1. Talking when you shouldn’t.
This may sound obvious but when you sell a business it’s more important to listen and ask questions than continually talk to try and “sell” the business. Often there is more information in hearing the type of questions being or not being asked and the follow up comments. If you are the only one talking that means there is little interest or other negative perceptions that need to be removed so the buyer is comfortable moving forward.

2. Failing to use common sense.
Selling a business rarely happens to the first buyer that comes along. There is a need to reveal information but only after the buyer provides enough information to show they are suitable buyers. This is one of the main reasons to use a broker to sell your business. They are trained and have the emotional detachment to ask appropriate questions to know not only if the buyer is truly serious but more important, qualified to be able to buy, finance, manage and run the business.

3. Poor communication and not listening.
A motivated buyer who is serious about buying your business will ask a series of questions. Often it can be the same question but asked a different way. They are looking to hear a consistent answer and therefore develop confidence in buying the business. For example, an important question could be how many hours do you, as the owner, work in the business? The same question a different way, how many hours each day do you work and is that Monday through Friday or do you work on the weekend? Or another approach, does your spouse work in the business and if so, how many hours do they work and are these hours when you work?

4. Giving worldly advice on subjects or matters not relevant to the transaction.
Politics, sport, religion and how best to run a business are not conversation topics to have with people you want to sell or buy something from. Respect the sole reason that is bringing you together with the buyer. Absolutely keep it friendly and honest.

5. Failing to get expert advice or assistance when it is required.
If you do your own tax returns, file your own legal papers, do your own financial planning, do your own negotiations, are a sales and marketing guru and have plenty of time to waste by people who don’t mind wasting your time; then selling your business without expert help may be a good option…until something goes wrong.

1. Do I need to create and use a team?
Putting together an exit strategy and then executing it is a team sport. Don’t try and do it on your own.
Members of your team to consider include:

Accountant or tax agent
Personal financial planner
Psychologist or Business Coach
Insurance expert
Attorney
Business Broker

Are you worried about the cost? Get it right and it won’t be a cost but an investment.

2. Determine your goals and objectives before moving forward.
Be patient with yourself; Be patient with those around you.
How long did it take you to get here and now you are here – what’s the rush? Taking action before you determine your goals and objectives can waste time, waste money, lets things that can’t be undone and/or cause unintended damage. Once you determine your goals and objectives – take action.

3. What are the tax consequences of selling the business?
Are these tax consequences manageable or not?
Talk to a tax agent to understand the implications and what strategies can be used to minimize taxes.

4. How much income do you need to maintain your lifestyle?
Talk to a personal financial planner to make sure you can achieve your goals. If you can, what are you waiting for?

5. Does the fear of spending the rest of your days playing with your grand kids keep you awake at night?
Talk to a psychologist or business coach to plan your future. Get that degree you always said you wanted to get, learn to fly or scuba dive or be a mentor or join a board or become an advisor or coach a new business owner or master public speaking or leap…then look.

6. What would happen to the business owner if there was a medical or worse, fatal incident?
Talk to an insurance specialist and put coverage in place that protects the business owner and any immediate family that need to be taken care of.

7. Are legal matters up to date and decided?
Talk to an attorney to make sure all legal matters are fully understood and addressed. Family trusts, wills, powers of attorney etc require refreshing… just in case.

8. Is there a natural heir to the business or is selling the business or finding a new owner required?
Talk to a Business Broker to explore the above.

Is there a natural owner to take over and run the business?
If the business has more than one owner, what should be discussed and implemented with any ownership changes?
Can this be done to minimize disruption?
If not, what’s the end game and is professional help needed?
What is the date to complete all the changes?
How much is the business worth?

9. Establish a deadline and take action
Now there is a clear plan it’s time for action.
Create an advisory team to execute the plan and hold your team accountable; especially yourself.
Consider a leader to execute the plan – yes – delegate
Conduct exit planning meetings to review schedules, assigned tasks and new information and ideas.

The success of an exit strategy for a business owner starts with the business owner. If the above are discussed, executed and aligned, the rest will take care of itself.

The Patient Protection and Affordable Care Act (the Patient Protection Act) was signed into law by President Obama on March 23, 2010. The Reconciliation Act has now passed the Senate and the House and will be signed into law by President Obama sometime during the week of March 28, 2010. Not withstanding the fact that amendments to the Act will likely occur, some minor and some significant, it is important for small business owners to understand the tax components of the Act which apply to them as it currently stands. All small businesses will be impacted with the following information hopefully of assistance to those businesses in the local Sacramento area.

