In Show 086 – Deregistration and Voluntary Winding Up originally broadcast on Facebook Live on Monday 30 April 2018 we explore this interesting topic.
Show Notes
On Fast Fix Monday today we are talking about deregistering your company and members wind-up.
As your company comes to the end of it’s lifecycle you may want to consider deregistration. Companies cost money to keep in operation so one option is to simply deregister it. There is an ASIC form that you have to submit to start this process. All the members of the company have to sign-off on the deregistration. The company cannot be currently carrying out any business and can’t owe any debts. It also has to have assets that are worth less than $1000. All penalties and fees have to have been paid. The business can’t be involved in any legal proceedings.
Liquidation is usually associated with a company in financial difficulty. But that’s not always the case. A members voluntary liquidation is something different. If the business is solvent a liquidator can still be appointed to sell-off the companies assets. There isn’t a one size fits all solution to this. If you are thinking about using this to wind-up the company you need to consult your advisers first. There are some tax benefits to doing this. But it is more difficult to re-register a company that has been subject to a voluntary liquidation.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 075 – Using Social Media to Sell a Business originally broadcast on Facebook Live on Wednesday 28 March 2018 we explore this interesting topic.
Download the weekbook here: 075 Worksheet
Show Notes
As part of Phase 13: Selling your business we have been talking a lot about the best way to get ready for a sale. David Biddle has started many businesses over his career, including the lifestyle business Smart Boating. After selling that company he co-founded Brilliant Businesses a business broker that emphasizes the important of digital marketing. David has a really unique way of selling businesses by leveraging the power of social media.
David started his career working in the live event production business. Over the next fifteen years he worked all over the world in that industry. He staged conferences and live events for many blue chip companies. After a decade and a half he and his family decided to make a major change, moving from his home in the UK to Australia. He wanted to make a lifestyle change and so bought a yacht charter company down-under. He ran that business for ten years and it was during that time that he began to deploy digital marketing techniques to grow.
After ten years he decided to sell the yacht business. He started by looking for a good business brokers. Unfortunately he found it very difficult to find someone that really understood his business. Yacht chartering is a niche business t hat few brokers had any experience with. They struggled to find the right buyers and they seriously undervalued the company. He and his business partner leveraged their experience with digital marketing to sell the business on their own. They built their own website specifically designed to sell the business. They managed to sell within three months for double the valuation the brokers had offered.
David says people make many mistakes when trying to sell their business. But the biggest is not preparing properly. A rushed sale or an unexpected offer can lead to an owner making a bad decision. Not having the right paperwork is a huge error. Long term financials are a must as are monthly financial statements. He also says that having the right systems and processes in place documented is critical for a successful sale. Making sure the physical location of the business looks good is important. And most importantly, the owner has to be emotionally prepared to sell.
Most people will only sell one or two businesses in their life and the process can appear quite daunting. David and his team have put together and end to end approach acting as a trusted partner to guide owners through the process. David and his team start by making sure a prospective business is ready for sale. Accounts have to be up to date. Physical spaces need to be cleaned and optimized. Preparation also means that all the documents are uploaded to a data vault. That provides for a central clearinghouse for all information about the business.
Once that’s done David begins to pitch the prospective business to the marketplace. They do that by creating a tailor-made website specifically for the sale of the business. This is a standalone website separate from the businesses regular website. The website is selling the dream. It promotes the fantastic opportunity that owning this business will provide. The site features great pictures and videos that will engage a prospective buyer.
Next David promotes the opportunity to an audience. Rather than using a passive marketing approach they are much more proactive. They identify people that they think will be interested in the business and use Facebook, Google and LinkedIn to micro-target those audiences.
David says that if you setup your business to operate at maximal efficiency it will be much more easy to sell in the long run. A lot of business owners find that when they try to sell they company is far too dependent on them. It’s hard to sell an empty shell. Making yourself redundant from your own business is critical. The business should be able to operate without you before its ready to be sold. Finally, you should have a plan in place about what to do after the sale. Having a plan will keep you motivated during the sales process.
Connect
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 074 – Selling Part of Your Business originally broadcast on Facebook Live on Monday 26 March 2018 we explore this interesting topic.
Show Notes
Today on Fast Fix Monday we’re going to talk briefly about selling part of your business. All this month we’ve been focused on selling your business outright. That’s not always the best option. Selling just a portion of your company may be the better the solution.
The classic example of this is a real estate company that typically has two income streams. The first is the sales part of the business. The second is the rent roll of properties rented on a monthly basis. Both are very valuable assets and it’s very common for a real estate company to maintain it’s sales business while selling the rent roll for a high profit.
