Archive for the ‘Business Valuation’ Category

Investing In Your Business’s Immortality

Monday, May 11th, 2015
Business Teamwork - Rea & Associates - Ohio CPA Firm

Ensuring that you have the right team in place – from the ground floor to upper management – is a solid, common sense strategy for business owners who are looking to add short-term and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Go ahead. Take pride in all that you’ve accomplished. Relive the moment you decided to go into business and reflect on your trials and triumphs. And as you reminisce, identify everyone who helped you achieve your vision – because chances are you didn’t get where you are by yourself.

Make no mistake. In business, the strength of your team directly impacts your company’s success and overall val­ue. Therefore, it’s never been more im­portant to ensure that your exit from the company doesn’t lead to a “going out of business” sale.

Read: This Is An Intervention – Step Away From Your Business

Your Company’s Longevity

As a business owner, it’s your responsibility to continually evaluate your busi­ness. Part of the evaluation process is ensuring that the right people are in the right place to help guide and grow your company – even when you’re not around.

Whether they move on or retire, eventually every person on your leadership team will leave, including you. You must decide what kind of impact this will have on your company when it happens.

One of the best strategies you can em­brace is to become obsolete. That’s not to say that your work is not important, it just means that your team, your business, does not depend on you for its survival.

Every time you recruit an employee, you have an opportunity to reinforce your company’s mission. Do your due diligence to make sure the people you hire are on board with the company’s vision. They will continue to set the tone after you leave, which is why the qualities you consider when hiring a candidate should go beyond their education and experi­ence. Anyone you hire must have the passion to succeed, the capacity to learn and a personality that helps them easily overcome complicated situations. From entry-level to leadership positions, your ability to maintain a strong team ensures the longevity of your business.

Is Your Team Valuable?

Ensuring that you have the right team in place – from the ground floor to up­per management – is a solid, common sense strategy for business owners who are looking to add short- and long-term value to their business. Not only are customers and clients more likely to equate your team’s passion with quality, which helps secure new business and develop long-term relationships, but the strength and self-sufficiency of your team is a major incentive to investors.

Email Rea & Associates to learn more.

By Don McIntosh, CPA, CGFM, CFE (New Philadelphia office) and Tim McDaniel, CPA/ABV, ASA, CBA (Dublin office)

 

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This Is An Intervention – Step Away From Your Business

Tuesday, April 28th, 2015
Be The Leader You Want To Be - Rea & Associates - Ohio CPA Firm

Join organizations, attend events, and talk to other leaders about your business, your industry and your role in the world. It’s time to be the business leader you’ve always wanted to be.

As the driving force behind your company’s growth and success you have undoubtedly spent countless hours and dollars strategizing, networking and juggling a laundry list of managerial responsibilities. But your effort has paid off – today, you are praised for your work and are regarded as a leading entrepreneur within your industry. But maybe it feels like you have only begun to scratch the surface and that your business is long overdue for a growth spurt. While these are great challenges to have in the business world, if you are spending all your time in the office instead of hitting the pavement, it could seem like your ability to expand further is simply unattainable.

If only there were more hours in the day!

Read: Did You Know That Treating Your Business Like An Investment Can Lead To Wealth?

Throughout my career I have had the pleasure of working with many successful business owners. And while these men and women possess the skills, expertise and leadership traits essential for success in their respective industries, they have all learned that they are not immune to getting caught up in day-to-day managerial distractions. It can happen to anybody and before you know it you are caught up in a fruitless, energy-sapping, time-consuming headache that hurts your effectiveness as a business leader and prevents your company from achieving the growth and revenue you know it is capable of.

When that happens, it’s time to stop what you are doing, take a step back and reassess your organizational development strategy.


Step Away From Your Business – An Intervention – Created with Haiku Deck, presentation software that inspires

Work On Your Business, Not In It

“[The] executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get people to take it there,” says Jim Collins in his book Good to Great: Why Some Companies Make the Leap … And Others Don’t. “No, they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.”

In other words, if you want to continue to grow a successful company, you can’t do it alone. While this advice may sound cliché, your ability to develop a strong organizational structure is directly responsible for your company’s long-term success. But it’s not easy and getting “the right people on the bus (and the wrong people off)” has been the single hardest objective for some of the most talented business owners. But once you are able to achieve this step, you will finally be able to maximize your time and talent by working on your business, instead of in your business.