For owners of small businesses and their workers, the recently enacted health reform legislation has some key provisions to pay attention to. The major ones include: tax credits; excise taxes; and penalties. But whether a business will be affected by them depends on a variety of factors, such as the number of employees the business has. This article provides an overview of the key tax provisions in the new law with the biggest impact on small business.
Tax credits to certain small employers that provide insurance. The new law provides small employers with a tax credit (i.e., a dollar-for-dollar reduction in tax) for nonelective contributions to purchase health insurance for their employees. The credit can offset an employer’s regular tax or its alternative minimum tax (AMT) liability.

Small business employers eligible for the credit. To qualify, a business must offer health insurance to its employees as part of their compensation and contribute at least half the total premium cost. The business must have no more than 25 full-time equivalent employees (“FTEs”), and the employees must have annual full-time equivalent wages that average no more than $50,000. However, the full amount of the credit is available only to an employer with 10 or fewer FTEs and whose employees have average annual full-time equivalent wages from the employer of less than $25,000.

Years the credit is available. The credit is initially available for any tax year beginning in 2010, 2011, 2012, or 2013. Qualifying health insurance for claiming the credit for this first phase of the credit is health insurance coverage purchased from an insurance company licensed under state law. For tax years beginning after 2013, the credit is only available to an eligible small employer that purchases health insurance coverage for its employees through a state exchange and is only available for two years. The maximum two-year coverage period does not take into account any tax years beginning in years before 2014. Thus, an eligible small employer could potentially qualify for this credit for six tax years, four years under the first phase and two years under the second phase.

Calculating the amount of the credit. For tax years beginning in 2010, 2011, 2012, or 2013, the credit is generally 35% (50% for tax years beginning after 2013) of the employer’s nonelective contributions toward the employees’ health insurance premiums. The credit phases out as firm-size and average wages increase. Tax-exempt small businesses meeting these requirements are eligible for payroll tax credits of up to 25% for tax years beginning in 2010, 2011, 2012, or 2013 (35% in tax years beginning after 2013) of the employer’s nonelective contributions toward the employees’ health insurance premiums.

Special rules. The employer is entitled to an ordinary and necessary business expense deduction equal to the amount of the employer contribution minus the dollar amount of the credit. For example, if an eligible small employer pays 100% of the cost of its employees’ health insurance coverage and the amount of the tax credit is 50% of that cost (i.e., in tax years beginning after 2013), the employer can claim a deduction for the other 50% of the premium cost.

Self-employed individuals, including partners and sole proprietors, two percent shareholders of an S corporation, and five percent owners of the employer are not treated as employees for purposes of this credit. Any employee with respect to a self-employed individual is not an employee of the employer for purposes of this credit if the employee is not performing services in the trade or business of the employer. Thus, the credit is not available for a domestic employee of a sole proprietor of a business. There is also a special rule to prevent sole proprietorships from receiving the credit for the owner and their family members. Thus, no credit is available for any contribution to the purchase of health insurance for these individuals and the individual is not taken into account in determining the number of full-time equivalent employees or average full-time equivalent wages.

Most small businesses exempted from penalties for not offering coverage to their employees. Although the new law imposes penalties on certain businesses for not providing coverage to their employees (so-called “pay or play”), most small businesses won’t have to worry about this provision because employers with fewer than 50 employees aren’t subject to the “pay or play” penalty. For businesses with at least 50 employees, the possible penalties vary depending on whether or not the employer offers health insurance to its employees. If it does not offer coverage and it has at least one full-time employee who receives a premium tax credit, the business will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment. So, for example, an employer with 51 employees who doesn’t offer health insurance to his employees will be subject to a penalty of $42,000 ($2,000 multiplied by 21). Employers with at least 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit will pay $3,000 for each employee receiving a premium credit (capped at the amount of the penalty that the employer would have been assessed for a failure to provide coverage, or $2,000 multiplied by the number of its full-time employees in excess of 30). These provisions take effect Jan. 1, 2014.

