Posts

business succession why

Business Succession Planning: Why is it Important?

You may know what business succession planning is but do you know why it’s important?

It’s January 5th and I get a call from a client who wants to sell their business. They had a great holiday break and decided they no longer want to run their business. They do not want to deal with the headaches, stress, and people issues that accompany being a business owner. As their business advisor, I make the following statements and ask a few important questions:

  • Have you met with your financial planner to see if you have enough to retire?
  • Do you know what your business is worth?
  • Your business had a really bad year 2 years ago. Remember, almost all buyers will look back 3 years. This will hurt the value in the sale.
  • Does your executive team know?
  • Have you thought about incentivizing them to stay with the buyer?
  • What are you going to do next?
  • Most buyers of businesses your size, will use a loan to buy the business, and will require you to be out of the business in less than a year.

The list continues during the next few discussions with the client. It’s clear they have not thought of any of these, however they want to sell anyway. During the process, the valuation is lowered by the bad year they had, and a few members of the management team leave as they hear of the sale. The transaction closes after months of trying to sell and going through due diligence with a couple different buyers.

This scenario happens every year. Business succession plans help make sure that if you wake up on January 5 and decide to sell, you have the opportunity to easily answer these questions and many more. Having a plan in place will help you maximize the exit value when the times comes, and also make the process of selling or transitioning much easier for the business.

Contact us for a no-cost consultation to find out if your business is ready to be sold.

inc 5000

LBAHS Makes the 2019 Inc. 5000 List

Inc. Magazine unveils its annual list of America’s fastest-growing private companies – the Inc. 5000. For the sixth time, LBA Haynes Strand appears on the 2019 Inc. 5000, Ranking No. 4291.

Inc. magazine today revealed that LBA Haynes Strand is No. 4291 on its annual Inc. 5000 list. This is the most prestigious ranking of the nation’s fastest-growing private companies. The list represents a unique look at the most successful companies within the American economy’s most dynamic segment—its independent small businesses. Microsoft, Dell, Domino’s Pizza, Pandora, Timberland, LinkedIn, Yelp, Zillow, and many other well-known names gained their first national exposure as honorees on the Inc. 5000.

Not only have the companies on the 2019 Inc. 5000 been very competitive within their markets, but the list as a whole shows staggering growth compared with prior lists. The 2019 Inc. 5000 achieved an astounding three-year average growth of 454 percent, and a median rate of 157 percent. The Inc. 5000’s aggregate revenue was $237.7 billion in 2018, accounting for 1,216,308 jobs over the past three years.

“The companies on this year’s Inc. 5000 have followed so many different paths to success,” says Inc. editor in chief James Ledbetter. “There’s no single course you can follow or investment you can take that will guarantee this kind of spectacular growth. But what they have in common is persistence and seizing opportunities.”

More about Inc. and the Inc. 5000

Methodology
The 2019 Inc. 5000 is ranked according to percentage revenue growth when comparing 2015 and 2018. To qualify, companies must have been founded and generating revenue by March 31, 2015. They had to be U.S.-based, privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2018. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2015 is $100,000; the minimum for 2018 is $2 million. As always, Inc. reserves the right to decline applicants for subjective reasons. Companies on the Inc. 500 are featured in Inc.’s September issue. They represent the top tier of the Inc. 5000, which can be found at http://www.inc.com/inc5000.

About Inc. Media
Founded in 1979 and acquired in 2005 by Mansueto Ventures, Inc. is the only major brand dedicated exclusively to owners and managers of growing private companies, with the aim to deliver real solutions for today’s innovative company builders. Inc. took home the National Magazine Award for General Excellence in both 2014 and 2012. The total monthly audience reach for the brand has been growing significantly, from 2,000,000 in 2010 to more than 20,000,000 today. For more information, visit www.inc.com.

The Inc. 5000 is a list of the fastest-growing private companies in the nation. Started in 1982, this prestigious list has become the hallmark of entrepreneurial success. The Inc. 5000 Conference & Awards Ceremony is an annual event that celebrates the remarkable achievements of these companies. The event also offers informative workshops, celebrated keynote speakers, and evening functions.

succession planning

Business Succession Planning: What is it?

From the day you start your business, you are focused on both present and future growth. However, many people never think of life after the business or succession planning until it’s too late. How do you know it’s too late? Typically, business owners don’t start thinking about this until a major life event occurs, they are burned out and need to sell, or someone comes knocking and wants to acquire their business. According to a Wilmington Trust Survey, 60% of business owners do not have a succession plan in place.

None of the times previously mentioned are the best time to start a succession plan or think about it, as you are under stress. The best time to put together a plan is when you start your business. If you didn’t do it then, the next best time is today!

What exactly is business succession planning? It starts with answering a series of questions with yourself, your family, your executives, and your advisors. The purpose is to make sure what you have built in your business continues on, not just for legacy, but for the people, and families, that you are providing a job to. There are a lot of critical things to think about in a succession plan. It helps you decide what happens to your business if something were to happen to you.

Does it go to management? Does it pass to your estate? Will the business just fold up and close? How is all of this planned both structurally and financially?

A succession plan is an iterative process. Business owners need to pick it up once a year and re-read to say, yes this still fits where I am in my life and where my business is, or it needs changes.

If you are a business owner without a succession plan in place, contact us to schedule a no-cost consultation.

