DO YOU HAVE AN EXIT STRATEGY

DID YOU KNOW…?

About 80% of the businesses on the market will not sell. It is primarily due to owners not realizing the need to plan for the sale of their business.

In Canada, over 1.5 million businesses in the small- (less than 50 employees) and medium-size (50-500 employees) enterprise sectors are owned by Baby Boomers. Ownership planning research indicates that over 40% of these owners plan to leave their businesses within the next five years, and over 70% within the next ten years. (CFIB surveyed)

“71% of small and mid-sized enterprise owners plan to exit their businesses within the next ten years, strongly highlighting the growing importance of enhancing business value. However, the challenge is that few organizations genuinely understand what actions they must take to achieve this goal….”

– Deloitte & Touche –

“The unfortunate reality is that 80% of business owners fail when trying to sell their company. This is an alarming statistic and I hope to serve this as a bit of a wake-up call” says Steve Harvey of Business Finders Canada. “I have met far too many people who think they can wake up one morning, decide to sell their business, and go out and do it. In reality, that does not exactly happen.”

“On the flipside if you PREPARE your business for SALE you have an excellent chance to sell your Business” Exit strategies are something that every investor in a business and business owner looks for. Even if you are running a one person sole proprietorship, you need and Exit Strategy. Industry average in sales of business is less than 20%. Business Finders Canada’s sell through rate is greater than 65%. More than 3x the Industry average!!!

This is a statistic that has held constant for the past three to four decades. It has been studied by numerous organizations, trade associations, publications and independent firms, and regardless of the year, the economic climate, or the source of data, they all return roughly the same statistic: only 20% of businesses listed for sale in any one year will sell.

“In the Okanagan approximately 200 businesses were listed through the Okanagan Mainline Real Estate Board (OMREB) with 32 sales which converts to 16% sell through rate” says Steve Harvey of Business Finders Canada.

It does not mean that they never sell, but they tend to take much longer, with a two-, three-, or four-year process to get the business sold, during which time the owner likely lowers the price considerably. It could be that they were asking too much to begin with. It could also be that there were other factors that harmed the value of the business, and it ended up being worth less than the average business in that industry of a comparable size and position.

Of the businesses that ultimately do sell, about 15% sell to a family member, 15% sell to an insider – a partner or manager, and 50% sell to a third party. The remainder is made up of a variety of other business exit strategies: merging with another company, implementing an employee share ownership plan, or going public.

When a business doesn’t sell, operating the business indefinitely or simply closing the doors may be the only options available. Hardly the exit plan that any owner would desire.

Despite the absolute certainty that every business owner is going to leave his or her business at some point in time – voluntarily or otherwise few Canadian business owners have developed a formal succession plan less than 18% of owners have a written exit plan for leaving their business.

  • 40% of these owners plan to leave their businesses within the next five years, and over 70% within the next ten years
  • About 80% of the businesses on the market will not sell.
  • Less than 18% of owners have a written exit plan for leaving their business
  • The number of businesses sold in Canada is expected to double each year for the next ten years. (Community Futures)

Exit strategies are something that every investor in a business and business owner looks for. But even if you are running a one person sole proprietorship, you need an exit strategy. For you, as for any investor in a business, the questions are the same when it’s time to move on.

 

HOW ARE YOU GOING TO GET YOUR MONEY OUT OF THE BUSINESS? AND HOW MUCH MONEY ARE YOU GOING TO GET?

  1. LiquidationOne often-overlooked exit strategy is simply to call it quits, close the business doors, and call it a day. (not a great one). If you liquidate, however, any proceeds from the assets must be used to repay creditors. The remainder gets divided among the shareholders-if there are other shareholders. For small businesses, especially those that are dependent on the performance of a single individual, liquidation is sometimes the only option, as there’s really nothing else to sell.

     

  2. Keep your business in the familyThe dream of many small business owners, keeping your business in the family ensures that your legacy lives on. As an exit strategy, it can also give you the opportunity to groom your own successor and even perhaps give you some continued say in the business. If you’re looking for proceeds to retire this may not be the way out.