The “Cadillac tax” on high-cost health plans. The new law places an excise tax on high-cost employer-sponsored health coverage (often referred to as “Cadillac” health plans). This is a 40% excise tax on insurance companies, based on premiums that exceed certain amounts. The tax is not on employers themselves unless they are self-funded (this typically occurs at larger firms). However, it is expected that employers and workers will ultimately bear this tax in the form of higher premiums passed on by insurers.

Here are the specifics: The new tax, which applies for tax years beginning after Dec. 31, 2017, places a 40% nondeductible excise tax on insurance companies and plan administrators for any health coverage plan to the extent that the annual premium exceeds $10,200 for single coverage and $27,500 for family coverage. An additional threshold amount of $1,650 for single coverage and $3,450 for family coverage will apply for retired individuals age 55 and older and for plans that cover employees engaged in high risk professions. The tax will apply to self-insured plans and plans sold in the group market, but not to plans sold in the individual market (except for coverage eligible for the deduction for self-employed individuals). Stand-alone dental and vision plans will be disregarded in applying the tax. The dollar amount thresholds will be automatically increased if the inflation rate for group medical premiums between 2010 and 2018 is higher than the Congressional Budget Office (CBO) estimates in 2010. Employers with age and gender demographics that result in higher premiums could value the coverage provided to employees using the rates that would apply using a national risk pool. The excise tax will be levied at the insurer level. Employers will be required to aggregate the coverage subject to the limit and issue information returns for insurers indicating the amount subject to the excise tax.

Continue monitoring regulatory changes. Debate over health care reform, and in particular the recent Act, will continue. Be sure to monitor ongoing health care issues as it is very probable that the new law will eventually be amended in significant ways.

If you need additional information, have questions, or need assistance navigating the sea of business confusion, call your Business Transaction Strategist, Monty W. Walker at (940) 322-5086.

As the entrepreneur looking to sell and transition out of being a business owner, it’s not a quick process. It can even drag on if the buyer wants the seller to continue in an active role in the business in some capacity. At the end of the day, however, it all needs to make sense to the entrepreneur and the best way to do that is to build a transition plan.
What should be included in the transition plan? A transition plan can overlap with an Exit Plan. An exit plan is essentially a process to exit business ownership. A transition plan is a strategy to manage the protection and eventual transfer of assets or stock in a proactive, tax efficient manner. Essentially an entrepreneur can have 5 types of assets. These are Personal Property, Real Estate, Business Interests, Insurance Plans and Employee Benefits.

Personal property includes savings, stocks, bonds and personal effects. Real estate includes both residential and commercial property. Business interests include the business legal entity such as a corporation, partnership or LLC. Insurance plans include life, health and annuities. Employee benefits include pension, 401(k), IRA and stock options.
Creating a Transition Plan touches all aspects of an entrepreneur from the obvious personal financial need and therefore personal security to matters such as tax and perhaps not always recognized, the emotional needs of the entrepreneur. At all times the emotional needs of the entrepreneur are always exposed. Things like divorce, health issues, family issues, personal safety and disability are always looming. The pressure of the business from customers, suppliers, landlords, employees, government agencies, lenders and a myriad of others constantly keeps an entrepreneur thinking, planning and reacting.

When transitioning the ownership of a business there are many options. An outright sale to a buyer is one of the most obvious but there are 4 other possible options. These are selling the business to the employees through an ESOP program, sell through a Charitable Trust, transfer to a family member and sell to a partner. In certain circumstances, the owner could take the business public and sell his interest via an Initial Public Offering or IPO but most businesses would not meet the criteria including handling the associated costs.

A quality Transition Plan is all about success. Its ultimate goal is to ensure that the business and the owner moves from one state to the next. The best analogy I like is that it’s like juggling two snowflakes. Every snowflake is unique because of temperature, the absence or inclusion of a piece of dirt, the number of water molecules, spins of electrons, hydrogen and oxygen etc. So too is a business and its owner. To preserve and maintain the business and protect its uniqueness it must be treated carefully and properly. The same applies to the owner. The owner can live without the business and the business can live without the owner as long as proper care and attention are given to each so when the next owner comes along with their uniqueness, like another snowflake, it has to make sure it can mesh with the business and both be successful.

If the entrepreneur loses the hunger to learn, be the vision and leader of the business, it’s time for a change. Because a business is so dynamic, it requires leadership. If this doesn’t happen it will shrivel and die. Capital, time and energy must keep moving otherwise it will fade away.

