The Importance of Time Off – for You and Your Business

The Importance of Time Off – for You and Your Business

It’s mid-August and we have a question.

Did you take any time off this summer?

Did you step away from your business and not call or email in?

Many business owners would say “That’s impossible!”

But why? Research shows that real unplugged vacations are critical to people’s health  – allowing  you to return restored, refreshed, renewed. And ready to dive back in to running and improving your business.

As Andrea Callahan says in this Money article, “Vacations sharpen the sword”.

From a purely practical perspective, a business that runs on its own is far more valuable and easier to sell than one that demands every minute of an owner’s life.

Plus you’ll enjoy your business more if you step away from time to time.

How can you change your business so you can take time off?

Start small – take the afternoon off and do something for yourself or with your family. Promise yourself won’t check email after 6 p.m. (or before 7 a.m.) Ease into a long weekend – and truly “get-away”.

Identify tasks or processes that only you can do – and train someone else to take them on, while documenting the training. Distribute responsibility to those you trust. Look into automation for some tasks.

Soon, taking two weeks off for a dream vacation won’t be impossible. It will be do-able- and your business will be stronger because of your efforts.

Are you ready for a real vacation? Or maybe you are ready to sell your business for a permanent vacation!

We can help you plan and start the process. Connect with us (info@harvestbusiness.com or call 877-838-4966) today for a complimentary consultation.


Clients choose Harvest Business Advisors for our sage advice on profitably growing their business, accurate business valuations, and when the time is right, a consistent ability to deliver a high price as part of a smooth exit transaction.

Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

Business Owner Succession Plans Should Consider ESOP’s

Business Owner Succession Plans Should Consider ESOP’s

ESOPs or Employee Stock Ownership Plans should be considered as a succession tool by business owners.

When business owners first start to consider the possibility of retiring or transitioning away from day to day operations, many look around them to see who might be a potential buyer. A family member or a friendly competitor or an allied business frequently often come to mind. But perhaps owners should consider their employees as potential buyers.

An ESOP is an Employee Stock Ownership Plan. In the right circumstances,  ESOPs can be a great succession planning tool.  ESOP’s receive extremely favorable tax treatment.  But they are not suitable for every situation and can be somewhat complex and costly.

They often work well if an owner wants to stay involved but obtain asset diversity by selling perhaps 1/3 of the business.  There are strong tax advantages.  When set up properly both the loan principal and interest is deductible for tax purposes.  Note, usually only loan interest is deductible for tax purposes.  This is a huge advantage.

An ESOP may be set up with existing cash from the plan sponsor’s balance sheet but are usually leveraged.

  • The loan may be from a bank or other financial institution or the selling shareholder may finance the transaction by taking back a note for part or all of the purchase price
  • The plan sponsor usually uses its balance sheet to secure the debt financing
  • Often the owner must guarantee to loan to the business.  Sometimes this guarantee can be limited in time and amount.

The ESOP borrows the money to purchase company stock (outstanding shares, new shares, or treasury shares) which is held in trust for the benefit of the employees.

  • The company makes tax-deductible contributions to the ESOP to enable the ESOP to repay the loan
  • As the loan is repaid, shares held by the ESOP are released and allocated to employee accounts
  • The employee shares are held in trust.

More information about ESOP options can be found at National Center for Employee Ownership or connect with Harvest Business Advisors to discuss your options – email info@harvestbusinessadvisors.com or call 877-838-4966.

 


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 877-838-4966 to discuss selling your business, ordering a business valuation or buying a business.

Greg Caruso to Speak to Financial Service Professionals on Business Valuation

 

“Succession & Exit Planning” Course

Please join Financial Service Professionals (Baltimore Chapter) on Tuesday, April 3rd for a continuing education seminar presented by Gregory Caruso, JD, CPA, CVA from Harvest Business Advisors.

This presentation will look at how business value is created, measured, and transferred. Opportunities for planning and increasing value throughout the process will be highlighted.

Greg Caruso - Harvest Business AdvisorsGreg Caruso is an expert who works throughout the Mid-Atlantic with business owners to create and realize business value through business valuation, succession planning, and private company M&A. He is licensed in Maryland as an Attorney, Certified Public Accountant and Certified Valuation Analyst.

Over the past 15 years successfully completed over 50 business merger or sale transactions
He has been an advisor on acquisitions, exit strategies, and valuations of over 250 firms.
He is Editor-In-Chief of “Around the Valuation World” the most two interesting hours in business valuation, a monthly webinar produced by the NACVA

2 CE Credits for Maryland L&H and CFP

Click Here to RSVP

When you RSVP, please indicate all industry organizations in which you hold membership; e.g., SFSP, NAIFA, FPA, CPCU, BAHU etc. If none, please note “none”.

