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Closed Transaction
Buying a Business - Inventory
Selling a Business - Transaction Issue - Reducing Taxes via an Estate Freeze
Question of the Month: What's the Difference Between a Mission Statement and a Vision Statement, and do I Really Need One?
Current Businesses for Sale
Upcoming Seminars
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Closed Transaction
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Web-Based Specialty Food Retailer 
The Undersigned Has Acted as an Advisor to the Vendor  Beal Consultants Steven Beal, MBA, CGA, CFA, CBV 204-478-7266 ext. 109 www.bealconsultants.ca |
Buying a Business - Inventory
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Last month we discussed accounts receivable, this month we want to discuss inventory.
Unlike receivables and cash discussed over the past two months, inventory is almost always sold with an active business. However, just because it is included in the sale doesn't mean it is included in the price. A price for a business is typically stated "$x plus inventory" This is usually done because inventory can (and does) fluctuate every single day, so it is important to be clear in the negotiation process how much inventory is included. However, even when it is clear inventory will be counted and paid for in addition to the core price, there are still a number of issues to work through. The first, and most basic, is the dollar value of the inventory and how it is measured. That may sound like a basic question, but the answer will differ across businesses. Some basic questions to ask:
- What is the method of valuing inventory? (LIFO, FIFO, Average)
- Age and condition? Obsolete?
- Is the quantity too low or too high?
Next month we will discuss real estate.
In the meantime, if you would like more information on buying a business, contact us at 204-478-7266x110.
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Selling a Business - Transaction Issue - Reducing Taxes
via an Estate Freeze
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This month we will focus on a transactional issue - reducing taxes via an estate freeze. An estate freeze is a useful tool in transitioning a business to the next generation. It is typically used within a family transition, but the concepts could apply to an arm's length transaction.
An estate freeze is a basic share exchange. If you own a business worth a million, and you want to transfer it to your children, you can convert your common shares into preferred shares worth one million (less a dollar) and then sell 100% common ownership to your child(ren) for one dollar. This accomplishes a number of objectives:
- In certain situations (ask your accountant), you can crystallize your gain for income tax purposes. In this situation, depending on the tax cost base of your shares, you could claim up to $750,000 each in capital gains, using your lifetime exemption.
- Ownership of the future growth of the company will past to the next generation.
- The preferred shares could pay a specific dividend, giving you retirement income.
This is a complex transaction; there is risk in executing it. Consult a competent tax accountant, lawyer and business consultant before attempting to do it! Next month: Why choosing a successor now can help you maximize the value of your business.
If you would like more information on selling or valuing a business, contact us at 204-478-7266 x110.
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| Current Businesses for Sale | |
Bridal Shop
Metal Fabrication Business
Successful Restaurant Location
Print and Online Publication - Business Opportunity
Employment Service - Franchise Opportunity
Small Town Grocery Store/Meat Shop
Seasonal Contractor
Sandwich Franchise - Conditionally Sold
Frozen Food Distributor
Automotive Repair and Power Product Dealership
Specialty Building Product Retailer
Online Electronic Store - Conditionally Sold
Fast Food Sandwich Franchise
Diner Style Restaurant
Construction and Renovation Company
Trucking Company - NW Ontario
Rural Restaurant and Convenience Store
Winnipeg Convenience Store
High Volume Retail Chain
Thompson Hotel and Restaurant
Prepared Fine Foods - Catering, Wholesale, and Retail
Addiction Treatment Center
Marine Dealership and Services - Saskatchewan
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To review any of these business profiles, please click here .
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We do not advertise all of our listings to the public.
If you have a specific type of business in mind,
please call 204-478-7266 x110 to inquire!
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| Upcoming Seminars |
Introduction to Income Statements
October 2, 2013
10:00 a.m. to 12:00 p.m. Canada/Manitoba Business Service Centre Room 250-240 Graham Avenue Call 204-984-2272 to Register Introduction to Balance Sheets
October 8, 2013
10:00 a.m. to 12:00 p.m. Canada/Manitoba Business Service Centre Room 250-240 Graham Avenue Call 204-984-2272 to Register Learn to be Profitable! Pricing & Costing
October 9, 2013
9:00 a.m. to 12:00 p.m.
Canada/Manitoba Business Service Centre
Room 250-240 Graham Avenue
Call 204-984-2272 to Register
How to Buy a Business
October 21, 2013
1:00 p.m. to 3:00 p.m.
Canada/Manitoba Business Service Centre
Room 250-240 Graham Avenue
Call 204-984-2272 to Register
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| Quote of the Month | |
"Nothing Ever Becomes Real Till It Is Experienced"
John Keats
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Question of the Month: What's the Difference Between a Mission Statement and a Vision Statement?
For a business to succeed, it must know what it is about. It must be able to clearly describe why it exists, and what it seeks to achieve. Developing a vision and mission statement is a way of articulating these ideas to yourself, your customers, your employees, and to the world at large.
In simple terms, the mission statement answers the first question of any business venture: What business are you in and what is your reason for being? The mission statement describes your current purpose and identifies your market, values, and priorities.
The vision statement is an inspirational statement geared towards the future and guides your business to become what you want it to become. It articulates the "dream" state of your business. The value in knowing your vision is that you can make the decision to take the path that will lead you to that desired state.
In an increasingly competitive and deregulated markets and foreign competition, it has been observed that aggressive small businesses with a strong sense of mission can outdo large established corporations. By establishing business values and vision, Komatsu proved this - at the start of the 1970's this company was less than one third the size of the market leader - Caterpillar - and relied on just one line of smaller bulldozers for most of its revenues. Komatsu updated their vision statement to "Maru C", or "Encircle Caterpillar". This was the driving force for the company's strategy and by the late 1980's it had passed Caterpillar as the world leader in earth-moving equipment.
It is difficult to believe that in today's cutthroat business world, many organizations are operating without one critical ingredient for success: a clearly defined strategic plan and an honest, concise and meaningful mission and vision statement.
Lewis Caroll summarizes the importance of mission statements quite eloquently through the words of the Cheshire Cat in Alice in Wonderland, "If you don't know where you're going, it doesn't matter which way you go." How true.
For more information, contact us at 204-478-7266x110.
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About Us...
Beal Business Growth Consultants, Inc. helps owners of small and medium-sized businesses to buy, sell, value, and grow their businesses. We also work with individuals who are looking to buy or start a business or franchise.
Call us at (204) 478-7266 x110 for a free, initial 30-minute consultation to explore how we can help you buy, sell, value or improve your business. .
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Legal
Copyright 2013 by Steven Beal, Beal Business Growth Consultants, Inc. The information herein is not complete and is intended only to provide guidelines to supplement counsel the reader receives from a qualified professional. It is distributed with the understanding that the author is not rendering legal, accounting or tax advice or opinions on specific facts or matters, and accordingly, assumes no liability in connection with its use. Published by Beal Business Growth Consultants, Inc. www.bealconsultants.ca
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