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Business Resiliency and Disaster Preparedness

12/19/2022

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Well, it's that that time of year again. Time for some business planning for 2023. I am guessing there are not too many business owners who planned the 2020 pandemic in their business plan. But at least they had a business plan.

​Next week, I'll give you an outline to follow for business planning.

​This week I want to talk more about Business Resiliency and Disaster Preparedness.

​More people are looking at incorporating business resiliency and disaster preparedness. I would love to introduce you to Erika Andresen who can talk with you about doing as much or as little as you need. 


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Erika Andresen
Email:  info@eaasc.com
https://www.eaasc.com/ ​

She loves working with business owners on securing their assets with a plan so they can survive disruptions and thrive in the aftermath. The business will develop a business continuity plan via learning how to do tailored risk assessment and business impact analysis. Erika and her company, EaaS will then work that plan through trainings and exercise creation and facilitation to determine the plan's viability. EaaS leaves businesses better able to resume operations quickly when risk management fails.
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5 Steps to Selling your Business

5/24/2022

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Before I get to the 5 steps, I wanted to reference a great article from the
Daily Herald Business Section on May 5, 2022 by Jim Reynolds of Blackhawk Bank
Succession Planning for Local Businesses: 
https://www.dailyherald.com/business/20220515/succession-planning-for-local-businesses 


Step 1- Business Planning (Days 0-90/ Months 0-3)
  • Understand the owner’s personal, business and financial goals- Sale Readiness Assessment
  • Collect data about the company- Company Information Questionnaire
  • Prepare a detailed business valuation-GLM’s Business Valuation Report
  • Develop and action plan to Prepare the Business for Sale- Succession Planning Approach

Step 2- Pre-Market Preparation (Days 90-180/ Months 3-6)
  • Conduct in-depth industry research: Reference USA & 2018 Business Reference Guide
  • Prepare Generic Executive Summary and Marketing materials about company
  1. General Information Executive Summary (No Business Name or location)
  2. Buyer Nondisclosure Agreement
  3. Complete Executive Summary (Company name and Adjusted Financials)
  4. 3 Way Confidentiality Agreement (To be signed before seeing complete financials)
  5. Complete Company Description
  • Develop marketing plan to sell company- Suggested Next Steps
  • Identify prospective buyers- Reference USA Custom Lists

Step 3- Going to Market (Days 180-270/ Months 6-9)
  • Market company on confidential basis
  • Secure nondisclosure agreements from prospective buyers
  • Schedule and conduct management presentations and site visits
  • Secure Offer to Purchase- qualifying bids or indications of value from buyers

Step 4- Negotiation (Days 270+/ Months 9+)
  • Analyze offers and terms to help client decide best option
  • Manage key relationship with buyers
  • Assist with negotiations of Letter of Intent
  • Obtain final signed letter of intent
  • Coordinate the due diligence process
  • Assist with negotiations of purchase and sale agreement

Step 5- Closing (Days 270+/ Months 9+)
  • Work with attorneys to draft the definitive purchase and sale agreement
  • Help to resolve and open issues between parties
  • Coordinate with seller and buyer on strategic planning issues
  • Close the transaction
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Complete Guide to Selling a Business

4/26/2021

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The most frequent reason given by owners of a privately owned company for considering a sale includes a combination of the following:
  • Retirement
  • Health Reasons
  • Partnership Disputes
  • Divorce
  • Loss of Key Customers or Suppliers
  • Other Business Interests
However, starting a sale exercise is not something your business, irrespective of size, should undertake lightly, and every effort should be made to manage the sale process professionally, and to prepare, or ‘groom’ the business so to facilitate a successful outcome.

This guide has been prepared, based on our proven knowledge and practical experience, to guide owners through the complex phases involved in a business sale. While the content within this guide is comprehensive, we have also presented in a user-friendly style. We believe that this guide can play a significant role in helping business owners like you, deal with the critical issues that will come about during the business sale process.

​Should you have any questions after reading this guide we would be more than pleased to discuss these with you. You will find our contact details at the end of the guide and we look forward to hearing from you!
 
Tom Gosche 
Business Strategist
tomg@goglm.com
630-675-8971
complete_guide_to_selling_a_business.pdf
File Size: 320 kb
File Type: pdf
Download File

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Reporting the Sale of a Business

7/22/2019

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Congratulations, Now that you sold your business, there are reports you need to fill out for the IRS. 

Form 8594 is used to report the sale and purchase of a group of assets that constitute a business. Both the purchaser and seller must file Form 8594 with their own individual income tax return.
On Form 8594, the total selling price of the business is allocated to asset classes using the residual method.
Form 8594 provides the IRS with the following information:
  • The purchaser's depreciable basis in the assets transferred, and
  • How the seller determined gain or loss.
Assets Classes on Form 8594
Form 8594 lists seven classes of assets. For asset acquisitions occurring after March 15, 2001, make the allocation among the following assets in proportion to (but not more than) their fair market value on the purchase date in the following order:

Class I assets:
  • Cash and general deposit accounts (including savings and checking accounts).
  • Does not include certificates of deposits held in banks, savings and loan associations, or other depository institutions.
Class II assets:
  • Certificates of deposit
  • U.S. government securities
  • Foreign currency
  • Publicly traded personal property, including stocks and securities.
Class III assets:
  • Accounts receivable
  • Other debt instruments
  • Assets that you mark to market at least annually for federal income tax purposes.
Class IV assets:
  • Property of a kind that would properly be included in inventory if on hand at the end of the tax year or
  • Property held by the taxpayer primarily for sale to customers in the ordinary course of business.
 
