have done some diligence, they are buying largely on trust—trust that you have developed with them during the investigation stage.

You and the purchaser have opposing objectives during negotiation, however, and emotions can run high—it is important that you let your business broker do the negotiating. They have training and experience in negotiating that you probably don’t. They will help you reach a deal that achieves your goals and the buyer’s goals—they understand both.  If the deal does not work for either of you it will not work at all.

That does not mean you shouldn’t provide input into the development of a counter offer – you should, however, keep in mind that it has to work for both of you.

Building a pattern of agreement

We start by looking for mutual gains. Your counterpart is working for the best deal they can get. Where do they overlap? Start with what you can get agreement on, and build a pattern so it’s easier to get a concession when one is needed.

Know what concessions you’re willing to make in order to get more of what’s important to you. Prioritize what you must have, what you’d like to have and what you don’t really care about. The latter can be a bargaining chip—what’s disposable to you may be important to the other side.  Your broker will facilitate the trade off, as you give up some things that are a little important for things that are more important.

Generally, the first offer you get from a potential purchaser is not their best – it is their first. Price, terms, closing dates, diligence timelines, inclusions and exclusions are all negotiable.

As you work through the negotiations, keep in mind your Best Alternative to a Negotiated Agreement (BATNA). You need to determine this before you start the negotiating process. It may be that you simply keep the business or that you hope another buyer will be presented. If that’s the case, and it’s clear that an agreement can’t be reached, then you have to be prepared to walk away.

In the end, you make the decision. Not your accountant or your lawyer or your family and friends. You must decide based upon what works for you.

If you’d like to do further reading on effective negotiation, I recommend Getting to Yes: Negotiating Agreement Without Giving In, by Roger Fisher, William L. Ury and Bruce M. Patton.

For tips on buying, building or selling a business, make sure you sign up for our free monthly newsletter.

Negotiating Tips

Give to get. Give and take, and the need to listen to and understand the other party’s position, is needed on both sides.

It’s not personal. Avoid confrontation—learn to separate the person from the issues.

Focus on issues not position. Find common ground of shared interests.

Be prepared. Know what’s essential, optional and dispensable.[via @DonCooper]

Keep an open mind. Be receptive to creative solutions.

What does your website–or lack of it–say about your business?

Some 52% of Canadians go online to research products, says the November issue of Profit magazine. If your store doesn’t have an effective web presence, you’re going to sacrifice sales, they add.

And yet, many small businesses in Canada still don’t have a website.  Only 36 per cent of small businesses had their own websites (compared to 91 per cent of large businesses) as of 2007, a recent CBC article reports.

Surprised? I’m not.

I encounter this often, when owners enlist our help to sell their business—many do not have a website.

They don’t realize the bad image it conveys—that you’re not professional enough to have a site. And it’s just as damaging if you haven’t kept it current. Think of the website as your online home. Are your premises tired and dated?

An effective, well-designed website will give visitors a positive impression of your business. But the site needs to be consistent with who you are or want to be as a business and directed to your target market—your prospects. As with all marketing channels, you need to determine the audience you are trying to reach and with what message—with the ultimate goal of gaining a customer or client.

With this in mind, we took a long, hard look at our own Sunbelt Canada website this past spring and realized it didn’t convey all that our company had to offer. So we overhauled the site, to make it more relevant to and functional for our target audience—people interested in buying, building or selling a business–to attract more visits and ultimately, more customers.

Instead of just pointing out the improvements, I wanted to share some of the thinking behind the changes, so you too could benefit.

More learning opportunities for business owners and prospective business owners

I’ll admit it—I’m a packrat. I hate throwing something out that may be useful to someone else or to me in the future.  It took the discerning eye of my wife, Gayle, for me to clear out all the equipment and material I’d stored in the large vault being converted into a new learning space at Sunbelt’s Ottawa office.  The existing meeting rooms just weren’t big enough to accommodate the number of people wanting to attend our business seminars or broker training courses.  So over the past few months, we’ve been renovating, and we’re now in a position to host more learning opportunities for more business owners and prospective business owners, starting with a series of free evening seminars on “Exit planning for business owners.”   We’ll have more details shortly.

Whether you’re thinking about selling now or several years from now, proper planning and preparation can make a significant difference in the outcome of the sales process.  We encourage all business owners to understand and take control of the factors that affect the value of their businesses and to constantly build for maximum return on investment.

Have you read our three posts on how financial, organizational and operational factors can help you build value in your business?  If not, you might want to do so now:

How’s your fiscal fitness? Get tips on financial factors to build the value of your business.

Can a potential buyer see himself in your business or are you blocking the way? The greater value comes when the business is making money without its owner’s involvement in the day-to-day activities. Read more about the organizational factors that build value.

Some operational factors–the state of your shop, warehouse, office, store–are fairly obvious, but do you know how your systems or lack of them add or take away value from your business?

And if you want to reserve a seat at our Ottawa Exit Planning series, please indicate your interest by registering here. We’ll have more details shortly. Or if you’re outside Ottawa and you’d like to be notified when we have added an event on buying or selling a business in your area, use our contact us form to request this service.

