Small to Medium sized business (SME’s) often struggle to raise capital for expansion plans, especially since the Global Financial Crisis.  It’s even harder for SME’s to liquidate part of their business when they need cash to fund other activities, which is one of the reasons having an SME is considered risky.

Financiers are more reluctant to loan on SMEs because of the illiquid nature of them.  If Financiers find themselves having to foreclose on the business they’ve loaned funds to that is struggling financially, the last thing they want to do is run the business.  They prefer to liquidate quickly to regain the capital loaned.  This is typically harder to do for SME’s, and that is why more and more Financiers are demanding SME’s have a clear path of succession and a formal exit strategy to enable them to recoup the funds loaned more quickly if the business folds.

But what if my team could show you a way for SME’s to fund capital raising easily and provide a facility to liquidate the business quickly if needed?

That’s exactly what I intend to do in my next Webinar:  “How Smart Entrepreneurs Raise Capital to Grow or Go From Their Business”.

When you register for the Webinar, you’re going to discover some of the most innovative techniques you’ve ever heard about raising capital for your business, and you’re going to see a live case in action to demonstrate how easy it is to raise capital.

You’re going to uncover things like:

• 8 Funding Solutions for Growing or Going
• 2 Proven Legal Methods to Raise Capital in Australia
• How the valuation process is crucial for raising capital for your company, and how being able to raise capital easily can help BOOST your business valuation
• 5 Essentials for Good Capital Raising
• 7 Risk factors you’ll want to overcome to ensure you attract the capital you require
• There’ll be a live case demonstrated to show you how easy it is
• We’re going to make you an offer to get started raising your business capital right away.

The best bit is that it’s totally FREE to attend!  You can join our 45 minute Webinar/Teleseminar by registering here now.

The Capital Raising Webinar/Teleseminar will be held on:

Wednesday 5th October 2011  at 7.30pm

Or

Thursday 6th October 2011 at 11.30am.

If you’re looking to Grow or Go from your business soon, you can’t afford to miss “How Smart Entrepreneurs Raise Capital to Grow or Go From Their Business”

Here’s to your profitable exit strategy with easy capital raising!

Leigh Riley

Finally ‘Your Business Succession’ book is ready to purchase from the publisher

After almost 23 years of focus on winning the best possible personal and business financial outcome for my clients, reviewing business exit strategies with allied professionals, and continual research into best practice in business succession strategies, I can’t tell you how excited I am to finally hold this book in my hands and be able to share the valuable information it contains with business owners and professionals who advise business owners.

Proven strategies to boost business profits from start up to step down

‘Your Business Succession’ contains more than 20 detailed case studies, dedicated to all business owners who labor to see their legacy live on. While this book recommends the Stephen Covey principle of starting with the end in mind (7 Habits of Effective People), I can’t stress strongly enough that if you are a business owner who did not start with the end in mind, then the time to start planning for a profitable business exit is now.  Throughout the case studies I reveal the mistakes that you must avoid if you want to exit your business with maximum cash flow and profit.

How to enter, execute and exit your business for maximum cash flow and profit

‘Your Business Succession’ identifies five reasons too many business owners fail to achieve a profitable exit from their business, and also details the exact plans and processes you must follow for your business to achieve maximum cash flow and profits, not only as you exit your business but at all stages of the business cycle.

Advance praise for ‘Your Business Succession’ book

1. “A very timely book. A huge tsunami of business sales is about to happen… in this book, no stone is left unturned. For the business owner prepared to read the book from cover to cover, here is a sure guide on how to conduct a business succession.” Anthony Jensen, AEOA committee member, and currently a lecturer with the school of economics and business at Sydney University.
2. “In ‘Your Business Succession’, Leigh Riley brings real world experience with passion, and solutions to the issues facing business owners leaving their business. This is very positive reading.” Helen Hasty, former manufacturing business owner.
3. “Succession planning is a huge latent problem for our SME market. This book is an end to end toolkit in one place for a proprietor considering succession, and is a solid resource for any professional advising to business owners.” Australian executive business banker.

