The Leading Edge
Taking Care of Business
THE LEADING EDGE - 5 Tech Trends For Small/Medium Businesses In 2016
Small Business News:
CFIB Mock Awards for Red Tape - Canadian Federation of Independent Business's mock award for putting up red tape is likely something most governments, big and small, would very much like to avoid. Read more...
Falling dollar, oil prices, send business confidence to post-recession low - The almost steady decline in small business optimism seen through 2015 has stayed on trend for the first month of 2016. Read more...
Federal government launches $50-million fund to boost small-business exports - International Trade Minister Chrystia Freeland has announced $50 million in new funding for small businesses looking to export their goods. Read more...
Postal rate increase concerns small online business - Rates are going up on both domestic and international parcel shipping on Monday. Read more...
Thinking About Your Business Exit Strategy
One day, you are going to decide enough is enough and either sell your business, or hand over the reins to someone else, such as a business partner, or family member. It might be that you finally want to retire, or that you're simply bored with your business and want to try something else. Maybe the business is doing well and it seems like a good time to cash in, take the profit and start something new. Whatever the reason, at some time in the future someone else will take over the management of your business - even if that's when you've shuffled off this mortal coil, to quote Shakespeare.
The sixty million dollar question is, do you have any idea what that transition might look like? Many entrepreneurs never think about the succession of their business because it always appear so far away. But a succession plan is something that should be considered as early as possible, not something that crops up six months before the owner decides now's the time. In fact, a succession plan can even be factored into a start-up business plan; it's truly never to early.
Here are six initial questions you might want to ask yourself:
Would you like a family member to eventually take over the business, or do you think you'd more likely sell it to a third-party? Is there a possibility your management team might purchase the business?Could your employees pull together and affect a buyout to protect their jobs? This is not as unusual as you might think.Would you consider bringing onboard a general manager for a time until you decide the best course of action? This could be a form of semiretirement for you and give you a way to ease yourself out of the business. Would you stay on for awhile to train, coach, or otherwise support the new owners or managers? Do you see yourself as still owning shares in the company, or partaking in any ongoing profit-sharing?
Whatever your situation there are dozens of issues to be considered and decisions to be made when planning your exit strategy. Even if you don't plan to leave the business for twenty years, you can still begin putting systems in place that will make it easier when the time comes. Another thing to consider is that you never know when a major illness might befall you, forcing your business into a succession situation at short notice.
Two simple first steps:
Think about what your long and short-term goals and objectives are, both in business and in your personal life. Put a timeline to those considerations.Bring together an advisory team of stakeholders in your business. This can include tax advisors, lawyers, accountants, bank managers, financial planners, business valuators and brokers, senior managers in your firm, family members, and anyone else whose opinion you value. Meet several times a year to discuss the future of your business and include succession planning in that conversation.
You almost certainly feel strongly about all that you have achieved - the emotional ties to your business will be strong - but you have to accept that if the business is going to successfully continue to service its customers there has to be a succession plan. Ideally you will want the succession to take place smoothly, maximizing both the profit you can take from the business and its ongoing revenues. No doubt, you will also want to protect your employee's jobs.
All of this will be a whole lot easier when you have given yourself the opportunity to think through, and plan, every step of the process.
View succession planning as another exciting and rewarding business challenge and remember it is not something achieved overnight, it's a long-term dynamic process.
Watch for further articles about succession planning for small businesses in future issues of the Leading Edge.
Quick Guide To Financing For Small Businesses
Whether you are a start-up, or need money to finance growth in your business, it's always tough to know where to go to get funding. Should you head to a credit union, a chartered bank, your parents, cash in your RRSP's, or mortgage your home? Surprisingly, there are many ways for a small business to raise finances; here are a few that you might want to consider.
Grants - many small businesses start by searching for grants - after all you don't have to pay the money back, so that must be good! The problem is there are almost no grants open to a standard small business. Grants are made available to particular industries, and/or limited geographic areas for very specific projects, and are often only available to people within certain demographics.
Don't hold your breath waiting for a grant, it's probably the most unlikely source of funding for an average small business. Never purchase a guide to, or directory of, grants as all government grants are listed for free; a good place to start is: http://www.canadabusiness.ca/eng/page/2740/
Credit Unions and Banks - financial institutions often lend to small businesses through the Canada Small Business Financing Program. Under the program, the Government of Canada makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. You will still have to put forward a business proposal and go through all the standard checks and balances a financial institution makes for a normal business loan. Note that there is a 2% registration fee attached to the program, however this can be included in the loan.
Community Futures Development Corporations and Community Business Development Corporations - these agencies should probably be the first call for most small businesses as loans come with a mass of support, which will help guarantee success. There are 269 non-profit CF/CBDC branches across Canada offering loans to entrepreneurs of up to $150,000, designed to help them grow. What's more, they streamline the process so that things can move at the speed you need. Rates vary from region to region.