If the entrepreneur leading the business recognizes it’s good business to plan for a change of ownership and therefore handle the matter in a proactive way, the chances of success are so much greater and so are the chances of getting the highest price possible. There is a very simple reason for this. The buyer of a business looks at and includes many things in their decision making process. However, there are basically two ingredients, the cash flow the business generates and its potential to generate more cash flow in the future. If either one is missing, the buyer will require a discount on the purchase price of the business. If both are missing, it will be a business extremely difficult to sell.

As the entrepreneur works through their decision to sell the business, a critical component that will help them do this successfully is to start putting into place things the entrepreneur will move to after they sell the business. It can be intriguing to watch older entrepreneurs work through the process of selling a business, handling all the negotiations and questions from the buyer and just prior to signing the documents to transfer ownership to the buyer, decide not to sell. The reason they decide not to sell is because the appeal of cruising the world or playing golf 5 days a week or looking after the grandchildren all of a sudden doesn’t have the same appeal as going to work each day. So a good exit plan for an entrepreneur as its first priority needs to have a clear strategy detailing to what the entrepreneur is going to move.

The next ingredient is to make sure a good team is in place to advise and protect the transition of the business. The team can include accountants, business attorney’s, financial planners, lenders and a business broker to market and handle all buyer inquiries about the business. The most important ingredient to the entrepreneur is trust. If the entrepreneur does not have a trusting relationship with any of the people on their team, they need to be replaced.

Each entrepreneur will have a different risk tolerance to different aspects of the transaction. The current market conditions require a seller to be part of the finance of the transaction. Third party lenders can bridge the gap between the buyer down payment and the seller note, but the seller has to be willing to be in a second position on the loan.

Each exit plan will differ for each entrepreneur. My golden rule is that when selling your business, put your feet in the shoes of the other party and see things from their perspective. This is true not only for the buyer who has no history of the enterprise, has to put down a sum of money they may never see again, has to take the emotional risk of not only being good enough to own and operate the business as well as the current owner, but learn as much as possible as quickly as possible or suffer the embarrassment of it all crashing down on them.

Part 13 and the final article in this series looks at the Transition Plan and how it completes the role and responsibility of the entrepreneur.

A good form of insurance but one only the business owner can handle is creating a Disaster Recovery Plan. It doesn’t sound very attractive and it doesn’t sound like a good use of time but let’s consider the following.
If your business was hit by a severe storm, hurricane, truck or car that was out of control, flood, tornado, lightning or hail, earthquake, disease or pests, unusually high temperatures that caused damage to the building your business is in or some other unpredictable occurrence, how would this affect your business? What about a building fire, hazardous materials incident, sabotage, a loss of key staff or power disruption? Perhaps ask the same question in a different way. If something occurred to damage the business and you were out of action for a week or so, could your business survive?
The point of all this is to put a Disaster Recovery Plan together.

With each disaster there are three phases; Response, Mitigation and Recovery. With a defined Disaster Recovery Plan, each of the three phases means there is less downtime in each phase and could mean the difference in saving or losing the business.

Here are some important ingredients to include in your Disaster Recovery Plan.

1. Make sure everyone is on board with the plan and understands their role.
2. Create and train a critical management team who can plan, check and execute.
3. Document any hazardous or business critical items so a mitigation strategy is developed and agreed upon so response time is kept to a minimum and its laser focused on the critical areas.
4. Create, document and test any mitigation strategies so the business can return to normal operation as soon as possible.
5. Test, evaluate and maintain; and do this every 3 months.
6. Make sure you don’t forget step five.

This article is not an advertisement for insurance but there are many insurance products available. These include Property insurance, Flood insurance, Business Liability insurance, Workers Compensation insurance, Business Interruption insurance, Umbrella insurance, Errors and Omissions insurance, Disability insurance and Employers Liability coverage.

All disasters, by definition, only allow a certain number of things to be done in a window of time. The first thing to therefore establish is priorities and these should be people first, business criticalities for the future of the business and then things. First and foremost, people include the owner’s immediate family, the employees and customers. If home or business neighbors need help then that too should be included. Help should include knowing where and when to send people out of the danger area (don’t send them to another danger area) including an agreed place and time to all meet, having a list of readily available contacts including an agreed means of communications and tools, having the appropriate medical equipment including medications if necessary and a list of contacts to emergency centers so they can be contacted for updates. It sounds basic, but the need to avert panic and poor decisions needs to be top of the mind.