How To Lead Your Business By Developing Your Organization

  1. First you must understand that organizational development is a never-ending process. To get started, develop a formal organizational chart and take time to identify “the right people” to effectively fill the top positions on your chart. To aid in the flexibility and evolution of your business’s organizational development, consider forming an advisory board to bring outside objectivity to the process.
  2. Next, step away from the daily grind of running your business. It’s time to be the business leader you’ve always wanted to be. Join organizations, attend events, and talk to other leaders about your business, your industry and your role in the world. Doing so will help you earn respect and influence throughout your community.
  3. Once you put some distance between yourself and the day-to-day grind of your company, you will be able to lead your company more objectively. This is an ideal time to observe your current organizational structure and brainstorm strategies to help you achieve your future success with your inner circle. Just make sure that those who make up your inner circle are not like you, will tell you the truth, will add value to you and your organization and are willing to have crucial conversations.
  4. Now that you have solidified your role as a business leader, it’s time to empower those in your organization to take ownership of the company and their place in it. This includes giving them the ability to make decisions while supporting and encouraging them and demonstrating your willingness to follow their lead.
  5. One of the most critical responsibilities of a business leader is planning for the future of your company. How will you transition your business once it is time to retire? What should you do now to ensure your company’s longevity? Do you know how much your business is actually worth? In order to protect your most important investment, your business, it is important to thoroughly understand the value of your business and develop a plan for its continued growth.

Starting your business is hard; growing your business is even harder. You will make mistakes. When you do get it wrong,act swiftly to make the necessary changes.

Maximize your time and talent. Email Rea & Associates today to learn more growth and development tips for your business. I won’t say that we have seen it all, but we have certainly seen a lot.

By Mike Taylor, CPA (Millersburg office)

 

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Is A Sale-Leaseback Transaction Right For Your Business?

Tuesday, March 3rd, 2015
Sales-Leaseback Transaction

Is it a better business strategy to enter into a sale-leaseback transaction on your current office building or other business property? Make sure you know the pros and cons before making any decisions – Rea & Associates – Ohio CPA Firm

Are you looking for a plan to increase your business’s cash flow? If you own business property, you may be able to benefit by entering into a sale-leaseback transaction. But while there several great benefits to this type of agreement, there are also some significant drawbacks. So, before you draw up the paperwork, schedule a time to meet with your financial advisor to find out if the benefit outweighs the risk.

Advantages Of A Sale-Leaseback Transaction

A sale-leaseback transaction occurs when you, the real estate owner and occupier, sell your property to a third party on the condition that they agree to lease the property to you. Entering into this type of arrangement has several benefits, including increasing your business’ cash flow while freeing your business up to allocate the capital to other areas of your business. Additional benefits include:

  • As the seller and eventual lessor, you essentially maintain control of the property, which prevents operational disruptions from occurring.
  • Assuming the current property is financed with debt, this long-term debt can be eliminated from the balance sheet under certain lease arrangements.
  • From a tax perspective, you gain an additional annual “write-off” for the portion of rent related to the land (as land is not depreciated).

Drawbacks Of A Sale-Leaseback Transaction

Perhaps the most significant disadvantage of entering into this type of agreement is that you stand to lose the flexibility that comes with owning the property outright since these transactions usually are for longer terms than a typical property lease (15 or more years). The typical sale-leaseback transaction takes the form of a “triple net lease,” which usually states that you, as the tenant, will be responsible for the net real estate taxes, net building insurance and net common area maintenance. Other disadvantages include:

  • The loss of the real estate’s appreciation value over the course of a lengthy lease term.
  • Significant income tax impact that comes in to play when a property’s sale price significantly exceeds the property’s “book value.” This typically occurs when you are selling a property that has been owned for a long period of time prior to the sale.
  • A decrease in your Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as your depreciation expense on the property is replaced by the rent expense.

The financial benefits of sale-leasebacks must be balanced with your unique strategic and operating considerations. A financial advisor and business consultant can help identify whether this option is right for you and your business. Email Rea & Associates to learn more about sale-leaseback transactions and other strategic business decisions. By Ben Antonelli, CPA (Dublin office)  

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‘Ghost Assets’ Haunting Your Business? How Can A Small Business Owner Keep More Money In Their Pocket? How Will A Tax Credits and Incentives Plan Benefit Your Business?

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‘Ghost Assets’ Haunting Your Business?

