For many people, their business is their main source of income during their working life.  It also forms a major part of their retirement plans.  You will want to sell your business for as much as you can to ensure that retirement you deserve.  To this end I believe it is critical to know what your business is worth today.  This is the starting point for achieving your retirement goals.

Selling your business for what you think it is worth will not just happen.  You need to work at it.  It stands to reason, that with the average age of business owners being between 55 -60, that there will be a large number of business for sale in the coming years.  Why will yours be special?  What can you do to make your business stand out from the crowd?

There are several issues that can impact on the sale of your business, one of which is the owners reluctance to consider succession planning early on.  Planning to have your business sale ready should start as a minimum 5 years out.

Part of planning for the sale of your business is to optimize the business value.  It is important to understand the key drivers around your business that impact on the value of the business.  Some of these key drivers are

• Good Systems (why franchising is so popular)
• Low reliance on proprietor
• Different from your competitors
• Succession Planning

Do you know how much your business needs to be worth to fund your retirement lifestyle?  How much is it worth now?  How are you going to bridge the gap between these two figures?

The time to start thinking about this is now.  Get to it and enjoy the retirement that you deserve!

If you’re in business you would have had many consultants telling you to do a business plan. Unfortunately statistics show that the majority of small business never listen to this advise and hence are unable to reach their destination successfully.

Why is it that people don’t plan? Is it that they:

-       Don’t know where to start?

-       Don’t have time?

-       Don’t know what  they want to achieve?

-       Don’t want to fail?

People don’t plan to fail, they fail to plan!

Running a profitable business is complicated. The more shareholders, staff, customers the more complicated  and challenging it becomes.

When  commencing a business or even having been in business for some time it’s imperative to  draw up a business plan. If you’re in a business  or in a business  partnership this should include a strategy where each stakeholder of a business discusses independently with a non related facilitator their needs and expectations of each other. I would encourage family members to be involved on a small scale also to determine what each member would like out of the business and there life with their spouse. From here we can assess whether the expectations of the business partners are inline with work and a there family needs!

A perfect example is having your spouse at home telling you to spend more time with the kids? You may be feeling suffocated by the business and finding it difficult to get away and think clearly? These thoughts happen, it’s important to address them when they occur.

By addressing your business and life plans this can promote discussions of all business, and family factors that need to be considered when developing a plan for the future. It encourages business owners to think about where they want to take their business in the future and, more importantly, how to get there.  This will have a positive impact on all stakeholders lives.

If you would  like to know more about business life planning please call  www.axios.com.au

On Friday night I attended a business awards gala. For those businesses entering his award, they were required as part of the application process to completed an extensive questionnaire involving nearly all aspects of the individual businesses.  The businesses where then questioned by the judging panel about their business, with the winners of each category determined based on their responses.

In congratulating the winners and other businesses for being nominated, I began to ask about the process  business entrant went through.  They all mentioned how exhaustive the questions were on all aspects of their business.

I asked each of the winners if they knew how much their business was worth.  Of the 15 business who won awards, only one knew the value of their business – I found this staggering!  Here was the cream of the crop and only one out of 15 could tell me what the business was worth!

In all cases, I am sure that all business owners were planning on using their business to assist in funding their retirement, yet they had not idea how much it was worth?

During the GFC nearly every person with investments could tell you how much they had lost on their investments.  These same people could tell you how much their investments have recovered.  They know the value of their investments.  All investments except their business!

People have an expectation of what money they would like to have when they retire.  To achieve this goal it is imperative that the business is valued regularly.  An investment has a unit price or share price so you can regularly track how they are going and make changes where necessary.  A business has a value that can be changed by adjusting aspects of your business.  How do you know your business is truly improving if you do not know the value?

For further information on how best to determine your business value, please contact us.

I’ve found the comments from the peanut gallery (aka media experts) intriguing as they seem to search for reasons why the super coach, Mark Thompson, could possibly be ‘burnt out’ and ‘exhausted.’ But it is not hard to see why as he, in fact all professional coaches, are under scrutiny 24 hours a day and 7 days a week.

I am sure 11 years at the top job at the Geelong Cats would be exhausting in itself but the demands that footy clubs place upon the coach to coach, front the media, handle recalcitrant players, contract negotiations and more. Not to mention that fans are baying for success and if not they bay for blood – someone’s blood and it is usually the coach’s!

So then do we expect too much as fans?

Are we asking the coach to be accountable for too many things?

