The New Job Security

When you think of going into business, what comes to your mind? Most people conjure up visions of a brilliant idea and building a company from scratch—successful for some but not usually without deep pockets, substantial risk and a workaholic lifestyle. There are no existing customers, no sales and little to no immediate revenue. You need to market your business, hire and train employees and hopefully establish a cash flow… all without a track record or reputation to go on.

 

These are some of the benefits of buying a business instead of starting one:

• Less Risk. You walk into an operation that already has revenue and profit.
• Relationships. You have a well established customer base, a good track record and a competitive edge because of the company’s tenure.
• Financing. The banks are more willing to provide financing to buy an existing business versus funding a new venture.
• Employees. Included in the purchase of a business are loyal employees who know every aspect of the company. You don’t have to reinvent the wheel by developing procedures, systems and policies, since the blueprint for running a profitable business is already in place.

Best of all, you don’t have to compete for that ever elusive “secure” corporate position that could evaporate, in the name of downsizing, restructuring or reorganization… taking your benefit package with it. That’s what the new owners Detlev and Anke Braatz considered with their recent purchase of Paulette’s Cleaning Services, a commercial cleaning business on Vancouver Island. “Despite our years of experience and education, we just couldn’t find jobs” says Anke. “So we looked for a business that was up and running, something we could easily do.” Thankfully,” she adds, “our business broker helped us protect our interests with a Due Diligence Checklist, a step-by-step process that was invaluable. Our clients are happy as are our 9 employees and we continue to have the support of the previous owner.”

 

Working for someone else is trading time for money, but doesn’t build equity. As an entrepreneur, you are the master of your own destiny.

 

If you are considering business ownership or the sale of your business, we can help. Visit our local website at http://www.bcbusinessbroker.ca/ or www.sunbeltnetwork.com/vancouverisland or phone 1-877-289-0969.

 

Consider More Than Money When Selling Your Business

Sure you want a big payoff, but when it comes to selling your business, money should not be the only consideration.  You don’t want just any buyer, you want the best buyer. Surprisingly, sellers don’t always choose the buyers offering the most money. Would you consider a lower price for a buyer that fits the company’s culture?  Would you consider an offer that’s considerably lower if it meant the difference between years of seller financing and cash at close? It’s common for deal structures to include a variety of options which must be carefully evaluated, long before you get to the negotiating table. You may not realize it, but you’re positioning and negotiating from day one of a sale. Be sure your priorities are well thought out or you might give a buyer the wrong impression. A prospective buyer may ask how long you’ll stick around after the sale and you may casually respond that you’ll be around as long as needed.  Then you find out that the buyer is thinking about a two-year transition when you and your wife had been discussing a potential move to Florida. Something like that could blow up a deal. Had your initial response been that you would be around three to six months and then could provide consulting services from Florida, the buyer would not be counting on long-term support. As a seller, here are 7 important questions to ask yourself:

1. Financing – Do you prefer a higher offer with some seller financing or a lower offer with cash at close?

2. Transition – Are you looking for a quick exit?  Does the buyer expect a lengthy transition?

3. Employees – Sellers are often very protective of their employees.  Will the buyer relocate or replace staff?

4. Ownership – Are you looking to maintain a minority stake for yourself or your family?

5. Legacy – Most sellers don’t want to cash out and watch the company erode. Ten years from now they want to look at a successful business that they had a hand in building.

6. Real Estate – Is the buyer interested in your building?  Some sellers prefer to keep the real estate and draw rental income. If the buyer doesn’t want your facility, how soon can you fill it?

7. Trust – Do you trust the buyer?  Some sellers will pass up higher offers to work with a buyer they feel better about.

Even if you know your preferences, you may not get everything you want when making a deal.  A reputable Business Intermediary will be sure that the right questions are asked to help you organize your thoughts, review your priorities and understand what the market will bear.  In the end, you’ll find yourself in a better position to negotiate and close the deal—without sacrificing your goals. Contact the Sunbelt Nanaimo office @ 250-751-7917 or visit our local website at http://www.bcbusinessbroker.ca/.