Asheboro Expansion

LBA Haynes Strand PLLC Acquires Asheboro, NC Office

LBA Haynes Strand is excited to announce the acquisition of the Asheboro office of Cherry Bekaert LLP. With this acquisition, we will expand our firm’s footprint to maintain the Asheboro office location. With nearly 80 professionals across North Carolina, clients will have access to local resources and immediate support.

“Our firm has been focused on the middle market client base for more than three decades,” said LBA Haynes Strand CEO and Principal, John Bly. “We are excited for the opportunity to add quality team members in the Asheboro market, along with a strong client base. This is the next step in our firm’s growth plan.”

Cherry Bekaert partner, Brad Crumpler, has announced his retirement and will assist our firm through the transition period. Elizabeth Scott (Senior Associate) and Donna Smith (Administrative Assistant) will be joining the LBA Haynes Strand team.

Principal Chris Bunting will continue to lead the firm’s assurance department while principals Dave Recchion and Courtney Ageon will build and maintain local relationships in the Asheboro community. In addition, the Greensboro office team will be readily available to support all client needs.

Since its inception, the focus of LBA Haynes Strand has been to become a partner in our clients’ success. Cherry Bekaert clients will be able to continue working with high quality professionals committed to delivering excellent client service.

LBA Haynes Strand expanded into Winston-Salem in January 2019 and looks to grow more across North Carolina and the southeast.

Accounting For Growing Companies: What To Consider

Do you know the old adage of “it takes one to know one?” We believe this to be a characteristic of LBA Haynes Strand, that just isn’t available at other CPA Firms. We of course are talking about a growing company. Growing companies face all kinds of challenges: accounting, hr, marketing, operations, etc, etc. There are two areas that we see growing companies needing the most assistance in: Cash Management and Internal Controls.

Cash Management

The truth of the matter is, it takes a LOT of cash to grow a business. Think about it – when a company grows their receivables grow, their work in progress grows, they have to hire new employees, they may need more inventory to sell, different technology needs, etc. All this costs money, but it is essential to creating a business structure that is capable of handling the business growth. If you are a business owner and you are looking to grow your company, you need to be aware of this.

It is a common story in the business world that businesses grow quickly, but then fail quickly, because the business was not properly prepared to handle the growth.  Business growth does not always equal success. When you grow you must look at all sides of your business and make sure that each function is strong and able to handle the increasing workload. Cash is going to be spent quickly to do these things, but the business owners must realize that this is necessary! The trick is not running out of money and working with your CPA can help you accomplish that.

Internal Controls

We see it often that a company comes to us asking for assistance because their company’s growth is outpacing their business structure. Sometimes these companies have little to no accounting function, because they just haven’t had the time to put the right systems in place, the right internal controls in place, or put the right people in place. This is a big area of concern for us.

Internal controls are often pretty logical measures that can make the difference between the success or the failure of your business. Implementing strong internal controls early on in the growth process can save the company a lot of time and money in the long run. This will also ensure the company that they will have efficient and effective business functions, reliable financial reporting, compliance with laws pertaining to the businesses activities, and the company’s assets are properly protected. So how do you know what internal controls you need to strengthen? This is where a certified public accounting firm with a team of internal auditors comes in handy. The internal audit team will come in and learn your business, conduct testing of your internal controls, create solutions for any issues they find, and then make recommendations to the management team.

If you are a growing company and have questions about your internal controls and your accounting function, contact LBA Haynes Strand today. As a two-year Inc. 5000 fastest growing company, we understand growing companies. What better advisors to your growing company than ones who knows how to handle it themselves!  Contact us today for your no cost-consultation!

Successful M&A: Internal Growth Must Match External Growth

Traditional entrepreneurial formulas go something like this… “If we have 10 clients, we hire 1 marketing person, adjust their salary according to client growth, and then in 4 to 5 years we could possibly see 10% business growth.”

We have news for you! A merger and acquisition process will grow your business 30% to 100% OVERNIGHT!

When you merge with another business, you are effectively doubling your business in size. That growth equals greater sustainability and greater scalability. You may think that a larger business would be more to handle, but just think about the growth process in general:

  • When your business expands in size, you have the opportunity to expand your client base.
  • The more clients your business has, the more revenue it generates.
  • With a boost in revenue, you are able to hire the appropriate staff to handle the rise in clientele.
  • With the right staff in place, your revenue and your clientele are going to continue increasing significantly.

It’s easy to get stingy about bringing more team members on board. After all, when you experience financial growth, your first reaction is to keep it growing, and hiring staff seems to do the opposite of that. Initially, you may experience a financial dip when you hire your new sales team. However, if their human capital matches your business values, you are undoubtedly going to experience financial growth in the following years.

Remember: When you grow externally, you must grow internally to achieve even more external growth!

Basically, if your clientele grows, your internal team must grow. That does mean a higher payroll, but it also means a higher ROI. You might be looking to hire a sales manager that demands a hefty salary. To ensure a good return, thoroughly analyze what this person brings to the table. Let your decision to hire involve looking back to their work history, but also looking forward to your company’s future. Always look forward! If you don’t see this person contributing to your future growth, look for someone else to fill the position.

If you are expecting rapid growth from your M&A transaction, expect to make the occasional investment. Hiring a team of experts is definitely an investment worth making. The more growth you experience, the more responsibility you gain. When you have an efficient internal team, those responsibilities are not only fulfilled, but they help you grow your bottom line a whole lot quicker.

Interested in learning more about M&A, contact us for your no-cost consultation.