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It’s one of those issues that you may feel you don’t have time for because you’re too busy actually running your business. But it’s an important question you need to ask yourself. What are your plans for the business once you’re out of the picture? It’s surprising how few business owners actually know the answer. Statistics show that almost half of family businesses have absolutely no succession plan.

Gilmore Jasion Mahler and Croghan Colonial Bank recently teamed up to present a business succession planning workshop for area business owners. They offered some valuable takeaways including 8 steps to ensure a successful transition to new leadership.

First and foremost, be realistic about how long it will take to sell your business. Croghan’s Paul Wannemacher says the average time to sell a business once it’s listed for sale on the market is 6-11 months. He says one should also factor in 2-3 months to close once an agreement is reached.

“Make sure you’re ready when that prospective buyer does come along,” says Wannemacher. “Create a descriptive listing of the business as well as an overview. Just like when selling your house, you need to think about “curb appeal”. You may need to resurface the parking lot, freshen the landscape or painting to make it look more attractive to a potential buyer.”

Once you’ve tended to that first impression of your business and informed your key management, here are the 8 steps to succession planning:

1. Get a handle on the marketplace. What’s the climate in your industry, the local economy and the national and international economies? Are there potential buyers out there?  Maybe your family members, managers within the company, maybe competitors?
2. Pull together a team of advisors. This team should include your CPA, lawyer, wealth advisor and commercial banker.
3. Get your business ready for transition

• Review metrics
• Make sure your records are accurate and up to date

It’s smart to anticipate some challenges along the way as you get your business ready for transition. Some of those challenges could include:

• Normalizing your income statement
• Cash flow/debt service history and capacity
• The condition of your balance sheet
• Collateral

Who is in the pool of potential buyers?

4. Get a valuation

Gilmore Jasion Mahler CPA Jeff Denning is an expert in business valuation. He says the first question you need to ask yourself before getting a business valuation is: what are you offering to sell?

“Are you selling all of the transferable assets of your business or a fractional interest or equity share? What about your client and customer relationships? Your contracts? What about your workforce? We’re in the midst of a critical workforce shortage,” says Denning. “Many businesses are interested in acquiring other businesses right now to acquire their workers.”

Another challenge can be landing on an asking price for your business. Denning offers these questions to ask yourself:

• Do you have a CFO or controller to assist in this process?
• Do you have an outside CPA with valuation experience?
• Do you need a business broker to help assess market potential or handle the entire sale process?
• Do you need a real estate appraiser?
• Grade your business against other comparable businesses
• Is the business transferable? Owner-operated? How much risk of retaining customers?
• Put yourself in the buyer’s shoes- your advisors should help with this perspective

5. Create a personal financial plan: What amount of sale proceeds do you need to be satisfied? Look at your living expenses, vacations and spending you anticipate, family and charity goals. Don’t discount the emotional toll of finally leaving a business you’ve nurtured and built over the years.
6. Prepare your family for the transition: The sooner you can let family members in the business know your plans the better. You may consider family wealth transfers through trusts or partnerships.
7. Work with prospective buyers: Some things to keep in mind as you consider bids: how will loyal managers and employees be treated? Will the new owners continue with the company, improve it, or close it down?

“The buyer may want you to stay for a period of time after the sale. Just be very clear what that continuing role might be and how long will it last,” adds Croghan Bank’s Chris Kelly.

8. Structure and close the sale

“Once you’ve identified a buyer, be aware that the final stretch can be as difficult as all the other steps that led you to this… and maybe more frustrating,” says Croghan’s Paul Wannemacher. “Will the business organization change? Will there be a reorganization? Are non-compete agreements needed?”

And, what type of financing is available?

• Seller financing (you take on all the risk)
• Conventional bank financing
• SBA 7(a)
• Collateral enhancement
• Equity investors
• ESOP

From assessing the marketplace to closing the sale, these eight steps are meant to be a guideline as you contemplate the future of the business you’ve worked so hard to build. While it may seem daunting, many financial experts agree that perhaps the worst thing you can do in regard to succession planning is to do nothing. If you and your financial team can come up with a strategy, you can rest assured that your exit will leave your business and your employees well positioned for future success.