And are we taking the coach away from what he does best, coach footy sides?

I am not sure of the answer but I do know that what Bomber Thompson is going through so publicly, many people go through every day in the work place. He has no work-life balance, so there is no surprise he is burnt out.

But there lies the quandary that the fans of the footy club find themselves in and also employers: do we lower our expectations and have them reached for 20 years or do we raise them, so that they are reached but only for say 4 or 5 years?

I see an enormous cost for Geelong to replace Thompson. They will not get results immediately with a new coach coming in and establishing his culture. He may even see some players leave and it may take 2 or 3 years before he is happy with his roster and the performance returns to the level that fans are happy with.

I also see enormous costs for any employer replacing an employee – from advertising to interviewing to training to down time in productivity.

The question still remains: do we push hard for performance at the risk of losing them or do we not care so long as we win a premiership in sport or the equivalent in business?

I think there must be a compromise and the coach or the manager must lead this.

In the work place, as an employer I believe you need to lead from the front. Your example must be that of balance in your life. It is not a medal of honour to working 80 hours a week, never taking holidays, eating at your work station and doing no exercise. If the culture is about high performance then do it with balance. It is way less expensive to keep your staff than find new ones.

So consider the picture I initially painted for Thompson’s role. If his role was narrowed to what he does best, coach teams and the peripherals were handled by someone else, enabling him a more balanced life would he still be there? Would he have the energy for another year?

If you have your staff do what they do best every day and have balance, is there a chance that they can perform at a consistently high level for many years for you?

We’re now preparing for week six of the Success 4 Business series set to kick off next Thursday 30th September.

How do you tune in? At 2.30pm on Thursday 30th September, you can jump onto Twitter, follow @S4BG and follow the Hashtag #S4BG.

Follow the entire interview LIVE using the #S4BG. In fact, why not ask your own questions. This is your chance to get up close and personal with some of Australia’s leading Business advisors to help bolster your business. This will be the final interview for Part 1 of the Success 4 Business Series.

If you missed our interview with the motivated Justin Tamsett @JTActiveMgmt last week, you can find all the detail at http://bit.ly/dyWHmX

This week we have guest interviewer @nataliegiddings who will be talking to our very own David Patterson @S4BG on the sixth topic ‘Understanding your Business Value’.

See bios for both Natt and David below.

David Patterson – Partner of Succession 4 Business Group

David Patterson is a business valuation specialist who assists owners in valuing and growing businesses to it’s full potential. David has been able to help business owners to understand the true value of their business. He is also able to identify where improvements can be made to help increase the value of the business.

David is a CPA accountant, and has been practicing for 20 years. Through this time he has worked with many businesses and gained great insight into how they operate. David felt that accountants should be offering more to their clients than just tax and compliance work.

It was this ambition that led to David joining forces with Paul Stafford at Succession 4 Business Group. It’s our aim to help all business owners realize the full potential and value of their business.

Natalie Giddings – Thinktank Media

Natalie is a leading Australian marketing specialist and personal branding expert. Natalie has successfully worked with key business leaders; building and refining their strategic vision as well as helping them to better understand their niche.

Natalie’s wealth of practical experience includes brand management, communications, and more recently online social media strategies specifically for lead generation.

Natalie has applied her skills across various industries including: ICT, finance Services, automotive, hospitality, retail and health; always achieving impressive results.

INTERVIEW – Thursday 30th September

NATALIE:

 I am the guest interviewer on #S4BG Live Twitter Interview this week http://bit.ly/92PnTa ….what tough questions should I ask David??

 DAVID:

This week we have guest interviewer @nataliegiddings who will be talking to our own David Patterson #S4BG http://bit.ly/92PnTa

NATALIE:

Role reversal – @nataliegiddings will be interviewing @S4BG on Twitter LIVE http://bit.ly/92PnTa follow #S4BG hashtag. Here we go people…We’re set to start Part VI of the Success 4 Business series #S4BG

Follow @S4BG and Hashtag #S4BG for the entire interview. Your chance to get up close and personal with some of Australia’s leading Business advisers. Wooohoo – I am guest interviewer for the last of the Success 4 Business Series.

I’m chatting LIVE w/ the 6th guest of the series on ‘Understanding Your Business Value’. Today I’ll be speaking to crazy (my words entirely) David Patterson @S4BG! David is a very keen Collingwood supporter and enjoys frequenting his home gym. David is passionate about making business understand the ‘real’ business value and assist in closing any value gap.

