The Beal Business Advisor

November 2013

Contact Number: 204-478-7266

In This Issue

Buying a Business - Accounts Payable & Other Accrued Liabilities

Selling a Business - Financing Your Exit Strategy

Question of the Month: I am Considering Going into Business with a Family Member, but Don't Want to Ruin Our Relationship, Any Advice?

Current Businesses for Sale

Upcoming Seminars

Closed Transaction

Sandwich Franchise

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 - Accounts Payable & Other Accrued Liabilities

Last month we discussed machinery and equipment, this month we want to discuss accounts payable and other accrued liabilities.

As discussed with accounts receivable, accounts payable may or may not be part of a sale. They are typically only assumed by a buyer in a share sale, and when receivables are assumed. Specific things to look for when you examine accounts payable and accrued liabilities are:

- Review the list of accounts payable, and their age

- Verify if any are in dispute

- For accrued liabilities, ensure you understand what they are, such as:

- unpaid wages

- accrued vacation pay & sick leave

- payroll taxes

- Federal and Provincial income taxes, PST, GST

Next month we will discuss notes payable and mortgages payable.

In the meantime, if you would like more information on buying a business, contact us at 204-478-7266x110.

Selling a Business - Financing Your Exit Strategy

As mentioned last month, this month we will focus on financing your exit strategy.

Financing is key to the transition. Various statistics tell us that more than half the deals that are agreed on paper (terms, price, etc.) fall apart due to lack of financing. Don't let this happen to your deal by ensuring you know what's possible.

Let me start with the bad news. Sellers, if you want maximum price for your business (and who doesn't?) and if your business has a large goodwill component, be prepared to take back some of the financing. There are sources of cash flow financing, but typically the amounts offered are either very small or very expensive. The buyer will be forced to look to you for at least part of this component.

Now the good news. Seller financing helps boost the price. A US study (data from Canada is only anecdotal to get) indicates sellers can get up to 25% more for their business if they are willing to finance the buyer.

Averages are always tricky, and every business is different, but, in general, most deals need three sources of financing: the buyer with a downpayment of anywhere from a quarter to half the value, the banks, with an amount equal to the fixed assets, plus some working capital (if not already tapped) and, finally, the vendor for the balance.

If you would like more information on selling or valuing a business, contact us at 204-478-7266 x110.

Current Businesses for Sale

Indoor Tanning Studio

Small Town Dollar Store

Winnipeg Meat Shop - Grocery Store

Weight Loss Clinic

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 - Price Reduced

Frozen Food Distributor

Automotive Repair and Power Product Dealership

Fast Food Sandwich Franchise

Breakfast & Lunch 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

Cash Flow is King! Cash Flow & Financial Ratios

November 14, 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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Learn to be Profitable! Pricing & Costing

January 21, 2014

1:00 p.m. to 4:00 p.m.

Canada/Manitoba Business Service Centre

Room 250-240 Graham Avenue

Call 204-984-2272 to Register

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Introduction to Income Statements

January 23, 2014

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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Introduction to Balance Sheets

January 30, 2014

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

Quick Links

CMBSC Seminar Registration
Chamber of Commerce Website

Beal Consultants Website

Quote of the Month

"People who succeed have momentum. The more they succeed, the more they want to succeed, and the more they find a way to succeed. Similarly, when someone is failing, the tendency is to get on a downward spiral that can even become a self-fulfilling prophecy."

Tony Robbins

Question of the Month: I Am Considering Going into Business with a Family Member, But Don't Want to Ruin our Relationship. Any Advice?

Operating a family business presents additional obstacles to the business owner. Relationships are put at risk on a professional and a personal level as work/life boundaries become blurred. Often family members know the right buttons to push and disagreements can easily escalate. Additionally, financial risk may be intensified in a family business if both family incomes are from the same source.

For some, the advantages of being in business with family outweigh the disadvantages. Working alongside people you know and trust and generating family wealth can be very rewarding.

Before starting a family business, ask yourselves some questions:

How healthy is your relationship now? You have to have a good foundation from the start.
How will performance be evaluated?
What will the compensation plan be for family members?
Develop a policy for additional family members joining the team.
Outline roles and responsibilities.
Develop a decision making framework to have corporate governance on strategic decisions.
Develop a process for dispute resolution, including when to bring in outside advisors.

If you are already in business with family some important things to remember are:

- Commit time outside work for fun

- Avoid keeping score

- Recognize each others' successes

- Communicate, Communicate,

Communicate

- Formalize a succession plan

For more information, contact us at 204-478-7266x110.

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. .

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.