Archive for category: General

Talking about succession planning for family owned businesses…

Did you know that 7 out of 10 Baby Boomers plan to work past the age of 65?  

While that’s not really too surprising, given that generation’s legendary work ethic, this can cause a problem in family businesses, particularly around succession plans. Indeed, when some owners are asked when they plan to retire, the answer is often a laugh, followed by, “Never.”

Understandably, sometimes people simply aren’t ready to retire. They enjoy the work and have much of their identity and lives tied to their companies.

Yet, their children are also looking for some kind of certainty. They need to understand the succession plan so they can begin to plan their futures as well.

The Conflict

The older generation tends to have experience which can’t be taught. The younger generation has enthusiasm and a willingness to take risks that can’t be shared (there’s a shorter timeline for the older generation to recover from losses). Both sides have to step out of their comfort zones.

The younger generation has to understand the wariness and desire to move more slowly on the part of the older generation. Gentle prodding, encouragement, and an overall positive attitude can go a long way, even when there are personality and management differences.  

The older generation has to learn some new tricks too. They need to take time to rediscover their “whys” and ensure that their identities are not entirely tied up with their businesses. If not, then there’s no hope for a peaceful exit.  

This doesn’t mean that they need to develop a forced love of travel or new hobbies overnight. But one thing is for sure…some kind of plan of transition has to be put in place. The new blocks of time they receive as their responsibilities are (slowly) lightened can be used to reflect on the larger questions of life. The “what’s next” questions are ultimately far more important than the day-to-day operations of a business.

Most family businesses will tell you that family comes before business. That’s why these discussions always need to be had with a lot of empathy and love, on both sides. And why they can’t be put off indefinitely.

If you haven’t started to have succession planning discussions, there’s no time like the present.

Here at Apex, the majority of our deals are related to the Small Business Administration (SBA) in one way or another.

Many people know that it’s a government agency, and they know it’s supposed to help small businesses, but from there it usually gets hazy.

What we want to share are some of the things you’ll need to have in order to qualify for an SBA loan so that when you start the process you won’t be too surprised.

Three things at the outset:

• The SBA does not lend. It simply provides a guarantee to the banks for 75-85% of the amount originated, thereby severely de-risking the loans for the banks.  That does mean, though, that there is a cap on the interest rate that can be charged.
• You still need to have good credit.
• The SBA process takes a long time if you don’t use Preferred SBA Lenders – we can steer you to the right lenders.

With that said, here are, broadly, seven criteria the SBA considers when reviewing your application:

1. The business has to operate for profit.
   It can’t be solely making losses, particularly in the most recent years.
2. The business must be considered “small” relative to the industry.
   There is a 45-page government index (did you expect anything less?) which reveals the majority of businesses fit in this category.
3. The business has to be based in the United States.
   You should not be drawing significant income from foreign sources.
4. There must be reasonable investable equity.
   You should expect to contribute 20% or more to the transaction.
5. Personal resources and financing must already have been exhausted.
   Would the transaction qualify for a conventional loan?
6. Criminal Background Check.
   Felonies in your past? Could be trouble.
7. No delinquency on government debt.
   The US government gets a lot wrong, but at least it’s sensible enough not to loan you money if there’s still a question about other funds you may owe it.  Make sure you’re up to date on all tax debts and student loans.

We understand it looks intimidating, but you don’t have to go through this alone.  Our brokers and bankers have guided thousands of our clients through this process.  We’re here to make this part of the process intelligible and easy.  We can’t promise we’ll have all the answers to every question you might have, but we’ll know where to find them!

Apex is actively looking for Advisors to join our team. If you or someone you know would like to learn more, contact Doug Hubler at or 913-433-2303.

Post by Steve Weaver, Apex Senior Advisor and Owner of Celebration Party Rentals

As you consider your decision to become a business owner, you might want to think about the people-management aspect of the job. It’s a critical factor in business success. As a small business owner myself, I spend a lot of time working on this.

Seek Input on Attracting Qualified Staff
In today’s job market, you have to be savvy to attract the talent you need. You’ll want to cover this topic thoroughly during your due diligence with the sellers. How are they sourcing talent today? Where have they found good talent in the past? What’s the tenure of current employees, and how committed are they to staying on after the sale?

Talk to other people, too. How do others in this field see the market for talent? How have they been successful?

It’s a good idea to talk with both business and non-business associates. You never know who might have insight or sources for you. Some of our best employees have come from casual referrals via friends and neighbors. It may sound harsh, but you should always be looking for the next new employee. Employees will move on. And like any job or business, you need to keep your pipeline full.

Websites like Indeed.com are an inexpensive way to post jobs. You’ll get plenty of hits, but you still have to do a lot of work to weed out those who won’t fit. This is a struggle for our business sometimes, because we need to fill vacancies fast. We’ve had to get comfortable with some level of risk here. We manage that by establishing a 90-day transition period. This lets us and the employee take some time to see if it’s going to work. If we end the relationship during that time period, we don’t have an obligation to pay unemployment benefits.

