Jim Kendall on Small Business
Depending on your accountant, there may be more to your business' year-end wrap-up than profits, losses and taxes.
For Tony Massaro, lead partner in the tax practice group at Porte Brown LLC, a CPA firm headquartered in Elk Grove Village, this is the time of year "to get your whole house, your fiscal life, in order." In Massaro's context, the process might combine business and personal taxes; wealth management, including retirement and insurance; and, even, the future of your business.
Whatever the scope, expect the conversation to be thought provoking. Let's assume, for example, that the business' good times stopped with the economy in 2008, and you've decided to sell. It's likely you have pre-sale work to do.
If weak finances are the reason you want to sell, be aware that finding funds to restore your company's luster will be tough. "Bankers are sitting on a lot of cash," Massaro says, "but they don't want to lend."
For the most part, the reluctance to lend is because banks are facing intense pressure from regulators to make better loans. "There aren't too many handshake deals," Massaro says. "There has to be something behind the loan."
Complicating the financing issue for many small businesses is that many owners already have tapped out such traditional financing alternatives as credit cards — with their high rates not always a good idea anyway — and home equity loans.
If your business' finances aren't a selling issue, management could be.
"You have to have a structure," Massaro says. "If you're the only person with control, if the company won't do well without you, potential buyers will be less interested.
"You need a management team" in place that can assume control and give prospective buyers some assurance there's a future for the company even if you're not there.
The sales process may be easier if your business is "strategic to someone else, maybe a good vertical fit or a source of customers a potential buyer doesn't have," Massaro says. But, he warns, "Everyone wants a bargain, and you may not want to sell for that bargain price."
Although "I don't see much difference" in likely economic activity between 2012 and this year, Massaro does think manufacturing has potential, both in the marketplace and on for-sale lists.
Newer machinery "is more efficient, faster, tolerances are better, and there are fewer rejects" in the manufacturing process, Massaro says. Even better from a bottom-line standpoint, "one person can run two or three machines."
If you can position your business on the cutting edge — saving time in the manufacturing process, improving quality and making more money — then, Massaro says, you're better positioned going forward. That's the case, he adds, whether you want to sell or, with a better outlook, stay in the business.
Jim Kendall welcomes comments at JKendall@121MarketingResources.com. © 2011 121 Marketing Resources, Inc.
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