Peer-to-Peer Lending - This is brand new to Canada and came out of the popularity of Crowdfunding (see below). Legislation was changed at the end of last year to allow non accredited lenders to lend money to businesses (an accredited investor generally has to have minimum individual income of $250,000.). While it does open a new financing option for small businesses it comes at a price. Interest rates range from 6% to 15.5% depending on the deemed risk. In addition, your business must have been operating for 2 years or longer, have annual revenues of $200,00 or greater, and have assets which can be used as collateral, or can sign a General Securities Agreement.
Crowdfunding - this is not really a financing option in the true sense of the word, but deserves a mention here. Using a crowdfunding platform, members of the public can pledge money to a business and in return receive a 'perk'. Money pledged is not a loan and no interest is paid. Typically successful companies who have raised money this way have been those developing a unique product where the people pledging receive the first opportunity to get hold of the product. Although this sounds like a dream come true, it's not easy to run a successful crowdfunding campaign. Community Futures Stuart Nechako, in Northern B.C. has a crowdfunding initiative called InvestLocalBC.ca for local nonprofits, the arts communities and business startups which allows them to create online forums to fund, support and evolve their initiatives and projects. This resource is available to all CF's and there are plans for it to comply with securities requirements and equity investments for business in the future.
Bank of Mom and Dad (and other family and friends) - Often, if you need a relatively modest amount of financing, friends and family can provide the answer. The best way to approach this very personal source of financing is to develop a detailed business case to demonstrate you are serious about the business and can explain why you need the money, how it will be used, why it will increase revenues in your business AND how you plan to pay them back! Too often when approaching friends business owners just ask for the money because. That's not good enough, it's not professional and rarely works.
Bring on a Partner - If you need money to expand your business, you probably need additional skill sets too. Consider selling a percentage of your business to someone who can also become a valuable asset to your business. This is a win-win situation. You'd be surprised at how many people are looking for business opportunities with established businesses.
Home Equity - Many business owners are loath to access the equity in their home, or take out a second mortgage. The reason for this is they are worried about the risk involved. However, they often expect financial institutions to take the same risk they themselves won't take. If you truly believe in your business consider borrowing on your home equity, it can actually offer one of the lowest interest rates available.
Sell Stuff - If you have a luxury item, consider selling it. Selling a high-end motorbike, boat, or antique can help you reach you business goals. Horrified about selling something precious? Reconsider how invested you are in your business.
What type of funding is right for you? That's a tough one and only you can answer that after you've done a ton of due diligence. Talk to your accountant, lawyer and other advisors before making any decision on borrowing money. Interest rates can vary significantly from funding to source to funding source, with the least traditional potentially being so onerous they might cause more financial challenges than they solve.
Coach's Corner - Four Ideas to Work ON Your Business
As owners and leaders, we often can get sidetracked with seemingly urgent yet unimportant tasks in our businesses. We get hung up on the things that distract us from the important job of working ON our business. Urgent is not always important. We need to focus on important questions and making them urgent to further our business and career goals.
Last month you were asked 6 questions to help you get started on your most important resolution for 2016. The first question asked you to look ahead to the end of this year and figure out what is the most important thing that you want to achieve?
This, then, becomes the lens through which you focus your actions and strategies. It provides the impetus to spend time working ON your business or career, not just IN it.
Keep your important goal prominently displayed for you to see each and every day. Whether it is a one-page business plan incorporating actions and strategies to accomplish your goal, or a statement of your vision, it is important to keep it at the forefront of your mind in whatever way works best for you.Make it a habit to write down your weekly intentions. What do you want to accomplish this week? How do those intentions fit into your grand scheme of things? How are they related to your goal? At the end of the week take time to reflect on them by asking what were the barriers to fulfilling your intentions? And how can you avoid those barriers next week?Drill down some more by being intentional about everything you do in your day. When you are about to embark on a task -emails, phone calls, meetings, etc.-ask yourself how each contributes to your desired outcome. Does this need to be done? Can someone else take it on? Are you the person to do it? Consciously thinking about how an action, activity or proposal ties into your strategic goal helps you make decisions.
"We don't do anything without an intention. Sometimes our intention is just to have some fun. But there definitely is some soul-searching done on every decision we make." Sheri Salata, Co-president of the Oprah Winfrey Network in The Leadership Issue of Fast Company (January 2016). Stop Micromanaging! Be clear on your expectations and ensure your employees or colleagues understand them. Have a check-in process in place and then let them do the work, let them take on the responsibility, and let them have ownership for their work. This really comes down to having them work IN the business while you focus ON the business.
The important thing is to get into the routine of working ON your business (or career) every day, or at least once or twice a week. Setting aside uninterrupted time demonstrates to your colleagues and your staff that this is a priority for you.
Paul Abra, Certified Executive Coach,
Motivated Coaching and Development
Beaver River Community Futures Development Corporation
PO Box 2678, 106 1st Street East, Meadow Lake, SK, S9X1Z6
Phone: 306-236-4422 | Fax: 306-236-5818
firstname.lastname@example.org | www.beaverriver.ca