Tuesday, 4/3/18
8:00am: Continental Breakfast & Networking
8:25am: Announcements
8:30-10:30am: CE Program

Location
PSA Learning Center
11311 McCormick Road,
Suite 500
Hunt Valley, MD 21031

Click Here to RSVP

Click  here for more about Financial Service Providers Baltimore Chapter
Click here for more about Financial Service Provider’s Sponsors

A Quick and Usable Year-End Succession and Strategic Planning Method

Business owners and particularly owners of construction firms often find planning a waste of time either because “things keep changing” or because “we go through this whole process and then do not look at the thing until next year”.    The very simple system explained below is designed to address both of those issues.  Of course, you must develop the practice and habit of monthly review to fully implement this program.

Time to Sell Your Construction Business? Please click here to download the e-book, “A Contractor’s Guide to Succession Planning”.

Planning:

  • You build projects from plans and specifications.  You build your business the same way.
  • Planning is an opportunity to receive input from your team.  In the process they assume responsibility.  Many heads really are better than one.  This is also a very good start to delegation – a key to growing a business and creating value
  • Planning, as I mean it for most contractors is not 100 pages of fluff.
    • It is one page setting your vision, mission, and your major goals
    • It is a few pages of financial budgets or projections (including a work-in-process or WIP schedule for many firms) shown in terms of both dollars and some sort of meaningful units (usually jobs, but could be other units), perhaps monthly for the next year and then 2 to 4 more years annually.
    • It is a 90 day checklist of improvements (what is to be done, who is to do it, when is it due by) to meet the major goal and financial projections.
  • Depending on the trade or the size of your company you might add:  capital investment section, technology section, etc.  But the essence is major goals, financial and unit projections and a checklist of improvements.
  • The plan should be reviewed EVERY MONTH along with high level management KPI’s (Key Performance Indicators).  Every month, the 90 day goals section should be updated with new goals as the old ones are accomplished.
  • A critical part of any plan is the succession portion.  If succession is always discussed as part of the process of running a business, then it will not be unusual or shocking to people.  Further, as secession event can be promoted as the opportunity it is for management growth.  Clearly this section might only be discussed with the higher level management team and outside advisors, but it should be part of the process.
  • Proper planning and management of budgets and KPI’s is essential to the growth of any firm.  It is the equivalent of an architectural plan for our firm.  If you are not regularly engaged in this process – ADD IT.

From the Whitepaper, “Whats Your Number, A Contractors Guide to Contingency and Succession Planning”(While geared to Contractors the paper is great advice for all business owners and their advisors).


Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at info@harvestbusiness.com or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.

Company Valuation and Business Valuation Standards of Value for Litigation, Mergers & Business Brokerage and Other Situations

Levels of Value for Company Business Valuations and Appraisals, business owners who are thinking of selling their business or doing routine succession planning need to understand the value of their business. Often owners are surprised when they learn that company value, enterprise value, or business value found might be dramatically different depending on the situation.   The value of the business is usually determined by what it is worth to others.   From that standpoint, it makes sense that buyers in different situations might have different values. This is because different buyer types will be able to make different amounts of money (both theoretically and actually) from the business.

Want to know more?  Please click here for the downloadable e-book. “7 Things You Must Know Before You Order a Business Valuation” 

Below I discuss Strategic Control Value.

In my next Post I will discus Fair Market Value and Minority Interest Fair Market Value.  These are the main standards of value used.

Strategic Control Value. This value is the value obtained when 2+2=5. This buyer is often called a synergistic buyer. Namely the acquirer can obtain more value from the target than the target can make on their own. This can happen because of operational efficiencies or because of the ability to increase market sales with incrementally lower costs. The classic example of an operational efficiency is two delivery companies running the exact same routes. If they merge the combined entity should be able to deliver the same packages with substantially less trucks and drivers. An example of the ability to increase market sales is when a small software company is purchased by a larger one who has a sales force that is already established in the industry the software is designed for.

Studies have shown that operational efficiencies are more predictable than sales and revenue increases. For owners it is important to remember that while strategic buyers and strategic value exists in terms of day to day operations you must run your business as if you will own it forever without a strategic buy-out. If you can modify your business plan to court a strategic buyer without putting your day-to-day efficiencies and operations at risk fine but never put yourself in the position of only having one buyer or being inefficient with the hope of attracting one buyer.

In summary strategic control value is a high value that can only be met in certain times by certain buyers.  It is worth calculating when you are going to sell and strategic buyers are a real possibility.  It is not worth putting your whole company at risk for to obtain if it limits current profitability or future options.

 

Greg Caruso, JD, CPA, CVA
Harvest Business Advisors
Business Brokerage, Company Valuation, Business Appraisal
Princeton New Jersey, Baltimore Maryland, Columbia Maryland
gcaruso@harvestbusiness.com

 

 

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