Business Information for Entrepreneurs by an Entrepreneur

What is your exit strategy? Whether you're a young entrepreneur with grand ideas or a seasoned professional approaching retirement, you should have an exit strategy for your business if you want it to continue after your tenure.

If your desire is that your business continues to succeed after you step down, there are a number of options for you to consider. Here are the typical paths to handing your business reigns to another:

• Sell it to an outside buyer - You might sell to another entrepreneur or perhaps undergo a merger with an existing larger firm.

• Sell to employees - Perhaps you've built extreme loyalty with employees. Consider transferring the business to them through an employee stock ownership plan.

• Sell to top manager(s) or partner(s) - You might also have a top trusted advisor or a partner who wants to assume full responsibility of your business after you are gone.

• Transfer or sell to family - Many business owners want to "keep it in the family" and have a son or daughter take over after retirement.

Selling To Outside Buyers

If you are considering selling to an outside buyer, here are some tips to help you get the most value for your business:

• Improve Business Valuation - Be sure your business is in top shape for sale. Reduce expenses and streamline processes, while simultaneously building your customer base and improve your products. The better your business can make money, the more buyers will be willing to pay.

• Be Ready for an Appraisal - Buyers will want to have your business appraised. Be sure your books and all records are clean and ready for evaluation.

• Find the Right Buyer - You might advertise locally or even nationally for your ideal buyer. You may even want to use a national business brokerage to find the right buyer.

Transitioning Your Business

If you are handing off your business to a family member or new qualified manager, here are a few tips for a smooth transition:

• Develop a Plan - You must prepare for the handoff. Clarify your expectations and your role, if any, in the company after you step down.

• Groom your Successor - Work side by side with your successor. Help build their skills and confidence and ability to make wise decision. Share your wealth of wisdom.

• Phase Out - Try letting your successor lead while you are still present to offer advice. Help employees transition their loyalty and support to their new leader. And finally, you must eventually "let go" and say goodbye. Have a company party as a celebration of both new and old leadership.

Whether you are on to greener pastures or looking towards retirement, planning your exit strategy in advance will pay dividends.

Successful small business owners can get caught in a trap: their business grows to the point that they cannot do it all alone, yet cannot afford to hire staff employees. This is a conundrum in which many entrepreneurs find themselves when they are growing their business, but fail to generate the increased sales numbers that can help them expand. What is a small business owner to do?

Getting help doesn't mean you have to hire employees. That is what outsourcing is for! Here are a few ways you can acquire excellent talent, save money, and remain flexible in your growth - all without hiring full or event part-time staff members.

Commissioned Sales People

Sales is the number one marketing priority for many small business owners. You can post a plethora of advertisements and marketing materials, but when it comes to getting money in your register, you often must have a live person interacting with a customer. Sales people may be on-location in your store or in the "field" where they make contacts to other customers outside your place of business.

Why not organize a set of experienced salespeople to work on commission? Agree to pay them a high commission, say up to 50% or so, on each sale. That saves you valuable marketing dollars by letting them do the lead generation and presentations, and you reap the benefits of greater sales numbers.

Essential Non-Income Personnel

Many employees of a business are not part of the revenue generating system, including accountants, administrators, legal staff, and others.

However, it is easy to outsource your essential business administration functions. Hire a bookkeeping service to do your monthly books and a CPA to help file taxes each year. Hire a janitorial service to clean your office once or twice a week. Even freelance administrative assistants are available to do the few administrative tasks you have each week.

Labor

If you operate a manufacturing or product assembly business, you know that labor is essential for getting the work done. However, you can easily contract through a temporary agency that can provide you with pre-screened and skilled labor when you need it. This also helps avoid layoffs during non-peak times of the year. Let the temp agencies help you with this important staffing task.

By being creative, you can find ways to procure the help you need - without having to bear the overhead of employees.

Having health insurance available for your employees is certainly a great way to attract the right talent and retain them to avoid turnover. However, every year, it seems that health insurance costs and premiums are on the rise. How do you cope with these increases and pass off the difference to your employees without a big fuss?

1. Talk to Your Employees

   First, be sure to share the possibility of health insurance increases with your employees. Saving the increases as a "surprise" for the next year will not cultivate goodwill. However, you will keep their respect if you sit down with them and discuss the issues.

   Have an employee meeting. Tell them the situation, and ask for their input. Perhaps you could create a poll and have all employees mark their choices for dealing with the increases. Whichever way you choose, keeping them in the loop will foster much more loyalty with you and the ultimate choices you make.

2. Agree to Increase Co-Pay

   One option you may consider to keep health premiums low is to raise the co-pay. Most insurance policies have an amount that an insured must pay at the time health care is given, usually around $20. Increasing the co-pay by $5 or $10 can help keep monthly premiums lower.

3. Raise Deductibles

   When it comes to saving on health care premiums, raising the total deductible may be a better choice rather than cutting benefits. This means that each employee would pay more out of pocket each year IF they had larger health bills, but their monthly premiums would stay lower.

4. Require Employees to Pay a Larger Share of the Premium

   Many small businesses agree to pay most of the health care premiums. Some pay upwards or 75% up to 100% of the monthly premiums as a benefit to their employees. However, when premiums skyrocket, it may be necessary to make employees pay a more equitable share. Splitting the cost 50/50 is reasonable and helps keep your business from going under from high insurance expenses.

5. Change Insurance Companies

   Ultimately, if your current insurer raises health costs too much, you may need to research other alternatives. Talk to your insurance agent about other insurance company options that are more affordable.