Finally, copies of all critical records require a systemic and deliberate process. If paper records are copied and archived in a different location why not make an extra copy or two and archive them elsewhere. Computer data and a deliberate back up strategy should now be part and parcel of any small business that uses computers. Online back-up services are available for little to no cost and work very well.

Disasters cannot be avoided. History repeatedly shows us that we choose to ignore disasters at our own peril. Good management includes preparing for a disaster and strategies are readily and easily available. Include making a Disaster Recovery Plan as part of your business assets. If you have one in place; congratulations! If you don’t have one, create a deadline and make sure it gets done. Consider putting a team together and have them handle all the pieces and bring a final report back to you.

At some point, all business owners will exit their business. It’s just a question of whether it’s in a wooden box and is therefore an unplanned event or on a cruise ship as a planned event.

Part 12 of this article series looks at the importance of an Exit Plan and how to put it together.

The first area to look at is the financial statements of the business. The first and most readily used is the Profit and Loss Statement as it shows the income and expenses of the business with hopefully the income greater than the expenses. Just as important, however, is the Balance Sheet as this document shows the wealth of the business. With an up to date profit and loss statement and balance sheet, a trained business appraiser can then calculate what the owner of the business could expect to get if they decided to sell it on the market.

In addition to the financial statements, the next performance area to measure and manage can be simple business metrics that include the number of incoming calls to the business (and this can be broken down into times of day if call volume is an important metric,) the number of hits to the website, volume of email, volume of faxes and volume of orders placed on-line (if important.) Depending on the business, the total number of orders placed and/or the number of orders placed by each sales person. In simple terms, sales can generally be easily measured. It’s important that the sales team is clear on sales targets and agree how they are to be measured. Sales people are motivated by getting results. Make sure the results are measured accurately, consistently and fairly or sales people will become de-motivated; which is obviously the complete opposite from what you want to do. It’s important to start by building Key Performance Metrics for your business. Don’t be afraid to change and add other metrics as they are normally easy to isolate and therefore count.

Make sure all metrics are counted monthly and as many data points shared with everyone in the business as possible. Celebrate successes and ask the team for suggestions when the performance isn’t acceptable.

The next aspect to a Performance Plan for the business and something not always done is an annual performance review. There are different approaches to this topic; some are personal preference. For example, some businesses tend to link the annual performance review to also a salary review. My preferred strategy is not to link them. My reason for this is that I don’t think they are linked. Compensating someone on performance is important. However, the good performance of one person does not always mean the business can afford to pay as collectively the business may not be performing well enough. The argument goes that incentives should include as many workers as possible so if they are successful so too will the business, but you can have a top performing employee that is bring in the best sales for the business but his demeanor or attitude to co-workers may not be acceptable.

Therefore, how do you financially reward a top performer during a meeting and then point out behavior or communication problems. Rewarding people for sales is great however, you will lose any goodwill from acknowledging and rewarding great sales and then bringing up negative issues.

If the performance of each employee is measured with an Annual Performance Review an extension of that is to include feedback from the co-workers at the same level as the employee. This is called a Peer performance review. It can be controversial as someone may choose to denigrate the performance of a co-worker they don’t like. So there are risks. However, it can provide constructive results if managed correctly.

A best practice for a Performance Review is asking an employee that reports to a manager their opinion on the performance of the manager and how the manager could do things better. This is called a Management Review. Once again this approach can have a downside but it can enable a business to grow and be internally stronger if open and honest communication is part of the business culture.

The final item to consider is your performance as the business owner. Not every owner has the time or desire to put such a process in place, but if you want your business to grow and have a healthy business environment I think it’s one of the best means to enhance the success of the business. Depending on the size of the business, the Owner Performance Review can be done by hiring an outside consultant. An alternative suggestion is to do it by anonymous survey but this approach reduces the effectiveness as it restricts the answers that can be given and doesn’t allow an exchange to clarify things.

There is a business axiom that says “If you can’t measure it, you can’t manage it.” The Performance of a business can mean the difference between success and failure. Most businesses do not fail overnight. They decline gradually, with often the decline picking up steam towards the end. A good Performance Plan will provide warnings that if measured and managed will allow corrective action to be taken in time.