     

  3. Sell your business to employeesSelling your business to your partners or management can be an attractive option to consider. Current employees know the business and have a vested interest in seeing it prosper. As well, customers, suppliers and investors may be reassured by the stability this option offers. Arranging an employee buyout can be a win-win situation as they get an established business they know a great deal about already and you get enthusiastic buyers that want to see your business continue to thrive.

     

  4. Sell to another businessTargeting another business to purchase your company can be highly advantageous. Businesses buy other businesses for all kinds of reasons, from using a new acquisition as a quick path to expansion through buying out (and getting rid of) the competition. The trick to success with this exit strategy is to target your potential acquirer(s) in advance and position your company accordingly. And of course, convincing your acquirer that your small business is worth what you want for it.

     

  5. Sell in the open marketSelling a business on the open market is probably the most common way to exit. At a certain point in time, often when he or she is ready to retire, the small business owner puts the business up for sale for a certain price – and hopefully walks away with the amount of money she wanted to get for it. If this is your exit strategy, you should spend some time PREPARING your business for sale, making it as attractive as possible to potential buyers.

     

THE BEST EXIT STRATEGY

Decide first what you want to walk away with and if that is reasonable. If it’s just money, an exit strategy such as selling on the open market or to another business may be the best pick. If your legacy and seeing the small business you built continue are important to you, then family succession or selling to employees might be best for you. Most people who own a business are focused on making it a great success. Few of us spend as much time thinking about winding down the business or transitioning it to someone else.

Other Businesses

5538 Airport Way,… $3,999,995.00

MLS #: 10195140

British Columbia

$3,999,995.00

5538 Airport Way,… $3,999,995.00

Kelowna YLW Plaza. $3,995,995 – 5.5% CAP RATE, 1.43 acres This is a development play. Approved further to add car wash, detail shop and 2-3 storeys building to 15,000sf+ (zoning CD12) City leased land until 2054 with renewals in 20yr increments. This building is only two years old, exclusive to the Kelowna Airport with Three National Tenants. The Kelowna Airport is the 10th busiest airport in Canada with over 2 million passengers. Every car that goes to the airport or exits the airport must drive by this Plaza. (id:20794)

#204 c/o 1505 Harvey Avenue,… $999,900.00

MLS #: 10194324

British Columbia

$999,900.00

#204 c/o 1505 Harvey Avenue,… $999,900.00

Proudly Marketed by Points West Realty Group. Profitable paving business for sale. Owners looking to retire. Does the lifestyle of working for 6 months and off for 6 months sound appealing? Then this business is for you. Includes the company, equipment, staff and contracts. Well establish business with increasing profits. All equipment is owned, many repeat customers and ongoing contracts. Call Ryan Mayne for further details. (id:20794)

280 B Campion Street,… $195,000.00

MLS #: 10195024

British Columbia

$195,000.00

280 B Campion Street,… $195,000.00

A turnkey auto repair shop that has been in business for over 20 years. The owner is looking to retire. Business comes with loyal customer base, all tools, machines and assets. There are three lifts and additional storage in the compound behind and side access for larger vehicles. (id:20794)

5538 Airport Way,… $499,995.00

MLS #: 10195138

British Columbia

$499,995.00

5538 Airport Way,… $499,995.00

Exclusive National brand gas station located at the Kelowna Airport. This gas station is only 2 years old and is doing approximately $5 Million in sales and growing. Cost more than $700,000 to build. Currently operated as an absentee owner. Increase the cashflow of this business as an owner operator. 1772sf plus 533sf of an additional common area, 6 pump station with lots of parking. Also tenanted with a Tim Hortons and Freshii. Long term lease available. (id:20794)

c/o 1553 Harvey Avenue,… $297,850.00

MLS #: 10193210

British Columbia

$297,850.00

c/o 1553 Harvey Avenue,… $297,850.00

Well established turn key childrens activity centre has hit the market. This is the perfect opportunity to own and operate a community focused family business that has been operating for over five years. All of the hard work is done for you. Please make note the address and picture do not represent the actual business as it is a confidential listing that requires the signing of a NDA from a qualified Buyer. Proudly Marketed by Carlo Giusto Personal Real Estate Corporation and Stu Morgan of the Invest In Kelowna Real Estate Group and RE/MAX Kelowna. (id:20794)