Tuesday, October 7th, 2014

The IRS recently issued taxpayer-friendly guidance regarding the disposition of a component of real or personal property.

Under the Internal Revenue Code, taxpayers are required to capitalize certain amounts paid to acquire, produce or improve real or tangible personal property during the year and that is used for a trade, business or for the production of income. However, prior to the issuance of new regulations in 2013 taxpayers were unable to write-off the remaining cost of a component of a larger asset or building that was repaired or replaced (e.g. a roof). In fact, under the old rules, it was not uncommon for business owners to be required to depreciate “ghost assets” – assets that were removed or replaced by the taxpayer and are no longer in service.

The good news is that the IRS has changed its mind on these, so-called, “partial dispositions.”

So, What’s Changing?

Beginning Jan. 1, 2014, taxpayers were able to deduct the remaining cost of such components in the year they were replaced/repaired by making an election on their tax return.

Additionally, the IRS allowed taxpayers to apply the regulations to dispositions that had already happened in prior years as long as the ghost assets were still being depreciated.

What was unclear until recently was how a taxpayer could effectively make the election on a retroactive basis given that businesses were required to file their 2013 year tax returns before the IRS had issued definitive guidance.

The IRS’ Response

The IRS officially announced a specific revenue procedure that provides a limited opportunity for taxpayers to write-off assets that were disposed of during a prior year. The guidance outlines the procedures necessary for taxpayers to secure the write-off, as well as what documents they should include when filing their request. If you do plan to write off a ghost asset from a previous year, you must make plans do so now as this retroactive election opportunity is time sensitive. Taxpayers who miss this opportunity will be required to continue depreciating these ghost assets. For some, this means that you could be depreciating ghost assets for another 15-20 years.

Are you a business owner who is still paying the IRS for assets that you no longer have or that have been replaced? Do you want to learn more about the IRS’s new rules on ghost assets and how they can impact your business? Email Rea & Associates to find out if you can write off ghost assets that continue to haunt your business.

Author: Chris Axene, CPA (Dublin office)

 

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When Should You Start Thinking About Succession Planning?

Monday, February 10th, 2014

You’re busy serving customers. Managing employees. Overseeing the day-to-day operations of your business. Stepping down as the head of your company may not be on your radar, but sooner or later you’ll need to think about what will happen to your business once you’re out of the picture. We recommend that business owners start thinking about their business succession plan at least five years before planning to implement it.  (more…)

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What Are 6 Things You Can Do To Improve The Health Of Your Business in 2014?

Monday, December 30th, 2013

Are you out of breath from the impact the economy had on your business during the last several years? Is it time to develop some New Year’s resolutions that will make a difference in your business? Adopting a new diet, jumping on the treadmill or committing to run a half marathon are common items on the “personal” resolution menu. However, is it time to add energy and resources to your resolutions in order to improve the health of your business?  (more…)

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What Are The Top 5 Challenges Business Owners Face in Today’s Economy?

Thursday, September 26th, 2013

You may find that being your own boss is extremely rewarding. Starting a business from the ground up takes a lot of hard work, and you’ve been seeing the fruits of your labor. But your success doesn’t come without challenges. Business owners are facing some tough challenges these days, and you yourself may be experiencing some of these growing pains. Here’s a list of the top 5 challenges I’m seeing business owners like yourself facing in today’s economy. Do any of these resonate with you?

(more…)

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Do You Have An Exit Strategy?

Thursday, August 29th, 2013

This month marks my 38th year in public accounting, 32 of which have been as a principal interacting with business owners and executives of closely held entities. I have been able to observe the good, the bad and the ugly as it relates to exiting a business. Throughout the years, I’ve had the privilege to serve some outstanding captains of industry who exemplified the ideal way of exiting a closely held business.  (more…)

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Did You Know That Treating Your Business like an Investment Can Lead to Wealth?

Wednesday, June 19th, 2013

If you’re a business owner, did you know that you can significantly increase your net wealth by simply changing the way you look at your business? (more…)

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What Legacy Do You Want to Leave?

Friday, April 12th, 2013

Last year, I was consulting with a client who owned a business that was worth over $20.0 million. He said that one of his advisers told him “Why waste your time and money developing an exit and succession plan? You will be dead and won’t care and let others take care of it after you die.”

I guess that’s a good plan – if you don’t mind the chaos it creates for your family members and if your legacy is not important to you. (more…)

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