Your Business - An asset?

[baileyuph]

Is your business run with the vision that it will be an asset when time to retire?

Needless to say, like any business the ideal is to be creating an asset, something that can be sold for cash or money can be derived from the business that you own.  Be wise to accumulate an asset from all the efforts - right?

The real estate, on which it sits, is one part of it but developing running the business to have a value and can be sold, is the focus. 

If a value is being created, how did it happen?  This could be of interest to several - one would think?  How did or can one make it happen?

Any thoughts/ideas/efforts working out there..........like to hear about it.

Doyle
 

[SteveA]

I've thought about this for years and the answer isn't simple.  I hire folks as helpers and have my Son's to fill in here and there but I've never believed a hired worker would do my job as good as I would. I've always worked at my job as best as possible to create new business so my name is the asset.  I was afraid that hiring would diminish the quality of work and although I'd build a saleable business I didn't want to become a craftsman with just an OK reputation. 
Therefore other then real estate when I'm done the business is done - I didn't built a company that runs w/employees.
No complaints here - it just wasn't for me.  Had my Son's wanted this career - different story.
It's a good topic Doyle -  we can continue regarding the stress and expense employees bring to the table - it's not for everyone -
SA

[gene]

Is your business run with the vision that it will be an asset when time to retire?

No.

like any business the ideal is to be creating an asset, something that can be sold for cash or money can be derived from the business that you own.

I disagree. Many small business owners, sole proprietors, (the majority of small business owners I think), either do not want to grow such a business, or they are not capable of doing so. They can still achieve a very successful business career.

If a value is being created, how did it happen?

In the book The E Myth Revisited, Gerber talks about the Entrepreneur, the technician, and the manager. A business that can be sold for cash or money is one where the owner has folks working as the entrepreneur, as the technician, and as the manager.

How can you tell if you have a business that has value beyond the owner? Take off work for 4 weeks and when you come back if your business has continued to make as much money as if you had been there, then you have something of value that others may be interested in buying.

This is a great topic Doyle. I've spent a lot of time considering whether or not I want to go in this direction. I've pretty much decided that I do not want to spend the time doing so.

It's like running a marathon. I have always wanted to run, or at least finish, a marathon. 15 years ago I met a personal trainer who had a 6 month program that could get most people to a place where they could finish a marathon. I realized that I wanted to finish a marathon. I did not want to put the time and energy into doing what it would take.

My business will end with me and I'm OK with that.

gene

[baileyuph]

Rational, clear, and understandable situation Steve.  Further thought might be worthwhile, for some.

Keeping it simple as possible the mind starts ( I qualify -simple mind - smile)

Logical questions are:  Who is or has built an asset -

From experiences and knowledge, what companies have turned into assets?  Many!!
What are/were their situations that started the asset build?  To keep a relative focus, one could start thinking of their own and pull up similar experiences of success that encourage.

Equally important what are the major differences in most of our success and the success of smaller business that have built assets?  They are out there, home work time.

Right off, the ingredient or growth support does not alone come from just hard work and expert craftsmanship - a wonderful virtue to possess but it has to grow and gain efficiency with a focus with a scope that includes more.  So right off the area to start investigating is technology.  That said, most hard working craftsmen, not all, seem to be working with low technology relative to asset building companies.  Understanding how Asia performs in the design, development, and execution of manufacturing upholstery related products certainly incorporates latest technology - my understanding. Best not to get confused - the point is not to suggest that high tech guarantees high quality.  It does not but does it exclude?  No!

To bring it up again, the US furniture manufacturers have already advanced their efforts to do manufacturing "new school" ways (with higher technology).

There might just be a lot of new turf to try absorbing.  Think about it, black smith technology did not disappear, it transitioned - metalurgical engineering - and boy the assets that were built over time!


That is a starter, perhaps leave it there and listen to hear of how some (if any) are building assets in upholstery.   So interesting .......

Doyle


 

[sofadoc]

Around here, when an upholstery shop goes out of business, the owner either sells the property, or wills it to an heir. Either way, the property gets re-purposed into anything but upholstery.

The contents get sold off in pieces either through an estate sale or Craigslist. The owner doesn't even get a fraction of the original cost.

A "one man" upholstery business is ONLY an asset to that one man.

This topic always reminds me of a local refinishing shop. A young man began working there over 20 years ago. The old man who owned it eventually got too old to work. The young man took over the day-to-day affairs of running the business. The old man just came in once a week to collect the income, and write a few checks.

When the old man died, his family offered to sell the business to the young man. They factored a hefty "business asset" value into their asking price. So the young man was being forced to pay for the value that HE himself had created. Without him, there was no "business asset".

Negotiations got ugly, but eventually the young man won out. He paid the family a fair price for the building and it's contents. Not a penny more.

A similar thing happened to me. When my mother died, a long lost step-brother suddenly reappeared to claim his half of the family upholstery business. I told him he could have it all.........I would just move down the street and open a new one. He gave up without a fight.

Gene's right. If you have a business that didn't miss a beat while you were on vacation, then you have an asset.

[kodydog]

We bought our first commercial property by the owner. He was adopted and had inherited the property from his mother. The relatives soon came out of the woodwork with claims to the property. It took a lawyer 6 months to clear all the clouds. 

We lived in Charleston for 10 years. We had a thriving business with a 4 month backlog. We listed the business and building with a business broker. His scheme was to sell it to a oriental family trying to immigrate to America. He said it happens every day. We thought this interesting. The only offer we got was from a young local lady who wanted to get into interior decorating. Financed by her father, a business man. He came in one day to talk and pointed out that when Rose and Ed leave town the skills and business leave with it. Good point. We told him we would stay 6 months and teach his daughter the business. But I think we both knew it would take much longer than that and finding skilled labor to replace the two of us would not be easy.

The best buyer of a business like this would be another experienced upholsterer. But what is a business like this worth to another upholsterer. The only real value is the phone number, the back log and the established customers. These are all things an experienced upholsterer can build on his own in two or three years without shelling out the cash.

So we put the building on the market. The first offer was from a fortune teller. Her brother did all the negotiating and told us the building was way over priced. He offered 1/2 the asking price which we refused. The second offer was a dentist who offered a fair price and we accepted.

Our business now is at home. We got to thinking when we retire the building will be unsellable without the house. So our latest game plan is sell the property and buy a piece of commercial property to run our business out of. Rent to ourselves and write the real estate off our taxes. Right now there are some good deals in some good locations. Its speculation but what business owner has never taken a risk. We have 10 to 15 years to retirement. Gotta plan for the future.

[bobbin]

I have no illusions about my business as "as asset".  I sell "time", you guys.  And I sell my hard-earned expertise.  I could never sell those... because they're part of me.  Machinery, attachments, inventory? sure, I could sell those.  My location? sure! but not as a business location... as a nice home in a very nice location. 

On the contrary, I view myself as a "job creator"! I've created the job I want to hold.  I work at home, taking full advantage of IRS reg.s and paying scrupulous attention to them.  I know what I have to earn and it's really pretty easy.  I have cultivated a clientele that has grown nicely (word of mouth) and when there are lulls in the work I work on my home (a real asset).  When there is "extra" cash I make sure to spend it down by investing thoughtfully in equipment.