#c/o 102-347 Leon Avenue,… $399,000.00

MLS #: 10192743

British Columbia

$399,000.00

#c/o 102-347 Leon Avenue,… $399,000.00

Rare opportunity to own a well-known and established consignment boutique located in Downtown high traffic area. The business caters to women and specializes in clothing, shoes, jewelry, and accessories from many designer brands. Almost nearly a decade in business, the owner and dedicated staff have created a warm and inviting store with a reputation as one to the top retail boutiques in the area. The business features the latest merchandise from many upscale and premium brands at competitive prices with a unique retail business model. There is a robust clientele with a healthy combination of new and repeat customers. This is a unique opportunity for someone in the retail industry or an entrepreneur looking to own consistently profitable business with a sustained track record of growth. The business can be run on a semi-absentee basis or with a full-time owner/operator in lieu of a manager. There is an attractive lease in place. Dont miss this chance to take over a business in an affluent and growing market thats set up for success. The seller will offer a training program. Price + Inventory. Proudly Presented By Kara And Associates (id:20794)

364 Lawrence Avenue,… $94,000.00

MLS #: 10190938

British Columbia

$94,000.00

364 Lawrence Avenue,… $94,000.00

Garden of Eden. Only the business for sale – includes all the assets on site. Owner lives on site which is open 24 hours a day. Buyer must show ability to pay cash to Seller on sale prior to viewing or disturbing the daily operation. Most assets are in pictures. ONLY SERIOUS OPERATORS WILL BE ADDRESSED PREFERABLY BUYER WILL HAVE EXPERIENCE IN THIS LINE OF BUSINESS.Iconic Garden of Eden DO NOT APPROACH OWNER OR ANYONE ON SITE. (id:20794)

#C/O 1685 Pandosy Street,… $129,900.00

MLS #: 10191719

British Columbia

$129,900.00

#C/O 1685 Pandosy Street,… $129,900.00

Profitable Independent Convenience store – turn key operation for sale. Top of the line Coolers and Equipment, Counters and Racking. ATM recently installed. 2 POS stations with touch screen terminals with customer facing screen. Fantastic location, with exclusivity to a high density and growing location with no competition. Fully wired with CAT5, ROKU TV for marketing, Top of the line 5 camera security system with remote in, backroom with fridge, bathroom, kitchen, proper mop sink, and tons of racking. Business has consistently grown daily with no signs of slowing down. Price does not include inventory. A Non-Disclosure Agreement required for confidential information. (id:20794)

#8A 1060 Leathead Road,… $1,600,000.00

MLS #: 10192389

British Columbia

$1,600,000.00

#8A 1060 Leathead Road,… $1,600,000.00

Established screen printing business with loyal customer base that has been operating in Kelowna for 25 years. The Business is largely Corporate Contracts with Repeat and Referral Clients. All equipment ready to go for a new owner operator to just step in. This is the largest screen printing business in the Okanagan. Price includes the ownership of a 3,200 square foot commercial strata unit. DO NOT TALK TO OR APPROACH STAFF. For financial information please request a CA. (id:20794)

#C/O 1685 Pandosy Street,… $288,888.00

MLS #: 10193006

British Columbia

$288,888.00

#C/O 1685 Pandosy Street,… $288,888.00

Selling pre-engineered and Quonset steel buildings including insulation, doors and accessories. Great for Orchardists, Wineries, Agriculture, Industrial, Commercial, Aviation and more. Exclusive distribution agreements. (id:20794)

#c/o #14 1470 Harvey Avenue,… $109,000.00

MLS #: 10193049

British Columbia

$109,000.00

#c/o #14 1470 Harvey Avenue,… $109,000.00

A great opportunity to acquire the assets of this turnkey massage therapy business. $250,000 was invested into leasehold improvements in 2014, and the results are spectacular! Just under 1,700 sq. ft of space available for massage, acupuncture, cupping or other counselling in 7 treatment rooms and another 600 square feet on the second floor to use as a yoga studio. The lease is assignable to a buyer of this business with favourable lease terms. NDA must be signed for further information. (id:20794)

#105 3677 Highway 97, N… $650,000.00

MLS #: 10193074

British Columbia

$650,000.00

#105 3677 Highway 97, N… $650,000.00

Fully leased commercial strata unit at University Business PArk, Kelowna. New roof 2016 (approx.). Professional property management company since construction. Brochure available thru listing broker. (id:20794)