How To Grow Your Business Through Franchising

Do you think your business is unique? Have you considered replication through franchising? Do you have the necessary skills to use franchising as an expansion strategy? While it’s not the right strategy for everyone, for some companies the explosive potential that franchising affords is unparalleled in the world of business growth. Franchising has many attractive features, particularly when compared with more traditional methods of expansion such as opening more outlets on your own. Typically referred to as company stores, you own and operate these locations yourself. You provide the entire investment for the startup, and while you earn all the income, you are also responsible for the expenses. That’s why more and more entrepreneurs are choosing franchising as the best way to expand a great business quickly with minimal capital and risk. Here are a few reasons why:

• Franchise owners are highly motivated operators
• Franchisees assume the risk of succeeding or failing
• Franchises can open quickly, gaining an edge on the competition
• Franchisees are responsible for all hiring, leases, and unit-opening expenses, reducing your risk
• Franchisees are easily attracted because buying into a proven concept minimizes their risk

Is your business "Franchisable"? Before making the decision to franchise, you must first determine whether franchising is a viable strategy for your particular business.

BC Business Brokers, an affiliate of Sunbelt, can help you analyze your business and perhaps, take it to the next level. If you are contemplating the sale or expansion of your business and would like to discuss your options, contact our Nanaimo office at 1-877-289-0969 – we can help you. Feel free to visit our local website at http://www.bcbusinessbroker.ca/ or www.sunbeltnetwork.com/vancouverisland.





Casting or Recasting - What's the Difference?

Definitions of Casting. 1. The art of throwing a fishing line out over the water by means of a rod and reel. 2. The act or process of choosing actors.

Operating your own business may seem frightfully similar to either one of the above definitions! However, when it comes to valuing your business for sale purposes, there is a type of casting that is crucial. Recasting.

What “recasting” the financial statements does is:

• Provide a clear indication of the business value to help the owner form accurate expectations
• Allow for owner benefits such as salary, perks, and discretionary expenses to be added back into the value of the business so a future buyer can accurately assess its cash flow and future earning capacity.
• Enable buyers to make meaningful comparisons with other investment opportunities.

Recasting is one of many services provided by BC Business Brokers. We assist business owners in understanding financial statements so they can move forward with the completion of the business sale. We also bring qualified buyers to the table and assist them in finding the right business for their background, lifestyle and financial goals. Because selling a business is pivotal on its asking price, the consultants at BC Business Brokers are trained to perform an analysis of financial statements to calculate a range for the “Most Probable Selling Price” (MPSP) of the business. This range is what the current market will typically support.

BC Business Brokers provides outstanding resources, expertise and people who are dedicated to the success of its clients. And if you’re lucky, your business broker may even take you fishing… with a rod and reel that is! You are welcome to visit our local website http://www.bcbusinessbroker.ca/, or the international website www.sunbeltnetwork.com/vancouverisland. Feel free to contact us direct at 250-751-7917 or 1-877-289-0969 to learn more about what our business specialists can do for you.

Brewing Up A Business

It’s an exciting time for the BC microbrewing industry with provincial sales reaching a record high. British Columbians seem to be veering away from the big beers and gravitating towards “craft breweries”, also known as “microbreweries”.  Some use the terms synonymously, others say there’s a difference between the quantity produced and methodologies used. But one thing is certain: In Canada’s $8 billion beer industry, the numbers are up for traditional ales and down for industrial commodity beer.  According to Rick Green, Executive Director of the Craft Brewers Association of British Columbia, “BC is basically the leading province in the craft beer movement.”  That’s all great news for Jennifer Lewis and Travis Findlater, the new owners of Fat Cat Brewery in Nanaimo, who plan a relaunch of the newly branded business as “Wolf Brewing Co.” in February. According to Jennifer Lewis “the recipes will remain the same with 1 or 2 new ales coming to the market.” Michael Naprawa, of BC Business Brokers is pleased that this longstanding, local brewery has been sold to a team of owners with new vision and new energy to take the business to the next level.”  Lewis and Findlater were relieved that the overwhelming details of the business transaction were handled by a business brokerage firm in Nanaimo, BC Business Brokers, the company that marketed the business and negotiated the sale.  “We were very pleased with the services provided by Michael Naprawa—his business advice and professional contacts were invaluable to making the transfer of ownership go smoothly” said Lewis. Learn more on:www.youtube.com/watch?v=nydVgJ_9kdY