Welcome David, thanks so much for being with us today!

DAVID:

Thanks @nataliegiddings – and good luck to the pies on the weekend.

NATALIE:

What do you do?

DAVID:

We help businesses understand their true value and help them build a more successful business.

NATALIE:

What inspired you to get into this business? 

DAVID:

As an accountant I felt there was more I could do to help people in business succeed other than just save tax. And it is exciting too!

NATALIE:

Good work – So what exactly is the importance of having your business valued then?

DAVID:

Having your business properly valued (more than just the numbers) will highlight areas in your business that can be improved. Also many owners will use the sale of their business as their retirement nest egg. For that reason it is important to know the value.

NATALIE:

I bet there is a lot of factors involved? How often should a business be valued?

DAVID:

Ideally every 12 months. It enables you to see if the objectives you have set for your business are working.

NATALIE:

Can you explain what you mean by a ‘value gap’?

DAVID:

This need is based on your own expectations upon selling regarding your lifestyle post business.

NATALIE:

Yeah I like the sound of that!

How can the value gap be overcome?

DAVID:

The value gap is what your business is worth now & what it needs to be when you sell or retire. Identifying the gap early will help, then implement strategies to help improve the value of the business.

NATALIE:

Ok – What sort of improvement strategies?

DAVID:

Getting more buy in from staff, improving efficiencies, improving systems, owner reliance, greater focus on your goals to name a few.

NATALIE:

How important is goal setting?

DAVID:

Goal setting is extremely important. Not having goals makes it very hard for you to achieve your objectives. Each goal can then be broken down into smaller chunks to make the process seem less daunting. World domination in 5 years is a huge goal. Break it down into months, weeks and even days. Tick off each time goals are achieved.

NATALIE:

Is having a business plan important?

DAVID:

Without a plan, how do you know where you are heading and if you are achieving your objectives? A plan is very important.

NATALIE:

You are preachin to the converted here!

DAVID:

It is staggering how few businesses have a business plan. It does not need to be “War & Peace” but it does need to be written. It’s hard to get people to come with you on the journey if they can not see the map.

NATALIE:

What is a ‘succession planning’?

DAVID:

SP is about planning for your exit from the business, be that on your terms or not. It is about being ready for all situations. Planning ahead will allow a smooth and successful transition out of the business, It is something most people leave too late to do.

NATALIE:

Where do you hope to see yourself and your business in 5 years?

DAVID:

World domination!! In 5 years we will be seen as the leader in our field. The businesses we have helped will all be successful.

NATALIE:

You are going to have to share with me.

DAVID:

I will have seen Collingwood win a couple of premierships and I will be fit enough to run a marathon.

NATALIE:

Top 3 tips for people running their own business?

DAVID:

I am happy to share world domination with you and the businesses we help.

1.Take time out of your business to plan for your future success. It won’t just happen.

2.Don’t think you have to do it all yourself. Take advice from people who are experts in areas you are not.

3.Make sure that you love what you are doing.

And a free one: Concentrate on growing your business and being successful rather than worrying excessively about tax.

NATALIE:

Great tips David…. is there anything else before we go?

That’s all we have time for today. Go Saints!

That was the last interview in the Success 4 Business Series. S4BG hope that everyone enjoyed the interviews and that you were able to gain some valuable information into running a business.

They will be looking to run these in the future. Anyone interested in being interviewed please let @S4BG know.

Thx David – Have a great day!

DAVID:

Thanks @nataliegiddings – carn the pies!

Since the night of the 2010 Brownlow, I’ve continually been thinking about the inspirational speech made by Jim Stynes. It really hit home, especially since a great friend of mine recently told me of her fight with a hereditary strain of breast cancer that took the life of her sister just 12 months ago.

Jim made the comment that until such time that he was diagnosed with this life threatening condition, he had not thought too much about trying to maintain a balance between work and family. Since having this illness, he has made a conscious effort to slow down and reflect on his life and make changes accordingly.

This got me thinking about why the majority of people choose to spend more time at work than with their families? Why does it take a situation such as Jim’s for people to take a step back and assess what’s really important to them?

From time to time, we all believe that work is the be all and end all! It’s just a means to obtain all the nice things we want and some of things we need! We all do it – become so consumed by work and unintentionally neglect our family and friends. I can attest to being that person!

