Business Talk: Tips for The Budding Entrepreneur
Posted: 11/14/2016 10:26 am EST – Huffington Post
Are you looking to buy a business but have no idea where to start? Don’t worry, we’re here to help.
Acquiring a company that’s already well on its way is seen as a great option for entrepreneurs wanting to skip past the start-up phase. But embarking on this journey can still be highly stressful and emotional.
The good news is that there are people and resources to assist you along the way. In this exclusive Q&A with Desjardins business transfer expert Richard Quinn, we ask all your burning questions.
From how to determine if a business is viable to the things you need to do before taking that first step toward your acquisition, we want to help ensure you’re set up for success and offer tips on how to maintain it.
HP: Transferring ownership can be highly emotional and complicated so what are the factors that should guide the decision? RQ: The very first thing to understand is that the company belongs to the transferor. This means when it comes to business continuity, the decision rests with the transferor as to when and how to transfer. The main factors are: What are my plans for this second part of life? What will be my financial needs? And does the company have sufficient value to reach that goal?
HP: What are the biggest challenges for entrepreneurs looking to acquire a brand?
RQ: Entrepreneurs looking to acquire a company should first ask themselves the following questions:
- Do I have the leadership to acquire a business?
- Do I have the skills to operate a business?
- And do I know the market and sector in which I intend to engage?
They should also confirm if they are equipped to handle a new acquisition. This includes making sure they have an expert team that includes a financial partner, a business evaluation expert, accountant, lawyer, strategic planning expert and human resources expert. A proper team will help guide and mitigate the emotional aspects of such a project.
HP: How do you determine if a business is viable?
RQ: First, you should review financial performance of the business going back five years. Second, review the industry landscape: Where does this business stand in relation to its competitors? Is the business currently leading this space? By reviewing the financials — including the normalization of results and balance sheet and return on investment (ROI) — you should have a clear understanding of the business potential for future growth.
HP: How important is it to establish clear, realistic deadlines to reach your goals during this process?
RQ: This is particularly important as the transfer of a business can be spread over a long period. As a result, clear and realistic timelines are needed. Therefore, it is key that you follow a structured approach with clear and realistic timelines so as not to lose sight of your goal.
HP: What are the benefits of calling on a professional chartered business valuator to help navigate the valuation process, including tax rules and legal aspects?
RQ: The benefits of using professional chartered business valuator and legal advisor to help navigate the valuation process are many. This includes helping to determine a fair price between the parties along with helping to facilitate the transfer process.
Not only can a specialist help minimize the risk of challenge by the Canada Revenue Agency (CRA), they can discuss and assess, in detail, the various transfer scenarios and implications according to the owner’s personal goals, whether the successor is a family member or non-family member and the owner’s financial needs for his retirement.
HP: Ultimately, how do entrepreneurs undergoing a business transfer define success?
RQ: At the end of the day, Canadian entrepreneurs can define success by the sustainability of their business — now and into the future.
At Malahat Valuation Group we frequently work with buyer and sellers of businesses to help them define the business value and help parties come to a price that both are willing to transact. Contact us today to if we can be of assistance, the initial consultation is free.
MALAHAT VALUATION GROUP LTD.