If you are considering small business ownership or the sale of your business, feel free to contact BC Business Brokers.  We can help.  Visit our local website at www.bcbusinessbroker.ca or www.sunbeltbroker.ca or phone 1-877-289-0969

10 Questions To Ask When Buying a Business—Do Your Homework!

Published in Nanaimo Magazine - December 2010 Issue

Buying a business is an arduous, yet rewarding process, and can take weeks or months. Because buying a business will involve investing a fair amount of money and time, it is critical to do your homework when gathering information about the business. This process is commonly referred to as due diligence.  It helps the buyer discover information such as whether the purchase price of the business is too high; the type and condition of the business being bought; bad financial situations if they exist, and contingent liabilities. There are so many questions to ask when considering the purchase of an existing business. In fact, there is not enough room on this page to list them. But let us give you a few examples that relate to financial, marketing, ownership and operations: 

1. Ask why is the seller selling—and verify the answer.

2. Ask to review the certified financial statements of income, cash flow and balance sheets for the last three years. If you borrow from a bank to pur- chase the venture, the bank will want to see them.  Recent audits and projections should also be reviewed.

3. Ask  to see the company’s Tax Returns (not the owner’s personal) for the last three years.

4. Ask for a copy of all documents of all outstanding indebtedness like notes payable, accounts payable, real estate and equipment leases.

5. Ask if the seller is willing to stay around for awhile after the sale to help with transition.  If so, have you discussed some compensation for his/her services during that transition period?

6. Ask if there has been any significant turnover of employees. If so, why? Ask to see employment agreements and organizational charts.

7. Ask about the quality of customer relations at the company. Review customer lists if possible.

8. Ask about the relationship between the company and its vendors. Do vendors display preferred, regular or irregular relations with the company?

9. Ask to review key contracts.  Also ask to see any litigation-related documents.

10. Ask for information about patents, copyrights and other intellectual property-related documents.

If you are contemplating small business ownership, feel free to give the Sunbelt Nanaimo office a call at 1-877-289-0969 or visit the website at www.bcbusinessbroker.ca or www.sunbeltnetwork.com/vancouverisland - we can help you find a reliable business that suits your background.  We are Certified Business Intermediaries with special training to help our clients analyze business opportunities and assess future probability of success.  President of Sunbelt Business Brokers, Michael Naprawa, is the Director of Education for the Canadian Chapter of IBBA (International Business Brokers Association), an organization that creates business standards and a code of ethics; and creates training and professional designations for Canadian Business Intermediaries.  Feel free to contact our Nanaimo office with your questions or comments.

View the article and check out Nanaimo Magazine here

Top 4 Myths About Selling Your Small Business

Most small business owners only sell their company once.
The steps involved in selling your small business is a complex process. Your goal as a business owner is to sell your company quickly and get the most amount of money in your pockets at the end of the day. Don’t fall for these common myths that could affect the sale of your business and ultimately the financial security of your family.
Do these sound familiar…

Myth #1 – I Can Sell my Small Business Myself

Entrepreneurs like to do things themselves. Many feel that they are qualified to sell the business without any assistance from professionals. This way of thinking can be a huge challenge to the successful sale of the company. Just because an owner can sell a product or service does not mean they can represent and sell their company.