Building value in your business: the Inner Circle

Inner Circle peer advisory group now in Canada

How many of you remember Victor Kiam, the businessman who liked his Remington shaver so much he bought the company?  Well, the three Inner Circles I experienced in the U.S. impressed me so much that I bought the company – at least the Canadian Master Franchise.

Kiam said (and showed), “Entrepreneurs are risk takers, willing to roll the dice with their money or reputation on the line in support of an idea or enterprise. They willingly assume responsibility for the success or failure of a venture and are answerable for all its facets.  The buck not only stops at their desks, it starts there too.”

Membership in an Inner Circle group can substantially improve the odds for entrepreneurs like us rolling the dice.  In a recent member survey, 97% reported better decision making ability; 75% reported higher revenues AND profits; 71% reported better work/life balance.

So what is the Inner Circle and its life- and business-changing power?

Business owners in Canada getting fair value for their businesses

Small business owners in Canada share many of the same challenges as their counterparts in the United States:  government regulations, access to credit/capital, taxes, finding new customers and retaining existing customers. But selling that same business is a whole other matter—think growth, in contrast to the gloom and doom of the current American market, where it seems that some sellers have reached their breaking point and are now settling for less.

Online marketplace BizBuySell.com has reported that sales of businesses with roughly $350,000 in annual revenue have risen 8% in the U.S. over the second quarter in 2010.

I can tell you that sales have also increased in Canada, but in healthy double digits and at prices that are reflective of anticipated economic success.  Business owners are getting fair value for their businesses and buyers are having success as the new owners.  Most businesses show an increase in revenue of 15% to 30% the year after the transfer of ownership.  The new owners come with energy, enthusiasm, and some new skills and ideas.  This has not changed. Sellers are having to finance a greater portion of the purchase price but they are getting fair value and 99% of the transactions at Sunbelt are working out well for both parties.

Who is selling and when

Some of our sellers are serial entrepreneurs.  They tend to be younger than 55 when they sell a business.  But the vast majority of our sellers aren’t serial and they’re not entrepreneurs.  [While business owners can be entrepreneurs, many are not.]  They hang on to the last moment, when they are turning 71 or 72. For most, freedom 55 is a myth.

In fact, a 2010 survey by Businessesforsale.com, found that 20% of business buyers in Canada were over 55!  You can read more about this and our tips for baby boom buyers here.

The average life expectancy was only 61.7 years when the U.S. set the retirement age for its social security program at 65.  This was in 1935.  By the time our CPP was established some 30 years later, life expectancy had hit 70.  It has now hit 81.  Puts things into a very different light doesn’t it.

Whether you’re thinking of selling and retiring or starting a second or third career, we can help you reach your business goals. Contact any of our offices across Canada for a complimentary consultation.

And for tips on buying, building or selling a business, make sure to sign up for our free monthly newsletter.

Gaining fresh perspective for life and business: letting go of the need to be right

Most of us will do anything to avoid being wrong

Two posts back, I wrote about the value of taking time out for vacation, to recharge, to clear the mind and get fresh perspective, good for our health and our business.

Perspective is everything in business as in life.  It’s what maintains us through the challenges of the economy, the marketplace, the unknown and the unforeseen.

Success-oriented small business owners are prepared to step outside of the familiar, the tried and true, and they are open to other ways of thinking and doing.  They are curious, always asking questions, looking for ways they can create value.  They are not afraid to act.

This week, a friend recommended I watch a TED video she had found through a blog post by staffing industry executive Susan Wright-Boucher.  As Susan says:

“We go to great lengths to prove we’re right. We defend our point of view when challenged. We debate and argue to get others to see things our way. And yet we celebrate movies and books that surprise us with plot twists and red herrings just so that we can enjoy the feeling of being wrong when we get to the end of the story. What happens to us in real life that compels us to be right? Are we missing opportunities to be surprised and delighted?”

And, from a business perspective, I would add—opportunities to surprise and delight our customers.

It’s been said that “in order for you to profit from your mistakes, you have to get out and make some.”  Based on what Slate columnist Kathryn Schulz says in her recent TED video, to start the ball rolling we have to “let go of rightness.”

Kathryn talks about the need to “step outside of that tiny terrified space of rightness,” reflecting that we limit ourselves and our personal and professional relationships by our fears of being wrong and inadequate.

Most of us will do anything to avoid being wrong.  So we pump up the confidence we have in our convictions.  And that can lead to tunnel vision, tempering our acceptance of other points of view.  As Abraham Maslow said, “To the man who only has a hammer, everything he encounters begins to look like a nail.”

That’s no way to build relationships and resolve issues that can make or break a privately owned business, be they with customers, suppliers, or staff.  It’s the same when it comes to buying or selling the business, where give and take, and the need to listen to and understand the other party’s position, is needed on both sides.

I encourage you to watch the video.  Let me know what you think.

And if you haven’t done so, grab my RSS feed at the top right or subscribe by email to the Real Deal using the SUBSCRIBE BY EMAIL in the right-hand column.  You’ll be the first to receive new posts hot off the press.