‘Your Business Succession’ will help you assess how well prepared you are to:

• ensure the quality of lifestyle you’ve worked so hard for
• maximize your business valuation and sale price
• find the right successor
• pre-arrange the sale terms of your succession to lock in your business valuation
• safeguard the value of the business legacy you will leave
• remain in a position of financial power and security at each phase of your business
• be released from debt commitments and exit your business with financial freedom
• maximize your cash flow
• maximize your profit
• exit your business with ease and peace of mind

I trust you will not only enjoy reading this book, but also benefit financially from the valuable information you will discover in the 366 pages of ‘Your Business Succession.’

Click here to buy your copy of “Your Business Succession”

Here’s to your Profitable Business Exit!

Leigh Riley

Sole traders deserve a profitable exit strategy too

If  your business has no employees, and your family members are not interested in taking over your business when you leave, what is your best exit strategy to make sure you actually receive the cash flow and profits you’ve worked so hard to earn?

If you are a sole trader you may believe that you are at a disadvantage when leaving your business, but there are many options to help you  maximize the value of your business and therefore maximize the return on your investment.

7 tips for a profitable sole trader exit strategy:

• Make sure your business has a proven track record with financial accounts  and tax statements to verify the income and profits of your business.

• Keep your place of business organized and attractive.

• Document all client records, including contact details

• Establish and document systems for all procedures and processes to make it easy for someone else to fulfill your role when you exit your business.

• Communicate your success to your business associations, competitors and trading partners to make it a well known that your business is an attractive purchase proposition.

• When considering potential buyers don’t overlook the newer graduates and trainees that you meet at business associations. They may currently be working with your competitors, but aspiring to own their own business one day.  You can portray your business as an easier path to owing their own business with instant income, rather than building a business from scratch.

• When you’re comfortable, approach someone in your network to enter into an agreement with you to buy your business one day upon specified events occurring.  The events can be agreed with terms to include retirement or another matter causing you to leave the business,and the term should also include events such as sudden illness, accident or death.

This strategy will allow you to agree on a price for the time when you exit the business. Your agreement should include the terms of sale, and can even make provision for funding the purchase price.  This is known as the ‘friendly rival’ strategy.

Benefits of the ‘friendly rival’ exit strategy for sole traders

Any agreement you set up should be arranged by a team of experienced business exit strategy specialists and should make provision for the changing value of your business.

Due diligence must be given to the tax implications upon changeover.  The agreement should also provide for terms to protect your business asset from the contingencies, with insurance to cover sudden illness, accidents and death.

Putting a ‘friendly rival’ exit strategy in place will allow you the comfort of knowing you have a certain buyer when the time comes for you to leave your business, no matter what the circumstances. This will also provide you with assured financial security in the form of both cash flow and profit int the future and remove the pressure of finding a buyer if you ever have to leave suddenly.

FREE online tool to evaluate your exit strategy:

Start with the end in mind and sharpen your business strategy in a way that will enhance your proitable exit . Invest just 3 minutes to complete the FREE Business Succession Readiness Quiz and receive your FREE customized evaluation, plus a ‘To Do’ list of specific actions you want to take to ensure your profitable exit from your business.

Take the quiz now

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How Prepared Are You To Exit Your Business With Maximum Profit And Cash Flow?

My inspiration for writing my book ‘Your Business Succession – How to Enter, Execute and Exit Your Business For Maximum Cash Flow & Profit’ came from a true tale about business succession.

Business Succession Case Study: When Harry Met Sally And Greg

When I met Sally she had just transitioned into owning a business in which she had been employed for a number of years.

Sally’s employer, Harry, built a very successful business and was now ready to sell and retire. None of his children were equipped to take on the role of leading the business, but Harry recognized that Sally was the primary income generator on his sales team. In addition, she was trustworthy, dedicated, hardworking and results oriented.

The Succession Plan

Given the size of the private company, Harry knew he wouldn’t find a buyer very easily. His best option was to offer Sally and another employee, Greg, a substantial interest free loan with special terms  to take 60% ownership in two equal shares of 30% each. The remaining 40% of the company would be allocated in equal shares amongst Harry’s four children.

For Sally and Greg this was a fantastic opportunity to own a piece of the business they had worked so hard to build. Harry was prepared to take the risk of providing an interest free loan each to Sally and Greg, because he trusted them both.

Fortunately Harry was in the financial position to afford to wait for payment, and  did not require immediate cash inflow from the funds he had loaned. His secure asset base aside from the business, allowed him the luxury of funding his retirement without the need for immediate capital injection. Harry’s ability to do this is extremely rare amongst even the most successful of business owners.