Jim’s speech was raw and real and bought home the importance of assessing what’s really important to me? What truly makes me happy? I found myself scheduling some time off in the school holidays to be with my husband. I organised a family dinner. I made a promise to myself to regularly step back and make sure that I have the correct work-life balance for myself.

How many people do you know like Jim Stynes that have looked up at there family while lying in a hospital bed and thought – ‘I should be spending more time at work?’

When was the last time you evaluated what’s important to you?

One of the guest speakers at our recent Success 4 Business seminar was Gary Honey.  Gary is an Olympic silver medalist (2^nd to Carl Lewis) as well as a two time gold medalist at the Commonwealth games.  Gary gave us some stories about his days as an elite athlete.

He told of his grueling training sessions involving a series of 150 metre sprints in very quick succession against other athletes.  The coach would ask the athletes to give their absolute maximum each time.  In each sprint Gary would place second, never to the same person during the sprint session.   The other athletes would win a race and then come fourth or fifth in the next.  At the end of every sprint session, Gary would throw up from the exertion.  He would give everything he had at every single training session.

Why did Gary push himself so hard at each training session?  Gary was always clear minded in the goal that he wanted to achieve.  He understood the sacrifices that were needed to be made to be successful in his chosen field.

How is it that a person can be so driven to achieve their goals?  Gary has applied the same mentality to his business and it is no surprise that he has been successful.

How many of us have the same determination to succeed in our businesses?  Do you drive ourselves as hard as we can during our working life to be successful?  Or do you back down when things start to get a bit hard?  In 11 years as an elite athlete, Gary never missed a single training session.  He had focus and determination to achieve his goals.

To be successful in your business you need goals.  You need to be passionate about what you do, and you need the determination to work hard to achieve your goals.

Can you look yourself in the mirror at the end of the day and tell yourself that you have done all you could today to achieve your goals?

How and When you plan to leave your business is one of those thoughts that generally gets locked away in the back of your mind. Leaving your business will inevitably happen, whether due to retirement, selling the business or having to leave due to ill health. As a small business it’s vital you plan for that day!

A Succession Plan outlines who will take over the business and the maximum amount of value you will receive when you exit your business. If you do not have a strategic approach to business succession planning you may find yourself in the 20% of Australian businesses working beyond the normal retirement age of 65.

It is clear that a vast number of business owners are not prepared for their succession and will end up making decisions at the last minute. By doing this the most likely outcome will result in a poor result not only for the business owner, but also the clients and staff.

Most business owners go into business not only to earn an income, but also to build the value of the business and to make it saleable. More than 50% of small business owners in Australia plan to use the sale of their business as the primary source of funding for their retirement. For many small businesses retirement has begun to sneak up and no longer as far away as first thought. In fact the average age of a small business owner is 56!

For many owners, the value locked-up within their business is their second largest asset behind the family home, and in some cases it is even more valuable than the family home. While people know the value of their family home, they generally have know idea about the value of their business. People are happy to invest the time, effort and money planning for the sale of their home unfortunately they don’t do the same with their business.

A good succession plan enables a smooth transition with less likelihood of disruption to operations. By choosing to invest the time and effort to develop and plan your business exit well in advance you can maximise the value of your business when you retire to enable you to meet your future goals and needs.

At the end of the day, this it what it all about!

Case Study

Tom’s business succession plan includes strategies to grow his business prior to selling. Tom has estimated that he will need a retirement income of $65,000 to provide his current standard of living in retirement. To produce this level of retirement income, Tom calculated that he will need Income Earning Retirement Assets of $1,083,000.

As at today’s date, his personal and investment assets total $350,000 and his business is valued at $395,000. His business value gap is therefore $338,000.

By maximising the value of your business, you will be in a far better position to choose among the many different exit options.

Please contact us for further information on Effective Succession Planning.

We’re now preparing for week four of the Success 4 Business series set to kick off next Thursday 16th September.

How do you tune in? At 2.30pm on Thursday 16th September, you can jump onto Twitter, follow @S4BG and follow the Hashtag #S4BG.

Follow the entire interview LIVE using the #S4BG. In fact, why not ask your own questions. This is your chance to get up close and personal with some of Australia’s leading Business advisors to help bolster your business. The series will run for another 4 weeks with a new guest, every week.

If you missed our interview with cupcake innovator Kathy Jackson @thecupcakewrapper, follow #S4BG for all the details.

Our fourth topic will discuss tips on ‘What it’s like to be Family In Business’ with the super talented Rishad Sukhia.  See his bio below.