Part 11 of this article series, explains the importance of a Disaster Recovery Plan. Most businesses don’t have the time to put this together. That can be a mistake and this article explains why.

How does this affect our business? There is no question that data including audio and video are exploding online and helping sell more goods and services. Hand held devices such as iPhone’s and Blackberry’s are growing in popularity, devices that track the GPS to give us driving directions are here to stay. We therefore, if we own and operate a business, need to ensure we use technology how it was designed and this is as a tool to help us be more productive.

To make technology work for us in our business we need a plan. There is no point adding a new device to the existing technology in the business if it won’t work. You can buy the latest piece of Windows compatible software and try to install and run it on a MAC but if the MAC doesn’t operate the Windows software you are done. Similarly, if your computers are running Windows 2000 server software and the hardware breaks and needs replacing, you have to make sure the replacement hardware will work in the old server and the software.

So what goes into a Technology Plan? A good starting point is a breakdown by make and model number of each of the pieces of hardware in the business. You need this data for tax purposes anyway and it is necessary. This information should include any devices that are specifically used and taken out of the office by any employee. If that employee leaves, you obviously want the item returned for their replacement in good working order and condition, all the data on it. Your technology plan should also include how often the data is to be backed up, where copies of purchase receipts and warranties are to be stored in case the machine breaks down and needs to be replaced or is stolen and a replacement machine needs to be bought and replaced urgently.

A technology plan also needs to clearly outline for all employees how they can and cannot use the business technology. If the use of Social Network Marketing sites like FaceBook, LinkedIn or Twitter are not allowed, then that needs to be communicated. It could be this ban applies to some positions but allowed for others. For example, it may not be a good use of time for the accounting, technology and operational employees to use these media but it may be encouraged or indeed part of the sales and marketing plan to use these technologies. Technology is not simple and straight forward. It does require discussion, the creation of policies but also review of these policies.

Another important component to technology which is sometimes overlooked is the need for training. Businesses in the technology are constantly competing to maintain and increase market share. One of their most important strategies is to deploy new and better hardware and software than their competitor. This constant change of products means employees that use these new and upgraded products, to remain efficient, need to be trained and kept up to date.

To make sure the technology plan is kept relevant and up to date, consider having one primary and one secondary person responsible. Both people need to live and breathe technology. Their responsibility is to keep the technology plan current, but also escalate problems and just as importantly, relevant new ideas that will help the business. As the owner of the business, if you delegate managing the technology to another employee, make sure you understand the difficulties they face staying on top of it all. Technology is supposed to serve us and the business. Because of its constant changes and oftentimes being deployed before it is truly ready for the market it can be a bear.

Measuring the performance of the business is the role of the Performance Plan. Part 10 of this article series looks at the need to score and then tweak so the business knows its success meeting annual financial goals.

Chances are you have a list of projects and tasks you want and need to do. It probably doesn’t include answering phones, sending and receiving emails, reading articles and newsletters, attending conferences, staying on top of compliance items that affect your industry but numerous day to day activities that lead most entrepreneurs at the end of the day to say “Where did the day go?” And that’s the point of a Productivity Plan.

A Productivity Plan is an attempt to put some system into each month, week and day. Whether you are the President of the United States or the unemployed person looking for a job, we all have exactly the same amount of time in a day. While we may not always be able to control who we spend our day with, we can control how we spend it. For example, do you know how much time each day you spend on email? Do you respond to each email as it arrives? If so, you are not being productive. An email is a non urgent means of communication. If it was urgent you would be using the cell phone or other telephone line. The goal of a Productivity Plan is to plan and manage your day, firstly, so you enjoy it and secondly, so you get the important tasks done while the less important tasks wait. Closing down your email so you answer each email in a window of time and then again in the afternoon allows you to be more productive…which is what a Productivity Plan is all about.

You generally work to a month as it coincides with a financial period that most businesses follow where the book-keeper or financial analysts close out the month in preparation for the next month.

What other areas can I address to remain as productive as possible? The starting point is to make a plan each week. You may prefer to set aside a little time to do this late Friday afternoon and therefore plan for all of the next week or you may prefer to do this first thing Monday morning.

Deciding what tasks you need to do in your business will vary greatly from another persons. Not only because you are in different businesses but also because you could be in different industries, and different positions but also at different stages of a life cycle of the business.