Jeffrey S. Denning, CPA ABV, CFF is a partner with Gilmore Jasion Mahler, LTD. He has over 30 years of accounting experience, with a focus on providing services as an accredited business appraiser, forensic accountant, litigation consultant, and expert witness.

Chris Kelly is a Vice President and Commercial Loan Officer at Croghan Colonial Bank. He has over 20 years of experience in commercial banking, providing small to medium sized privately held businesses, nonprofits and professional firms with financial solutions.

Paul Wannemacher, CPA, PFS, CFP is a Vice President and Trust Officer at Croghan Trust & Investment Management. He has over 25 years of experience in trust administration, portfolio management, tax & financial planning and business consulting.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities. 

Do you need to figure out what your business is worth? If you’re looking into getting a business valuation, you have some decisions to make. Gilmore Jasion Mahler (GJM) Partner Jeff Denning specializes in business valuation and says you could pursue a detailed (possibly 100 page) report, or a less detailed report. Which one do you need? Jeff has some answers in our most recent video blog.

Learn more about Jeff’s expertise in business valuation and GJM's forensic services, and don’t forget to sign up for our free quarterly newsletter The Expert. It offers timely and helpful articles with a focus on business valuation and litigation support. Just click here for quick and easy sign up.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities. 

As a business owner there are many reasons why you may need to know how much your business is worth. Perhaps you're considering selling, or maybe the valuation is required by the IRS or a court of law. Gilmore Jasion Mahler (GJM) Partner Jeff Denning specializes in business valuation and explains the process in this short video.

Learn more about Jeff's expertise in business valuation and forensics, and don't forget to sign up for GJM's free quarterly newsletter The Expert. It offers timely and helpful articles with a focus on business valuation and litigation support. Just click here for quick and easy sign up.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

On January 3, 2020, Iranian General Qasem Soleimani died in a Reaper drone attack carried out by American military forces. The American government cited a growing threat against US national security and the interests of the US as predication for the strike. There have been reports that Iranian cyberattacks against American businesses and government agencies are sure to intensify in retaliation.

While this may seem like an issue for the United States government to handle, American companies should recognize the fact that Iranian cyberterrorists and their allies are likely to target US civilian companies in an effort to destabilize as much of the country as possible.

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) has issued several warnings to American companies to explain the breadth and depth of the looming threat of cyberterrorism. It is essential for all US companies across all industries to take appropriate measures to defend their interests and digital assets, especially those pertaining to sensitive private data of US citizens.

Defending Your Business Interests and Data from Iranian Cyberterrorism

Ultimately, it’s important for all American business leaders to know that it is virtually impossible for the average company to protect itself from an all-out cyberattack staged by Iranian agents and Iranian allies.

The best a potentially vulnerable company can do is to make the company as hard of a target as possible in the hopes that any attacks against it will appear to be more trouble than they’re worth. It’s also essential to have protections in place in the event your company needs to recover after a cyberattack from Iranian operatives or any other cyberattack.

The CISA recommends American companies take the following steps to minimize their chances of becoming targets and to streamline recovery processes after successful attacks:

• Enable port monitoring and disable all nonessential ports. Companies should know which ports are necessary for business-critical operations and which are vulnerable. For the ports that must remain open, enable port monitoring to track all traffic through those ports.
• Configure advanced email and communications monitoring. Companies should carefully track phishing trends and consider implementing phishing protection measures to prevent employees from inadvertently granted access to cyberterrorists.
• Patch all externally facing equipment immediately. “Day zero” vulnerabilities exist on all types of equipment, so you don’t want to run the risk of letting several patch cycles pass while your systems remain unprotected.
• Limit and restrict PowerShell usage. Log all use of PowerShell within your company and cut off access for any employees who do not require access for day-to-day job duties.
   
