Businesses urged to plan transitions

It takes several years to prepare to sell a business, said Peter Nelson and Dick Jordan at a Lunch & Learn symposium held Jan. 14, at NJPA, Staples, sponsored by the Todd County Development Corporation, Staples Economic Development Administration and Staples Motley Chamber of Commerce. 

Nelson, of the Small Business Development Center at Central Lakes College in Brainerd, said banks want three years of tax records before financing a buyer for your business, so he suggested businesses change the accounting to make it obvious to the buyer where the value of the business is.

He said when business owners are operating a business, they are focused on growth and minimizing taxes. When they switch to wanting to sell the business, they should look to maximize the sale price by showing how profitable the business can be.

Jordan said it may take five years for some people to prepare. He said there are many other considerations besides getting the best sale price, including a desire to keep the business in the same community.

Jordan said there is an emotional value to a business and sellers have to consider family, management team, key employees, shareholders and partners. He said to ask questions like: is the family more important than the business?

He said the biggest problem for many sellers is the lack of a written agreement. While communication is the key, written agreements are needed so both parties can refer to the same deal.

Nelson said both the SBDC and SCORE services are free to clients, as they are funded by the Small Business Administration and Minnesota Department of Employment and Economic Development.

SBDC and SCORE can help business owners build a support team. Nelson said they are not a replacement for attorneys, accountants, brokers, families, bankers, financial advisors or insurance agents, but they can help line up those needed services.

SCORE is a nonprofit association dedicated to helping small businesses get off the ground, grow and achieve their goals through education and mentorship. Jordan said the former business people who give advice are emphatetic, having been in the same position as business owners wanting to sell, and will be impartial with no emotional ties to the transac