1495 Gordon Drive,… $1,598,000.00

MLS #: 10193133

British Columbia

$1,598,000.00

1495 Gordon Drive,… $1,598,000.00

Incredibly rare large commercial space available on busy intersection with private entry. This 3700 Sq/ft property is part of the Centria Urban Village just above the previously Nesters Market. Zoned CD17 Mixed Use Commercial you can use this space for pretty much anything! Currently setup as a business professional office with reception, two conference rooms, large presentation room, kitchen, two bathrooms and eight offices alone with private roof top access and executive wrap around patio. Owner has access to pool, hot tub and gym within Centria towers and 10 parking passes. Showings on week days after 5PM and anytime on weekends. Floor area measurements are approximate and should be verified if deemed important. Proudly presented by JP Letnick and Joanna Wang of the “Letnick Estates Group” http://LetnickEstates.com (id:20794)

#103 532 Leon Avenue,… $99,000.00

MLS #: 10194356

British Columbia

$99,000.00

#103 532 Leon Avenue,… $99,000.00

This downtown Kelowna Hair Salon is your golden opportunity to take over a turn-key business. This purchase affords one the opportunity to have 7 chairs for hair design, 3 chairs for shampooing, 2 chairs for hair drying, large staff room, reception area where products can also be showcased for sale and a spacious washroom. A team of highly skilled hair stylists has allowed the business to develop a loyal customer base and a client retention rate of over 85%.  Moreover, the business enjoys location advantages, being located in a high traffic area surrounded with plenty of businesses, law and accounting firms which generate additional business through referrals. This opportunity is ideal for a private buyer looking to acquire a growing business with an innovative and easy model to manage, or a strategic purchaser seeking to diversify and expand its product line and client base. Financial statements provided only on signing a NDA. Proudly Marketed by Carlo Giusto Personal Real Estate Corporation and Stu Morgan of the Invest In Kelowna Real Estate Group and RE/MAX Kelowna. (id:20794)

#c/o 14 1470 Harvey Avenue,… $279,000.00

MLS #: 10191761

British Columbia

$279,000.00

#c/o 14 1470 Harvey Avenue,… $279,000.00

Winter is coming and this very successful Central Okanagan landscaping company has year-round income. This business has been in operation for almost 20 years with trained employees, many loyal customers, with lots of client referrals and an excellent reputation within the community and with suppliers. This company includes equipment / tools, maintenance / construction contracts and established customer lists. The current owner can offer training and mentoring if required. Grow this business to the next level by capitalizing on the Okanagans continued expansion and development. Signed NDA must be in place for further information on this opportunity. (id:20794)

#5-6 1790 KLO Road,… $749,000.00

MLS #: 10191810

British Columbia

$749,000.00

#5-6 1790 KLO Road,… $749,000.00

Fixed income investment opportunity, 1505 sq ft of strata retail space located in a high traffic area at a controlled intersection. Situated on the corner of KLO Rd & Benvoulin Rd. Long term tenancy in place. Currently leased at $26.00. For further information please call Tony Sprovieri at Royal LePage Kelowna 250-878-7811 (id:20794)

#C/O 108 1980 Cooper Road,… $199,000.00

MLS #: 10192403

British Columbia

$199,000.00

#C/O 108 1980 Cooper Road,… $199,000.00

One of the best Japanese Restaurants in Kelowna, Popular Take-out and Dining-in Restaurant, Long standing and loyal client base, well priced, authentic, fresh Japanese food. Room to expand revenue through delivery, catering and promotion. Excellent location, Around 45 seats, commercial kitchen. High ratings and great reviews from clients on Google, Yelp, Tripadvisor, Zomato, and Yellow Page. Ample FREE Parking, has food primary liquor license. Owner invested lots of new equipment and did new renovations for both kitchen and dining in areas, including new motor for walk-in cooler, ventilation hood, grease trap, sushi bar, cashier, dishwasher, fryer, new floor, wall, paint, light fixtures, tables & chairs and so on. Proudly Presented by Letnick Estates Group, please call Joanna Wang at 778-363-8859, Joanna@LetnickEstates.com for more information. (id:20794)