Rishad Sukhia – Director of Brightlabs.

Founded in 2002 (then imagin8), Brightlabs has grown to become a highly regarded online solutions agency. From its small beginnings as a two-person team, Rishad and his cousin came together after university to create Brightlabs which has since grown to an agency servicing hundreds of clients across Australia and overseas. They employ some of the most talented web designers and developers in Australia, helping to keep Brightlabs at the forefront of the web industry. Rishad and the team at Brightlabs believe in ‘Life on the bright side’ – it’s what makes them different!

 Brightlabs have been rated amongst the top 10 agencies worldwide at the Interactive Media Awards (IMA) and recently listed in the Smart Company Smart50 Awards for 2010. These guys are moovers and shakers – watch this space!!

For further information on Brightlabs check out www.brightlabs.com.au

INTERVIEW – Thursday, 16th September 2010

SARAH:

Today we’ll be speaking to the super sensational and very intelligent Rishad @bright_labs! Rishad enjoys his Saturday breakfast club, cooking and playing tennis.

Welcome Rishad @bright_labs, thanks so much for being with us today!

 RISHAD:

Hi @S4BG, thanks for the great introduction!

SARAH:

Rishad, what does the team @bright_labs do? 

RISHAD:

Brightlabs is a digital media company focusing on designing and developing award winning online solutions.

SARAH

Who’s behind the creation of @bright_labs ?

RISHAD:

Founded @bright_labs with my cousin (Farhad Meher-Homji)

SARAH:

What inspired yourself & Farhad to get into this business?

RISHAD:

Saw a niche in the market for strategic solutions rather than just building websites. Outcome is more long term for the client.

SARAH:

Can u elaborate on strategic solution?

RISHAD:

Get to know your client, their requirements, their market, their business objectives and then plan their online solution

SARAH:

What do you like most about the IT industry? 

RISHAD:

We’re really more in the business of Marketing, not IT. The ‘IT’ aspect is more a means to an end.

SARAH:

How much work was involved in getting your business set up?

RISHAD:

We started small and built from there. It’s been a gradual process. I’ve never worked harder in my life. No pain, no gain!

SARAH:

How has your business grown, team wise from start to where you currently are now?

RISHAD:

We’ve grown from 2 and currently have 24 in our team between Melbourne and Brisbane.

SARAH:

We’re all interested to know – why did u decide to go into business with your cousin, Farhad?

RISHAD:

He has nice hair (Jokes!) Was an easy decision; implicit trust in your business partner is important. Bonus that he’s family!

SARAH:

LOL!! How do you as business partners and family over come your differences?

RISHAD:

We talk things out (even if it is heated) then move on and not dwell on it. It’s not a contest so ego takes a back seat.

SARAH:

Do you guys have business agreement?

RISHAD:

Yes all the paperwork is in order. Corporate Governance is very important when setting up a business (Farhad has a Law Degree!)

SARAH:

What do you like most about the being in business with your cousin? ….besides his hair

RISHAD:

We’re on the same wavelength, so making important decisions becomes easier when you’re both focused on the same goal.

SARAH:

I heard Brightlabs have won a recent award. Congratulations !!! Can you tell me more about that?

RISHAD

Not just one Top10 Agency Worldwide at IMA’s bit.ly/dwONPY & nominated for one of the Smart50 companies in Oz (bit.ly/d7R3uz)

SARAH:

That is truely fantastic!! Again a huge Congratulations!!! bit.ly/d7R3uz.

Where do you hope to see yourself and your business in 5 years?

RISHAD:

Owning and operating one of Australia’s most respected digital agencies.

SARAH:

Any plans to branch out Internationally??

RISHAD:

Not in the immediate future but we do talk about it. Definitely something we want to do.

SARAH:

What other tips would you give to family in business?

RISHAD:

Make sure you and your family members have similar goals and your skills are complementary.

SARAH:

That’s all we have time for today. Thanks for tuning in!! A big thankyou to Rishad@bright_labs – It’s been a pleasure! 

RISHAD:

You’re welcome Thanks for your time and the opportunity to have a chat Sarah! It’s been fun!

SARAH:

Only 2 more weeks left of the Succession 4 Business Series! Next week we speak to the super motivated Justin Tamsett @JTActiveMgmt

For further information on next wks interview, please visit http://bit.ly/dyWHmX

Cheerio guys!!