There are many reasons why you would want to sell just a part of the business. The first is that you may be in need of some quick cash. Selling part of your business can alleviate that fiscal need while maintaining an income stream for the future. A partial sale can also help you to access resources that you can then use to invest in another part of the business. Remember to exercise caution. Once you sell you can’t get it back!
The important thing to remember is that you need the right advice before you commit to a sale.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 073 – Why You Need a Broker with Warwick Peters originally broadcast on Facebook Live on Wednesday 21 March 2018 we explore this interesting topic.
Download the worksheet here: WorkSheet 073
Show Notes
In today’s episode we continue our discussion on Phase 11: Selling your business. We have invited Warwick Peters to join us. Warwick is an accredited business broker with Ray White Commercial. We’ve known Warwick for many years and are happy to have him back on the show. We previously had him on which focused on Phase 5: Protecting your intellectual property. Warwick helps businesses to discover where their profitability lies and how best to structure themselves prior to a sale. He helps to break down and analyze what problems exist in any given company and helps to fix them.
One of the biggest mistakes companies make when trying to sell is going too fast. It can take as long as two months to get a business ready for a sale. The other issue is when too sell. The best time is usually during the first quarter right after Easter. That means you have to get the business ready for a sale during the Christmas season. Once the business is on the market it can take another two months before a sale is finalized. That is usually followed by a another month for the due diligence process. That entire process can take as much as six months.
Having a business that is easily understood is key to achieving a successful sale. Your business can’t be overly complicated. On top of that you want your accounts to be clear and easy to understand. Being in a market that is growing is key. Businesses that are in decline will be much harder to sell.
Warwick has a number of recommendations for companies preparing for a sale. If you have a reasonably large business only about 25% of potential buyers will want to purchase the company outright. Around 75% want to buy the company and continue to have it managed by someone else. The big question is whether a company has somebody ready to take over the day-to-day management. Buyers will want a deal where the owner stays on for six months to train up the new management team. That means if you want to sell you need to bring on a replacement manager right away. Having a great set of accounts is critical. You need to show at least five years of continuous growth. You also need detailed documentation that details the process of the business.
Professionalism is what sells a business. A seller rarely understands what a buyer wants. If you don’t use a broker you will only understand your desires not what the buyer wants. A broker will help you to allow both sides to get what they want. A good broker will also be a good negotiator something most sellers don’t have any expertise in. A broker will also help to guide you through the many landmines that you will face during the sale process.
The most important thing you need to know before selling your business is understanding your limits. If there are things that you don’t understand get professional help. And don’t just hire anyone. Interview potential brokers to get a sense of their experience and level of professionalism.
Quickfire questions
What is the number one thing that people get wrong in business?
Most people are comfortable when buying a business but they never seem to operate it successfully. Operating a business year after year is really hard and often requires professional help.
What advice would you give to your younger self?
Start sooner. Warwick started 18 years ago and wishes he had started sooner. The more professional the market the less competition there is.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 070 – Taking Cash as Fees originally broadcast on Facebook Live on Monday 12 March 2018 we explore this interesting topic.
Show Notes
Today on the show we focus on one of the biggest pitfalls we see when business owners prepare to sell. Taking cash for fees might seem innocuous but it can have huge implications. It can effect the value of your business in the long term. You might be tempted to pocket any cash that flows into your business. Whether your a lawyer with a client that pays in cash or you operate a coffee shop there are plenty of opportunities to keep money off your books. Avoiding the tax man might seem like a good idea at the time but it really does matter for the long term prospects of your business.
At some point you are going to exit you business. Either by choice or or by circumstance there is an end date built into every business. By keeping a lot of cash off your books you are going to seriously impact it’s value.
Imagine a coffee shop where customers pay $4 for a cuppa. This shop sells 500 coffees in a week. That’s a yearly income of $104 thousand. By not declaring that money the owner will end up saving 30 cents on the dollar in taxes or $31 thousand per year. But when he goes to sell the business he can’t include that money in the businesses income. If the owner could sell the business for a multiple of three times year income then they are going to receive $300 thousand less for a sale.
Declare that cash!
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 069 – Selling Your Business originally broadcast on Facebook Live on Wednesday 7 March 2018 we explore this interesting topic.
Download the Workbook here – 069 – Worksheet.
