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Old 06-17-2008, 07:46 PM
 
Location: Boca Raton, FL
4,852 posts, read 8,323,197 times
Reputation: 5488

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You have been given a huge task of taking over a family business due to illness or sudden death.

It is a service business.

What do you do? Educate yourself? Sell it? Outsource?
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Old 06-17-2008, 08:10 PM
 
10,871 posts, read 41,162,985 times
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Way way too many factors here to give you a reasonable answer.

Do you have the time/interest/ability to continue the old business?

Does the business have "key employees" on staff who can continue to do a lot of the actual service functions? Management in place?

Or was this a business that revolved principally around the family member?

Unfortunately, many small service businesses cannot continue functioning without the key member who put it all together, and are worth far far less than you can imagine without that person present. Esssentially, the business falls to being worth only what the depreciated (or possibly, replacement) value of the hard assets that remain ... property, vehicles, supplies, equipment, materials, etc. Goodwill and customer accounts may often be next to worthless without that key player in valuing the business.

Commission compensated business brokers will try to tell you that the business is worth some formula valuation of gross sales volume or profitability ... but if it's an essentially "broken" business after a key player's demise, it's not so. Been there, done that ... as a buyer and as a seller. Don't fall for the "blue sky" value unless there's an exclusive service contract that you can continue to profitably fulfill.

Again, hard answers to this situation would require a lot more information about the business and about your ability to carry on.
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Old 06-17-2008, 08:57 PM
 
Location: Boca Raton, FL
4,852 posts, read 8,323,197 times
Reputation: 5488
Smile Small Business - Disaster planning

I am the planner. After hearing of so many acquaintances leaving us this year and then this past weekend, the sudden loss of Tim Russert left NBC virtually unprepared.

Our family depends on this business. If something were to happen to the key person, where would we be? It would be nice if it stayed in the family. There are employees, however, there is one person who has more knowledge than the rest.

It has been thrown in my lap as to the next step. It is a CPA firm and business is consistent. We are contacted by business brokers all the time. Makes you think.

I realized how unprepared we are in case of an emergency such as the above.
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Old 06-17-2008, 09:07 PM
 
Location: Happy wherever I am - Florida now
3,359 posts, read 10,637,475 times
Reputation: 3812
I doubt NBC will have a sucession problem. Too many people work there.

Regarding your CPA business, don't wait to become educated. Do it now. You need a backup person in the family who is working in the business who can take it over and knows what's going on. Don't wait till a situation arises to address it.

Selling is not always a realistic possibility.
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Old 06-17-2008, 11:10 PM
 
10,871 posts, read 41,162,985 times
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This is why it's essential to operate a small CPA firm with a "team" in place that knows the clients and the service functions the small business provides, so that you can "plan" to minimize the potential adverse impact of a key player's demise and continue to take care of your client base.

Not that a partnership is without it's drawbacks, but you can then plan for the eventual departure of one of the partners ... however that circumstance arises (death, dissolution, buy-out) ... without an adverse result for the business.

I've known partnerships to purchase life insurance for the partners so that the remaining partner is able to continue the business with insurance money to "buy out" the other's interest at a previously agreed upon price.

So, if you're just looking at a hypothetical case of "what should we do to assure a long term survival of this business" ... I'd be looking now for a qualified CPA to join/partner in the company. I think it would be an unreasonable task for you to try to get your CPA credentials unless your interests lie in getting the accounting degree, training, and advanced credentials needed for the CPA and want to work in that capacity should the need arise.
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Old 06-18-2008, 09:19 PM
 
955 posts, read 1,917,946 times
Reputation: 393
Quote:
Originally Posted by Bette View Post
It has been thrown in my lap as to the next step. It is a CPA firm and business is consistent. We are contacted by business brokers all the time. Makes you think.

I realized how unprepared we are in case of an emergency such as the above.
Take very good note of Sunsprit's two posts. Excellent advice. Especially in a service business with a key employee, the worth of the business is a lot less than you think if there was not a rational plan in place before a disaster strikes or you just decide to call it quits.

And beware of people contacting you promising incredible valuations for your business. You need a good, independent business valuation based on hard numbers. You may be surprised at the result.
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Old 06-20-2008, 09:26 AM
 
6,745 posts, read 8,075,304 times
Reputation: 1846
Quote:
Originally Posted by Bette View Post
I am the planner. After hearing of so many acquaintances leaving us this year and then this past weekend, the sudden loss of Tim Russert left NBC virtually unprepared.

Our family depends on this business. If something were to happen to the key person, where would we be? It would be nice if it stayed in the family. There are employees, however, there is one person who has more knowledge than the rest.

It has been thrown in my lap as to the next step. It is a CPA firm and business is consistent. We are contacted by business brokers all the time. Makes you think.

I realized how unprepared we are in case of an emergency such as the above.
I also own a small business. If business is steady, you are profitable, and you like your work, keep it in the family. Learn the business and do not outsource. Get all the knowledge you can from the employees. They may even have some ideas they were not allowed to implement in the past.

It probably doesn't seem like it right now, but you don't know how lucky you are to be profitable in this terrible economy.

Best of luck to ya!
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