Work on Retaining Your Employees
Hiring the right people is only half the equation. Now you need to work on keeping them. Low-wage workers are especially difficult to retain, because they tend to job hop in search of small pay increases.

Encourage their potential: Most of our employees are earning in the range of $28,000 to $38,000 a year. But many of them have ambitions to earn more and get better jobs. To keep them from job-hopping, we offer to work with them to increase their skills and management experience.

You can even sit down with them and help them work out a career and education path for getting where they want to go. You may not have a $100,000 job waiting in the wings for them, but you can potentially keep them happy and productive until they’re ready for the next step.

Train them well: You can’t be too detailed when it comes to training. Don’t just throw your new employees out there to sink or swim. Provide some documentation about the job, if you can. An employee handbook is a must! And consider setting up mentors or partners so employees can help one another.

Recognize their needs: Scheduling part-time employees is always tough. It’s hard for them, too, especially when they’re juggling multiple jobs, childcare or education. Whenever you can, try to show you’re attempting to accommodate their needs. It often pays off in terms of employee loyalty and productivity.

Find meaningful ways to create community and rewards: While money talks, you can find other ways to reward employees. Millennials, especially, are motivated by praise, feedback and a sense of community with their coworkers. Find ways to recognize great effort and results, host company lunches and give out small prizes, like gift cards. We find that the return on these small investments is much greater than the cost. For example, our business is super busy on holidays like the 4^th of July. So we provide burgers, dogs and drinks for our staff and their families. It’s a small gesture to show we care and understand how a job like this can affect family time on holidays.

Involve them in the business: As much as we can, we like to be open with company information. We try to keep our employees posted on how the business is doing so they can see how their work contributes to the bottom line. They need to understand that company performance can affect them – in the form of staffing, wages and potential bonuses or gifts.

Recruiting and retaining workers may be the most challenging part of our business. It takes a lot of time and effort. But when it works, it can be one of the most rewarding aspects of ownership.

If you or someone you know is interested in buying or selling a business, please call us at 913-383-2671 or contact one of our Apex Business Advisors today!

Post written by Doug Hubler, President at Apex Business Advisors

Our daughter was diagnosed with juvenile diabetes at the age of 6. Talk about a scary time. Over the years, we experienced several frightening ER visits, and we’ve gone through much trial and error with treatment regimes. Chloe’s now studying graphic design at KU, and she’s managing very well. But it seems like she will always have frequent doctor appointments and forever have to stay vigilant about her diet, exercise and medication. It’s a dangerous disease. And there’s no cure – yet.

So it’s probably not surprising that Apex contributes to the Juvenile Diabetes Research Foundation. We also support the Polycystic Kidney Disease Foundation because our son suffers from that disease.

In fact, my wife, Pam Miller, and I recently attended the local JDRF fundraising event as guests of Jason Moxness at Alterra Bank. The experience that evening led me to think about how small businesses can (and should) give back to their communities.

Whether your business is involved in charitable giving or not, here are some thoughts to consider:

Choose the right cause. We have a clear family tie to the JDRF. It’s a good idea to choose a charity where you have a special interest. You’re more likely to follow through, and your employees will find it natural to rally around a cause they can relate to.

Influence. As an individual, you can only ask your relatives to support a cause so many times. As a business, you may have a much wider network of people to influence. And it may be a little easier to ask.

Work-life balance. Getting involved with a charity is a way to bring some of your personal life into the work setting in an appropriate way.

Relationship building. Networking is a critical sales tool for many businesses. And charitable causes can be a great connector. For example, we introduced the Marian Hope Center for Children’s Therapy to our friends Jason Terry and Mic Johnson at Blue Gurus. Mic and Jason helped them with their website and blogging as part of their commitment to assist a different nonprofit each quarter. It was a valuable connection for all three organizations.

Character building. Clients like to do business with people who are well rounded and motivated by something more than profits. Being involved in charities can increase the level of trust you’re able to establish with a potential business partner or buyer.

Awareness. When you add your logo to a charity’s program or list the charity on your own website, you’re helping build awareness for the cause and for your business at the same time. It can help build your brand and your credibility, too.

Consider charitable giving when you sell your business
The money you contribute to a charitable cause shows on your profit and loss statement as a discretionary expense, so it’s part of the cash flow. It’s important to characterize that expense clearly, however, so a potential buyer can understand how it fits.

Make sure to talk with potential buyers about this aspect of your business, too. Charitable giving can contribute to the buyer’s qualitative evaluation of your trustworthiness and character.

Finally, be sure to help the buyer understand any long-term relationships you may have with a charity. Are you committed to a specific period of giving? Could changing your giving affect the company’s reputation? Such relationships can contribute to the impact of your brand – an important component of the perceived value of your business.

Regardless of why or how your business decides to give, sharing your success with your community is simply the right thing to do.

Doug Hubler, CM&AP, President

If you or someone you know is interested in buying or selling a business, please call us at 913-383-2671 or contact one of our Apex Business Advisors today!