• Configure a reliable data backup system. A good rule of thumb is to have at least three copies of your critical data in at least two different locations, one of which should be offsite.
• Conduct response and recovery simulations. It’s a good idea to put your defensive measure to the test and run simulations to see how your team responds to an active threat simulation, including data backup and other recovery processes.

If Iranian agents decide to attack American businesses digitally, experts predict it will be done with the intent of causing chaos and disruption rather than to extort. Businesses that take appropriate precautions will be harder targets and will therefore be more likely to be overlooked by Iranian cyberterrorists.

If you are unsure about your organization’s data security environment, contact Gilmore Jasion Mahler, LTD (GJM) to learn how we can help you defend your interests and protect your data against cyberattacks. GJM’s experts can help to uncover the vulnerabilities of your business and assist with data governance.   

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

There's been a lot of upheaval and uncertainty in global markets recently, and, for the United States, part of that is the new imposition—by both America and China—of tariffs. Beyond any financial arguments about whether or not trade wars are good and easy to win, there's no doubt whatsoever that trade wars, specifically in the form of tariffs, will change the market. And though it may take a while for these effects to be felt by the public, the impact of tariffs will be felt first and most deeply by manufacturing.

Big Industries Get Hit

Tariffs can have a huge impact on manufacturing and many other American businesses in unexpected—but understandable—ways. The U.S. has recently gone after the industrial sector with tariffs specifically targeting steel and aluminum.

Any steel or aluminum coming into the U.S. from specified nations now has an additional percentage cost added to the existing price. In other words, tariff impact on manufacturing means foreign steel and aluminum providers now have to pay an additional 25% and 10%, respectively, before they can cross the border into the U.S. and be used by American businesses.

Of course, steel and aluminum are pretty commonly used materials in a wide variety of industries, businesses, and applications. So, that extra cost will affect more than just the materials industries that are importing them into the country.

Tariffs Generate a Widespread Ripple Effect

As steel and aluminum import taxes increase, many businesses feel a ripple effect. Not only do tariffs impact the manufacturers of these metals affected, but also a manufacturer’s clients who turn steel and aluminum into consumable products.

For example, cookware and plumbing manufacturers will pay premiums for the materials needed to produce their goods. Further down the line, bakeries, restaurants, hardware stores, plumbers, and many other tradespeople will see increases in the cost of steel-based and aluminum-based products that are necessary to their professions. In turn, those bakers and plumbers must now decide whether to absorb the loss or raise the prices of goods and services to their customers in order to offset the price increase on metals.

Every link in the chain is affected by tariffs: the first-level producers, manufacturers, small and mid-sized businesses reliant on those products, and finally the everyday consumer.

What to Do About Tariffs

Governments know that tariffs are going to have a huge impact on the economy of the other countries involved a trade war. That’s why they are effective means of negotiating market conditions. However, many businesses and consumers get caught in the middle. So what can a small or mid-sized business do as tariffs are on slapped on the products they need?

While it may not be the solution for every manufacturer, one effective way to mitigate tariffs on manufacturing is to source materials from unaffected nations. Steel and aluminum, for example, are receiving tariffs from many nations, but Australia and Argentina are exempt. Sourcing metals from these countries means business can go on as usual.

For businesses using metal-based products, it may be best to arrange your affairs before tariffs begin to affect you. For example, if you need new tech equipment, with aluminum and steel parts, purchase that equipment soon or second-hand. You can also make more strategic business moves when scaling up. Say you're looking to expand your restaurant business to new cities, consider purchasing a space that's already outfitted with most or all of the features you'll need, so you can reduce the costs associated with acquiring new, and often imported, materials.

If you'd like to know more about tariff impact on manufacturers or which tariffs may affect you, reach out to your GJM team. Let us guide you through a complex, ever-shifting market and global trade climate.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.