Problems For Harry With The Succession Plan

Harry’s willingness to leave his future success vulnerable to the management styles and decisions of Sally and Greg really makes him stand out in the crowd.  Harry’s succession plan was not his best option, but he didn’t leave himself with a lot of choice. Due to lack of planning, and incomplete advice, it was the best solution he could think of for his business exit.

I became involved after Sally and Greg had taken over Harry’s business, when they were referred by Sally’s personal accountant, Josh. No formal agreement had been arranged at that stage – everything rested on a verbal agreement. Josh was diligent enough to appreciate that a verbal agreement was unacceptable as it left all parties vulnerable.

As a chartered accountant, Josh was handling the tax issues and was relying on my expertise to sort out all the contingencies relating to the business succession, including the debt owed back to Harry.

Josh engaged a lawyer colleague, Michael, to draw up the legal agreement. We all needed to arrange our various parts of the succession plan between Sally,  Greg and Harry.

I did not have the opportunity to work directly with Michael, but I certainly took care of my part in the process to the best of my ability. I feel certain that Michael also exercised his legal expertise within his range of knowledge as well.

However, it turned out that Michael’s main legal expertise was in the area of industrial relations, not succession planning.  This was as unhelpful as consulting a dermatologist about a bone fracture!

Tax Implications Overlooked

Josh, acting as the accountant on the matter, did not understand all the tax implications specifically related to succession planning, because his experience was limited to general business accounting, so he did not have the knowledge and skills to recognize the potential problems.

The outcome for Sally, Greg and Harry was totally unsatisfactory, in that it clearly did not solve all of their succession problems. Their succession plan was not structured in the most effective manner as the legal agreement amounted to little more than a shareholders’ agreement (Chapter 9 of  ‘Your Business Succession’ explains why a shareholders agreement is insufficient and is a weak strategy for effective succession planning).

The strategy had not addressed all the tax issues they would face in the future, nor did it provide an adequate agreement with clearly defined terms to cover all the identifiable succession triggers. Chapter 2 of  ‘Your Business Succession’ covers the 6 specific categories of Business Events, some of which are unexpected, that will lead to your business exit.

Succession Problems For Sally And Greg

This was a major problem especially when Greg had health issues that meant he could not arrange enough insurance to cover his commitment, and had insufficient assets to provide collateral as back-up for the debt outstanding.  This meant Sally would remain in a vulnerable financial position for a very long time because she was now solely responsible for repaying the debt to Harry.

From my observation, the resulting inadequate succession plan was largely due to failing to engage a team of cooperating professionals with succession planning knowledge, skills and expertise.  Adding to the problems was the fact that each professional had a blinkered approach, which left gaping holes in the strategy.

Each had expected the other to know their role. If only each had questioned the other with more understanding and communicated as a team to uncover the full extent of the problems. The worst part of this situation was that Sally and Greg’s understanding was so limited that they were unable to understand the gravity of their vulnerabilities.  Despite my repeated warnings with full explanations, I could not convince them of the need to revise their incomplete succession plan, particularly when Josh acting as their accountant, had assured them everything was in order.

I vowed never to let this happen again.  It really brought home to me the need to work in a team of experienced succession planning specialists. I decided then and there, that in future I would  work only with experts who were prepared to work as a cooperating team, for the greater good of the client! For me, that would be the only way to provide a complete business succession planning strategy that could stand the test of time.

Fortunately, I have now found that team, and choose to work directly with these noted succession planning specialists. This has added significantly to my ability to increase the value that I personally bring to my clients.

Education In Succession Planning

I was shocked to discover how little  information of sufficient quality was available about succession planning that was specific to the Australian context. I found plenty written by overseas authors, but these books were based on rules and tax laws that did not apply to Australian business owners.

Anything Australian that was available had focused only on specific aspects of succession planning and did not provide a complete picture. Such a limited focus had the potential to actually create many of the problems businesses being faced.  I resolved to try and change that situation once and for all, with my latest succession planning book, the Business Succession Profits Quiz and this educational blog.

Share Your Business Succession Story

The focus of this site and blog is an educational one, so feel free to comment on this post or to share your business exit story and perhaps prevent other business owners from failing to get the profitable exit their efforts deserve.

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