The lack of a business transfer plan is costing Quebec SMEs dearly. While many entrepreneurs are planning to retire and sell their companies, they are facing a blind spot. Without a transfer plan in their hands, they can see the value of their company go down. In this article, you’ll discover some useful solutions to help you prepare for your transfer.
More and more business transfers in Quebec.
In the coming years, a large number of companies will change hands. Between successions, sales or acquisitions, transactions are expected to increase. However, 60% of SMEs that will be for sale in the next 10 years do not have a transfer plan. This can be costly if nothing is done or planned!
According to the article in the Montreal Gazette, when business leaders decide to sell, many of the decisions are sudden. Some sales occur in short order, leaving little time for planning. Here are some reasons for this:
- A personal reason;
- Health problems leading to a stoppage;
- Competition is becoming increasingly fierce;
- An urgent desire to be retired.
How do you implement a business transfer plan?.
Sometimes you can imagine taking a large amount of money out to sell the company, but some owners don’t have that opportunity. They did not prepare properly. So if you are an entrepreneur and you are considering selling your company, it is recommended that you have a business transfer plan. Begin a few thoughts to help you achieve your goals:
Set a price and an ideal sales date
Create your ideal scenario by trying to be realistic where possible. For example, you could say: ““I want to sell my small business in 2025 for $5 million.” Once this ideal is clarified, consider: What do I need to do to get there? This will make it easier to implement your business transfer plan. If you need help, there are professionals who can help you. Accountants, tax professionals, business lawyers, insurance and investment dealers are some of the key people who can advise you on this. For example, they can ensure that your rights are respected, that your property is optimized, etc.
Identify succession or type of potential buyers
Who do you want to sell your company to? Is it a family member, a loyal employee, a large corporation, an investor? There are multiple buyer profiles; think about the answer to see what action to take in your plan. For example, if you are thinking of selling the company to a new generation, make sure you have a realistic time for knowledge transfer and provide leadership.
What can affect your selling price?
Factors positively or negatively impact the value of your business. You can identify them and implement solutions in your business transfer plan. You will certainly influence the value of your company. So if you want to take advantage of the sale, think about planning three key areas:
- Workforce: The key is to have a sufficient and skilled workforce to meet demand. For example, make sure to identify key people. Do you know who they are? This includes employees in value-added positions, employees with key skills for profitability, etc. Avoid being the only person with technical knowledge. This could make the sale more complex!
In addition, it is advisable to know your turnover and retention rate. For your information, high turnover results in high costs for the business, which can be a negative point for a buyer. To remedy the situation, try to find out why employees are leaving, where the risks associated with human resources are, and plan an action plan to improve your retention!
- Technology lag: Technology is lagging behind in Quebec’s SMEs. From a buyer’s perspective, this is a risk. There are concerns about outdated technology, lack of automation and lack of processes. These factors slow productivity and are a major competitive disadvantage. Turning to technology, stopping the status quo and automating is important right now if you’re in that situation. Be innovative and perform well. Integrating these aspects into your business transfer plan is a great option! A business analyst like WizeBA can help you with this.
Entrepreneurs: What do we do now?
The business transfer plan is becoming better known and adopted by Quebec SMEs. Often, contractors do not have the tools or knowledge to implement such an action plan for a future sale. Some are caught in the emergency room and operations, others simply do not have time to step back and plan the sale. Others who are passionate are struggling to retire. For any reason, having a business transfer plan is great for you. You have worked hard to establish and / or grow your small business, make sure you take advantage of this investment of time and money. You deserve it.
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Entrepreneurs: Do you have a business transfer plan? Here’s how to plan your business transfer.