Class V assets:
  • All other assets other than Class I, II, III, IV, VI, and VII assets.
  • Example of assets included in this class:
  • Furniture and fixtures, equipment, buildings, land, and vehicles.
Class VI assets:
  • Section 197 intangibles (other than goodwill and going concern value).
  • Examples include, workforce in place, customer lists, clients lists, patient lists, trademarks, trade names.
  • See the list of section 197 intangibles.
Class VII:
Goodwill:
  • Goodwill generally represents the excess of the price paid for a business over its net asset value (also called book value). It may have the following characteristics:
  • It may be associated with a company's good reputation in terms of the products it sells, the services it performs, and it's standing in the community. Other characteristics of goodwill include:
  • It may be tied to the ability of a business to continue doing business with its existing customers and to attract future customers.
  • It is an intangible asset that may only be acquired as part of the acquisition of a business.
  • It is a section 197 intangible whose value is amortized over 15 years by the purchaser of a business.
Going concern value:
  • Going-concern value is the value attributed to a business entity as an on-going enterprise.
  • Going-concern value focuses mainly on the ability of the company's assets to generate a return on investment not simply goodwill.
If an asset described in (I) through (VI) is included in more than one category, include it in the lower number category. For example, if an asset is described in both (4) and (6), include it in (4).

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Business Grooming Tips

3/25/2019

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You should make every effort to prepare or ‘groom’ your business so it is sold successfully at the first opportunity. While the financial advisors you appoint will work with you to address issues specific to your company, there are a number of general grooming points worth considering (even before you appoint advisors) to maximize the value of your business:

Sales & Profitability: Historically, you may have been setting your prices, and thus your profit margins, at levels designed to create barriers to entry for your competition. If you are planning for a business sale your focus is likely to be short term strategies. It will be time to re-examine your market and customer base to see if higher sales and turnover levels are achievable. If the proposed sale itself is a number of years away, you should consider performing a strategic review of the entire business.

Operating Costs: You should regularly review your operating expenses but this is especially so when preparing your business for sale. You need to identify avenues to reduce expenses without affecting the operational effectiveness of your business.

Profit Trends: Apart from current margins, a purchaser will be looking at profit trends. Buyers are looking to see stable and steady yearly profit trends. Therefore, risky projects should be avoided and longer-term contracts that may prove to be onerous should be fully considered before acceptance. Unprofitable contracts need to be reevaluated and, if appropriate, terminated, as it is quite possible they will be detrimental to the value of your business.

Management Team: The purchaser of your business will be looking to acquire a high caliber management team. It may be worth reviewing your corporate structure to ensure that job titles and role descriptions adequately reflect the contribution that your management team makes to your business. Any re-structure needs finalization well in advance of an anticipated sale. A purchaser may also want assurance that the management team is supportive of your decision to sell or at least that it is likely to stay with the business for a reasonable period post-transaction. You should consider talking to management - how cooperative will they be? You never know, they may be interested in buying the business themselves.

Asset Base: Are there any assets in the business that may be of little or no interest to potential purchasers- e.g. short-term investments, under-utilized property, equipment or perhaps surplus cash? Think about realizing and removing them from the business before the sale. It is also worthwhile having all your property assets valued individually.

Restructuring: If your business has more than one division, some thought should be given to restructuring it into a number of stand-alone entities and perhaps selling these separately. Any such reorganization will have potential tax implications and other complexities associated with it and it will be important to take professional advice before undertaking any such initiative.

Tax Planning: Details of the various tax factors that you need to consider are set out in section 4 of this guide. Initial points to address include making sure that all your Corporation Tax, PAYE and VAT returns and payments are up to date. In addition, any tax losses that your company may have built up over the years may now have a value to the extent that they are available for use by the potential purchaser. Personal tax planning opportunities should be discussed with your tax adviser.

Valuation Expectations: You must have realistic valuation expectations. Valuation is important but do not let it get in the way of securing the sale.
​
Timing: Deciding the best time to sell your business can be a difficult decision to make. Factors to be considered when making this decision include the level of corporate activity in your industry; the state of the economy; changes in sector relevant legislation; and available tax reliefs (e.g. do you have to be a certain age to avail of certain retirement reliefs or pension planning opportunities).
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Banking Alternative- Capital and Advisory Services

10/22/2018

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What is a “Typical Situation” people are in when they realize they need your help?
They are not happy with the performance of their business and need help in growing it, cutting costs, determining a solid strategy, and/or working on developing and implementing proper procedures.

What is something someone might say that would lead me to think of you? 
I need some help, I’m losing business, I’m losing key employees, or I’m just not happy with the performance of my company.

