What are my options to compensate loyal team members before or after the sale? What are my options to reduce income taxes on sale? What will I do with my life after the business sale? Should I consider a consulting arrangement? Buying another business? Should I consider a tax-free exchange for my business real estate? How should I change my estate plan as a result of the sale?
What risks do I need to hedge in the future without the business in place? SFG helps you answer these questions and more. Our process helps put business sale scenarios into clear focus and sets the stage for pro-active versus reactive financial independence planning, potential income tax savings techniques before and after the sale developed with your accountant and tax attorney , estate planning developed with your estate attorney , risk management and other key planning needed for the next chapter of your life.
Sale of the business based on expected value or letter of intent. Partial Sale — What will my personal situation look like if a cash plus note or earn out is successful? Realize that the financial section is not the same as accounting. Many people get confused about this because the financial projections that you include--profit and loss, balance sheet, and cash flow--look similar to accounting statements your business generates.
But accounting looks back in time, starting today and taking a historical view. Business planning or forecasting is a forward-looking view, starting today and going into the future. It's an elaborate educated guess. And you don't spend a lot of time on minute details in a financial forecast that depends on an educated guess for sales.
You're going to need it if you are seeking investment from venture capitalists, angel investors, or even smart family members. They are going to want to see numbers that say your business will grow--and quickly--and that there is an exit strategy for them on the horizon, during which they can make a profit. Any bank or lender will also ask to see these numbers as well to make sure you can repay your loan. It should be a guide to running your business," Pinson says. One way, Berry says, is to break the figures into components, by sales channel or target market segment, and provide realistic estimates for sales and revenue.
But if you break the guess into component guesses and look at each one individually, it somehow feels better," Berry says. And you most likely won't present it in the final document in the same sequence you compile the figures and documents. Berry says that it's typical to start in one place and jump back and forth. For example, what you see in the cash-flow plan might mean going back to change estimates for sales and expenses.
Still, he says that it's easier to explain in sequence, as long as you understand that you don't start at step one and go to step six without looking back--a lot--in between. The entrepreneur can get back on his or her feet instantly and try again.
When potential entrepreneurs perceive a high risk, for right or wrong reasons, they often need to rationalise the start-up decision. Having taught and worked with hundreds of would be, and dozens of actual, entrepreneurs, I have seen them worried about giving up a well-paid job, leaving the comfort of working in a predictable environment, using up their savings, or putting their marriage and family at risk.
Most of them need the feeling of safety provided by an elaborate business plan to make the leap into entrepreneurship. Two of my former students, Paul and Pierre, launched a business right after graduation from a programme where they worked together on an entrepreneurial project, as part of the curriculum.
Paul had resigned from his job and was keen, from day one, on starting a business that combined his IT expertise and passion for a given field. Focus on your skills. Then, build on those strong skills and focus on using them. Otherwise, you can get out of your area of expertise and lose your way. Give an opinion. Your opinion is why people come to you.
Just be careful how you deliver that unpopular opinion; too much opinion can be as bad as not enough.
It should be a guide to running your business," Pinson says. Use the numbers that you put in your sales forecast, expense projections, and cash flow statement. Why Stearns Financial? Without the business plan, Pierre would never make the leap into entrepreneurship.
The statements contained herein are solely based upon the opinions of Stearns Financial Group and the data available at the time of publication of this report, and there is no assurance that any predicted results will actually occur. The entrepreneur has only him or herself to blame and must live with the consequences. Still, he says that it's easier to explain in sequence, as long as you understand that you don't start at step one and go to step six without looking back--a lot--in between. We recommend you spend 5 minutes now and take a short CX Healthcheck self assessment to see how your organization is performing. We are professionals, not financial product sales people.
Then figure out what you have as liabilities--meaning debts.
Because you want to calculate gross margin. Then figure out what you have as liabilities--meaning debts. How can I protect against downside risks? Have an original idea. Gross margin is sales less cost of sales, and it's a useful number for comparing with different standard industry ratios. Be brave.
Here's some advice on how to include things like a sales forecast, expense budget, and cash-flow statement. That's money you owe because you haven't paid bills which is called accounts payable and the debts you have because of outstanding loans.
Should I consider a tax-free exchange for my business real estate?
Sale of the business based on expected value or letter of intent.
Estate and Gifting Scenarios — Alternative scenarios for business owners who want to gift a portion of the sale proceeds now or later to family or charitable entities. Individual account experience may vary. There are new chapters on pitching the plan and performing against the plan, using key performance indicators and milestones. You need it, so be sure to recognize and reward it as often as you can. Appreciate the support you get from friends and family.
Is now an optimal time to sell? He was the chief financial officer of the French subsidiary of a multinational company and had a growing family. Because you want to calculate gross margin.
Some of those are obvious and affect you at only the beginning, like startup assets.
Buying another business? Play Smart.