Archive for February, 2006

Retirement - you may already have a date in mind, a particular birthday or after a certain number of years in the CEO’s position, but will the money be there to support your retirement needs when the date rolls around? Many people get to their hoped for retirement date only to find their finances are insufficient and their dreams need to be put on hold. Planning for your retirement from the business should be a long term and well thought out process so that it can happen when you want it to. There are a number of steps you can take to set a realistic retirement date.

First, you must determine what your financial needs will be during your retirement, and that means budgeting for an unknown number of years. Some financial planners use 70 percent to 75 percent of pre-retirement income as a general rule, but this only applies if your financial needs actually decrease after your retirement.

Similarly, a little forward planning can allow you to minimize your expenses and reduce or eliminate many debts by the time you expect to retire, for example, by paying off existing mortgages and other long term debt obligations.

Regardless of the post-retirement income you think you’ll need, experience shows that most retirees find they need more than they originally anticipated, so it’s always wise to include a contingency in your estimates of the income required.

Still, for many business people what they are really relying on is a good sale price for their business as the major contributor to their retirement income. That means some expert advice from an evaluator. But there is still a piece of the jigsaw missing – you could be taking the opportunity of the years between now and your retirement to actually improve the value of your business by improving its cash flow. As an experienced business owner you’ll have an appreciation of the importance of cash flow. It’s always referred to as the ‘lifeblood’ of a company and rightly so, and it will also have a major bearing on the value of the business at time of sale, and therefore on when you can actually retire from your company.

Cash flow is what buyers want

The first consideration is that when you’re looking for someone to buy your business they’ll be looking carefully at its cash flow. The cash flow generated by the organization is what gives the business its real value. To put it another way, nobody pays for ‘potential’; what they purchase is a machine that makes money.

It’s cash flow that will enable the buyer to pay you for the business, and that’s equally important if you’re selling out to employees or expecting a member of the younger generation to take over and provide an income flow for your years of retirement. It’s absolutely essential that you have a forecast of your cash flow up to the time of your projected retirement – and as far beyond as estimates can be made. If the forecast indicates that the firm’s cash flow won’t be sufficient to cover all your objectives then you may have to do one of the following:

• Set a later retirement date
• Phase out your departure from the business
• Find a purchaser with cash instead of financing a relative into the business
• Find ways to increase the value of the business so it brings a higher sale price
• Reduce your retirement lifestyle expectations

Take steps to improve your cash flow

It might prove a painful reality check, but preparing an estimate of the business’ future cash flow is an essential part of retirement planning and a reminder that your long term dreams rely on how well you manage the business’ operations to maximize it.

Information in this article is sourced from RAN ONE, Inc 

As a business owner you expect and hope that the great employees that you have taken such trouble to hire will all get along. Even in the best companies, issues between employees still arise.

Intervening in employee disputes is a risky action and, often as not, ends up with the business owner or manager alienating both parties. A better way to proceed is set up a policy that will enable management to listen to any employee with a grievance, yet still encourage those with disputes to do everything they can to resolve it among themselves.

This should be a formal policy, stated in writing. It should also become a part of employee orientation and be incorporated into the company’s policies and procedures manual.

Be a mediator – not a judge

While it’s preferable to allow people to resolve their own disputes, if that doesn’t happen or if the conflict is affecting their performance or the business itself, then you will have to play a part. In this situation make your role one of mediator rather than as judge and jury. Have a plan and work to it or you’re likely to make things worse.

Guide them through a simple process that makes them think about why the problem arose and what they can do about it. Begin by seeing each of the parties separately. Here are some of the questions you can use to be sure and get their side of the story:

• Ask each of them what has been said and done
• Ask each of them why the other person feels that a dispute exists
• Ask each of them if any other co-workers are involved
• Ask each of them what they feel would end the dispute

Make careful notes and when the sessions are over compare records to identify the major points of difference or misunderstanding.

Bring the parties together in a neutral environment

Now that you’ve familiarized yourself with the parties in the dispute and how they feel about the key issues, bring them together in a location outside the work area of any of those involved. Summarize their respective positions and try to get them to be objective about their position as well as that of the other person.

If it’s a realistic idea, propose to both parties their own solutions – the answer they each gave about what would resolve the dispute for them. Start from those positions and try to work them both towards a middle ground that will probably be a compromise but hopefully will be acceptable to each of them. Point out where the parties have seen things the same way and try to build an agreement from those foundations.

Your role must be to remain objective and impartial. Even if you personally feel that one of the parties is ‘wrong’ and the other is ‘right’ your place is to help both parties see things clearly and work it out between themselves.

Ignore complaints that are anonymous

Complaints that are unsigned or made anonymously (telephone calls or emails) must be ignored. Once an anonymous complaint about an employee is investigated it has been given credibility. You become the villain because you’re the one making the accusations.

Information in this article is sourced from RAN ONE, Inc