What (Specifically) do you do?
I help companies develop a solid business strategy.  My firm helps companies create and execute solid policies and procedures.  We help effect needed change within an organization.

How do you do it? 
My firm will generate a diagnostic of the business and determine what’s working and what needs to change or be improved.  We will create a strategic plan for the business that is easy to understand.  We then will help the company execute that plan, and we will provide real-time adjustments and positive feedback and direction on a daily basis. 
Our plan is to be able to help companies learn what they need to do to become better, get them to that point, and then give them the tools so that they con continue improving on their own.  If needed, we also lend money to companies if they need working capital to make changes and improvements.

Matching Ideas with Resources: 
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Business Specific Attorney

6/25/2018

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What is a “Typical Situation” people are in when they realize they need your help?
Our client talks about wanting to optimize their tax and estate strategies.

What is something someone might say that would lead me to think of you?
  • "I need to decide what to do with my estate after I am gone,"
  • "I am unhappy with my corporate lawyer,"
  • "I want to optimize my tax strategies."
 
What (Specifically) do you do (3 lines Max)?
Distinguished by a dual focus in both the law and taxation, we are able to provide comprehensive support with: Business Counsel & Advisory Support, Taxation Mergers & Acquisition, Trust & Estate Planning, Administration & Settlement, and Generational Wealth Planning. We approach our clients with the belief that their legal issues, no matter how big or small, deserve the personal attention of an experienced and qualified professional.
 
How do you do it (3 Lines Max)?
We retain a team of professionals with decades of experience advising across a number of circumstances and situations. We have learned that business and personal needs, goals and objectives intersect. Our approach is designed to gather the necessary information, prepare a specialized solution that meets your unique goals and circumstances, confirm your agreement and implement the plan.
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Succession Planning Approach- Quick Thoughts

2/12/2018

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What the business may need to do
  • Productize- What are you best at?
  • Positive Cash Flow
  • Hire Sales Team
  • Stop Selling Everything Else
  • Long Term Plan for Managers
  • Find a Business Broker
  • Tell the Team
  • Convert Offer to Deal
What I may need to Do
1) Work to Recast the Financials (need 2-3 years Financials)
  • Develop a Valuation
2) Write 3-year Business Plan
  • Long Tern Vision
  • RE-discover Strengths
  • Re- Develop Customer Acquisition Strategies
  • Get the Business to the Point where
  • Profits are up,
  • Business Runs more efficient
  • Overhead is Down
3) Develop all information in a “Book” (Valuation) of the Business
4) Develop a list of Potential Buyers
  • Strategic and Financial
5) Field Offers
6) Close

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Banking- Formal Valuation

8/21/2017

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Typical Situation: Our client is thinking of selling the business. Maybe they are going through a divorce or IRS situation. GLM Can do a business Valuation for the purposes of determining a sale price or as a gauge of business growth. GLM cannot do a formal Valuation for the purposes of law and IRS.
 
When you hear a business owner say:
·         “I am looking to sell my business”
·         “I am looking to make a strategic acquisition”
·         “I am looking to grow my business and need help in raising capital”
·         “I need to get my business valued”
·         “I am looking to gift shares of my business and need a valuation”
 
Valuation Service Firms provide business valuations, estate/gift valuations and value everything outside of real estate and hard assets. They can also help business owners to sell their business or with raising capital.
 
How they Work They will ask questions about the ownership structure, how the business operates will look at the financial statements and forward looking projections.
 
Matching Ideas with Resources:
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Succession Planning- Funding

8/14/2017

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Typical Situation: Our client is talking about their partnership and succession planning. Maybe another business owner they know died or became disabled and their company is floundering because of it. They are trying to figure out how to figure out how to disperse an estate equitably when not all the children are involved in the business. Their company has grown since they originally drafted their buy sell agreement and want a review.
 
When you hear a business owner say:
·         “My taxes are too high.”
·         “I would hate to have to deal with my business partner’s spouse. (What happens if my partner dies or becomes disabled?)”
·         “What’s stopping my key employee from starting a business across the street?”
 
An Insurance Benefits Advisor protects business owners, their families and their businesses from the financial catastrophe that death or disability can cause. Whether it happens to a business partner, a key employee or themselves I make sure the financial impact is as minimal as possible.
 
How they Work First, they will do a deep dig to find out what the concerns are and other possible trouble points. Next, they educate on the possible solutions. Then once the client has the information needed to make a decision they implement the solution from one of our many carriers. They provide peace of mind and tax-savings ideas to business owners and successful individuals through qualified plans, life, annuities, disability, health, Medicare and long term care insurance.
 
Matching Ideas with Resources:
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    GLM's Blog

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    Tom Gosche

    Tom is the Business Development Manager for GLM. If you are interested in learning more about GLM's services, contact him:

    630-675-8971
    tomg@goglm.com
    View my profile on LinkedIn

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GLM, Inc.
 
300 N. Martingale Rd., Suite 750
Schaumburg, IL 60173-2097
 
Phone: (847) 884-1781
Fax: (847) 884-1830
E-mail: info@glmfinancial.com
Website: www.goglm.com 

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