There are three major issues if you want to sell the business yourself.

1. If you want to sell your small business yourself, confidentiality is lost.  What will your competition do if word gets out that you are for sale?
2. What will your clients, employees and suppliers think if they know you want to leave the company? Will your business drop? Will your credit from the bank be redefined?
3. Will you have the time? There is a lot of work to do when selling a business. You will need to compile the marketing materials, advertise the listing, screen buyers and determine if they are serious or kicking tires, and facilitate due diligence. In addition you need to focus on growing the company so that a buyer will not walk from lack of sales.

When it comes time to sell your business you need to keep focused on running the business and increase your sales. You need to concentrate your efforts on issues that matter to a prospective buyer not to take on new challenges.

Myth #2 – I’ll Sell my Small Business When I’m Ready

Certainly, it is important to be emotionally ready to sell. However, personal readiness is just one factor in selling. There are economic factors to also consider.
The price of your business for sale can be affected by industry consolidation, interest rates, unemployment and many other economic measures. Talk with a certified business broker about what it takes to sell your small business so that when you are ready your company is also.

Myth #3 – I Know What my Business is Worth

This is one of the key areas that owners find most shocking. Many small business owners have no idea what their business is worth in today’s market. For some business owners they base the value of the company on what they need for retirement. Others will tell you they want $100,000/year for “sweat equity.”  Still others utilize industry multiples. What happens if all these are false? What if the market is not willing to pay you what you think your small business is worth?
A third party valuation is a good idea for anyone seriously considering the sale of their business.  An outside valuation will include a thorough analysis of the business and the market it operates in. This will provide a solid understanding of the company’s growth potential, not some vague industry average.

Myth #4 – Selling a Small Business is Like Selling a House

When you prepare to sell your house it may take only a few weeks. Once your house is ready you bring it to market and get the word out to everyone that the house is for sale. Once you get an offer that you are happy with, you sign on the dotted line, turn over the keys and move on.
Selling a company is much more complex. A successful business sale usually requires a great deal of pre-planning, at least a year and maybe as long as three years to drive sales, develop key staff, document the operations and control expenses.
The average house will sell in less than four months, while the average business sale is nine months to a year.
Even after the business is sold, the seller can be expected to put in at least a few months, and possibly years of transition time, to help the new owner run the business successfully.
Go to market with realistic expectations by getting a professional valuation and using a professional business broker or intermediary.
These are just some of the myths that business owners need to be aware of before selling their business.
For more information talk with your advisor or business broker who specializes in helping business owners transition.

Article by Small Business BC posted October 4, 2010.

2010 Highlights of Small Business in British Columbia

Published October 2010

BC - The government has released SMALL BUSINESS PROFILE 2010, a 36 page report that profiles small business growth and development in the province. Here are the key highlights.
Small businesses account for 98 per cent of all business in the province, with approximately 395,900 small businesses operating in British Columbia in 2009. Of those more than half (56 per cent) were self-employed and the rest (42 per cent) had fewer than 50 employees.
Only Saskatchewan, which has 89.5 small businesses per 1000 people, has a greater number of small businesses per capita. This puts BC, which has 88.9 small businesses per capita, well ahead of most other provinces (the national average of 72.0).
How does this translate into economic value? Small businesses provide enormous support for employment and also contribute to the province's gross domestic product (GDP).
Small businesses in the province account for 57 per cent of private sector jobs, the highest rate nationwide, and employed 1,045,400 people in 2009. On top of this are 443,800 self-employed worker, who tend to be older, are more likely to work longer hours than employees working for others and are also more likely to be male.
In terms of production, small businesses in the province accounted for roughly 32 per cent of BC's gross domestic product in 2009 and 41 per cent of the total value of goods exported from the province in 2008.
Read the report SMALL BUSINESS PROFILE 2010 to learn more about the state of small business in British Columbia.

Article: http://www.canadaone.com/ezine/briefs.html?StoryID=10Oct18_2