Show Notes
Today we start our month-long focus on Phase 11: Selling your business. This is the phase that the previous ten have been getting you ready for. You can sell part or all of your business or list it on the stock exchange. Over the next few weeks we are going to discuss each of those options in detail. Today we are going to focus on the sale of a part or the whole of your business.
Phase 11 is at the top of the Business Legal Lifecycle for a simple reason. Eventually everyone is going to have to exit the business they’ve started. You may do it by choice or you may be forced to do it but it will happen to you eventually. That’s incredibly important to realize because you need to set your business up to be sold. All too often we meet business owners who have made no preparation for a sale and now have to scramble at the last minute. When that happens you won’t be able to sell your business for anything close to what it’s worth. One of the big reasons we started the BLL was to prevent situations just like this.
When you start your business you need to have an end goal in mind. To that end you need to have a conversation with your accountant and lawyer about how best to structure your business. The process of selling your business will depend on whether you are selling shares in the business or simply want to sell it out right. Your goal is to maximize the sale of your business. To do that you need to follow 11 steps.
- Collate all the information about your business
You want to collect all the information about your business in one place. Transaction histories, history of employees and everything else you can think of needs to be readily accessible. - Financial information
The buyer doesn’t just want to see the history of your transactions with your suppliers. They want to see the entire financial history of the business. If you haven’t disclosed all your money that you have made from the business in order to avoid paying taxes you are potentially going to cost yourself a lot of money on the final sale of the business. You have to be able to prove that you are making the money you claim to be. - Interview business brokers
There are plenty of people in this sector and it’s really important you pick the right broker. Don’t be afraid to ask for references. - Want do you want from the sale?
Before you make a sale you have to decide what your red lines are. What price do you want to get? Are you willing to continue to work after the sale? - Choose a business broker
Now the time has come to choose a broker. You’ll be expected to sign a contract so don’t be afraid to have a lawyer look it over before you sign. - Marketing the business sale
There are lots of different ways to do this. You will want to have discussed this with your broker before you added him or her to your team. - Consider offers
Don’t take the first offer you receive. Take your time to look over multiple offers to be able to weigh which one is best for you. - Negotiating and accepting the offer
You will likely want to negotiate terms and price so you need to have one person to do that negotiating for you. You don’t want your lawyer, your accountant and your broker all negotiating. - Transaction
There will likely be a due diligence period before the sale is approved. You will be expected to open up your books and offer all the information that’s required. - Settlement
This is usually the easiest part. This is where all parties meet and settle the transaction by signing paperwork and handing over the cheque. - Retention period
There may be a period where you continue to work for the business after the sale to ensure a clean transition.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 112- Fast Fix Monday – What to look out for if you write your own will originally broadcast on Facebook Live on Monday 23 July 2018.
Show Notes
We’ve been talking about estate planning and retirement all this month. A key part of that process is writing a will that clearly lays out your wishes for friends and family. Some people decide to write a will by themselves. This isn’t a method we recommend. Given the complexities of estate law, having a professional to help you is for the best. But for those that are set on doing it for themselves here are some tips:
- Guardianship of children
Who should take care of any minor children in the event of your death. This isn’t an easy question to answer but there are some things you should consider. Finding people who share your values or beliefs is important. As is finding someone that your kids are already familiar with. - Assets
Make sure you have a clear list of all the assets you own. Creating a list of everything along with their estimated value will go a long way to helping you to decide how to divide the estate. - Cherished items
When you’re making a list of your assets don’t forget to include the smaller things that may not have much value but will still mean a lot to your family. When you write the will you need to make sure that you include those things in a letter of wishes - Appoint an executor
This is the single most important thing you will do during this process. The executor essentially takes over the duty of administering your estate upon your death. They will make funeral arrangements and then make sure your wishes are carried out. It doesn’t have to be a family member and they don‘t have to be a beneficiary. - Pick your beneficiaries.
Deciding who should get what is another big decision. It can be people, charities or other organizations. If you are going to exclude someone in the family you definitely need to consult a lawyer to make sure it’s done correctly. - Pick the right charities
Many charities have specific rules on wording that must be included in a will in order for the gift to be accepted. - Funeral arrangement
You don’t want to include every detail about your funeral in your will but you do want to make sure the big things are dealt with. If you want to be cremated or buried in a certain place make sure that’s include. - Include consultants details
The people that may have helped you draft the will should be listed. Those include your lawyer, financial planner and accountant. - Power of attorney
Appointing someone to make decisions for you in the event of you being incapacitated is an important part of this process. It’s a separate document from the will and the person will be able to take over in the event of an illness or accident.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