If you want some help with what productivity tasks to accept, look at your normal work habits and decide how they can be improved, the tasks that must get done that slows down others, and even consider what you avoid doing or spend too much time procrastinating over. This is where you can improve your productivity.
The best option is to either write your plan in a word processing document or a spreadsheet. Making a written record and spending the time to define what needs to be done is the first step towards success. Another important task is to make sure you allocate a priority – A for urgent, B for needs completing within a reasonable time and finally C for non urgent. The labels I have used are simplistic but they really need to be tweaked for your own situation.
Finally, a Productivity Plan is not about measuring results. A Productivity Plan is about defining AND agreeing what needs to be done with what urgency. Measuring the results of your Productivity Plan is important, but that’s covered by a Performance Plan; which will discuss at another time.

Part 9 of this article series looks at a Technology Plan and how this fits in with the success of a business. Technology is now a key component to most businesses; having it as a tool and asset rather than a drag on the business is critical.

A key way this would help a business transition from a seller to a buyer would be if the seller used a Management Plan. What you may ask is a Management Plan? From my perspective, a Management Plan is where all the critical areas of a business are summarized so if the owner of the business wins the lottery and never wants to work another day in their life in the business and not come to work tomorrow, the business will survive and grow.

What are some things to include in the Management Plan? At a minimum the Management Plan needs to include a summary of key business information. This includes the following:

1. A current and monthly updated summary of all the employees in the business. The rule should be that if any employee needs to be contacted, their information should be available in less than one minute. This information needs to include emergency contacts of each employee, if they are willing to provide it and your State government agency allows you to collect it.

2. A current and monthly updated summary of all suppliers. All suppliers may be too much but at least the suppliers that supply any critical materials or provide more than 5% of the company materials.

3. A current and monthly updated summary of all business support services such as the CPA, attorney(s), financial planner(s), landlord, lenders, government agencies in case any are needed urgently.

4. A critical document that would help any buyer is seeing the business Training Manual. Again this document should be kept up to date and break down each of the current positions of the business. If the business doesn’t currently have this document, start creating it. It’s very easy to do. Have the current person encumbered with that job write down what they do. This is then presented to another member of the business with the instruction to execute what’s provided. If they can do it then the jobs done. If they can’t, it goes back to the person who wrote it for re-writing. If some employees don’t want to write the document as they are concerned they will be let go because anyone now knows how to do their job, hire a student from a local college to come and write things up or hire a technical writer.

5. In addition to the Training manual, put together an Operations manual. Michael Gerber is the master of written procedures. He’s written numerous books including The E Myth and The E Myth Revisited. Very simply, Michael Gerber believes that being a true entrepreneur is being able to take an idea and break it down and writing to the point where each person in the enterprise clearly knows what they need to do to collectively make the enterprise successful.

This is the purpose of the Operations manual; to clearly state the business process to achieve an outcome. Would you like an example? Let’s go with the example of a fast food restaurant that sells hamburgers. Let’s choose the person that makes the fries. The Operations manual would break down each step of that process. It starts with where to get the fries, what to do when the quantity of fries in the storage area gets to a critical point and what to do to order more; what temperature they should be stored. The next steps would detail what temperature the oil needs to be to cook the fries, for how long and in what container. Now detail what to do with the fries when they are ready, how much salt to add and in what container to place the cooked fries. Where the containers are stored and what to do when you reach a minimum threshold. You can do this in more detail but the beauty is that once this is done, it only needs to be checked say monthly and now on a consistent basis you can cook and deliver the best fries in the world.

It may seem like a lot of work putting these things together. These suggestions are the tip of the iceberg. What else can you document to make your business easier to operate? Using technology can make doing this so much easier. And remember to make sure you have a backup so all your hard work is not lost.

The most important reason to do this is that by creating this Management plan, your business will be of more interest to the right business buyer. In real estate, there is a rule called the principle of comparison. In simple terms it says that when a buyer is looking to buy a house, they will buy the best option not only on price, but also comparing it to other houses for sale in that area. If the buyer wants a 3 bedroom, 2 car garage, 2 bath house in a specific school district and they have 3 to choose from, they will not necessarily make their final decision on price but it could be features, for example, because one has a swimming pool… or not. The bottom line is that a strong and clearly laid out Management Plan adds value to a business being sold.

Part 8 of this article series looks at the value in creating a Productivity Plan and its importance to defining what and how things need to be done so the business is successful.