Happy Valentine's Day

First step for business owners preparing for sale is to get a valuation

Perhaps that is why the recent research by Investor Watch reveals that nearly 60% of wealthy investors would consider starting their own business.

At the same time, the favorable economic environment is spurring some business owners to cash out. And it remains to be seen who will fill the void.

• 41% of business owners plan to exit their business.
• 80% will sell or close the business—or they’re not sure what to do. 
• Another 20% intend to give the business to family.

Business owners who plan to sell are far too often unprepared for the process. Less than half have had their business appraised, for example. I am always shocked by how many business owners think they only need an accountant and a lawyer to sell their business, The first step of getting a valuation by a professional advisor would quickly show them the value of their business.  Equipped with a reality check on their assumed price for their business, they can then see if their cash flow of their business will be a better long term wealth strategy or time to sell and invest the payout. Having an investment banker on the team to do the sale of their business becomes obvious after the sale of the business.

At the same time that business owners are thinking of exiting, 58% of wealthy investors would consider starting a business. Together, these trends are increasing the need for advice and creating growth opportunities for Financial Advisors.

Please give me a call if you are thinking about how to maximize the wealth of your business.  

We have much to offer business owner clients and prospects. From lending, insurance and retirement plans to pre-sale planning, Employee Stock Ownership Plans and more, All good conversations to have when it comes to building your long term wealth.

 

 

Join me on Twitter @jacolineloewen

 

Check out my book for business owners wanting to sell to private equity.

Money Magnet: How to Attract Investors to Your Business

Planning is a bore compared with running a business but 3 simple questions can help a lot

Business owners make their wealth through concentrated efforts. The key to successful transitions involves focusing that same energy on planning the next stage of life and putting their wealth to work through investments outside their own companies.

Planning is a bore compared with running a business. If owners want to fully benefit from their lives' work, they need to grit their teeth and start tackling those three life questions before they get answered for them by life's forces.

The problem is, most owners avoid thinking about their next stage, their businesses don't get sold properly, and they lose the wealth they spent their lives building.

"One business owner that we came across had no transition plan, no successor, a son in the business who did not have an interest in running it, and no estate plan at all," says Maria Milanetti, a partner at MarchFifteen, a consulting practice specializing in business transitions.

"The owner was 70 years old, running a highly successful business, and utterly oblivious to the risks for his family's future wealth."

This scenario is common in Canada.

Too often, the only part of a business that can be salvaged are its assets, but not a great deal more, leaving the family in a precarious position. The economy also loses a company that could have continued under new leadership.

Why is this sad lack of transition such a common scenario for too many privately owned businesses?

Milanetti says, "It's quite natural for founders and those running the business successfully to 'want to keep a good thing going' and to feel that they need to keep running the business themselves." 

 "Often they want to 'protect' others from this responsibility."

 But their reluctance to share how they make decisions or influence stakeholders with their next generation leaders can have long-term negative effects. Milanetti acknowledges it can be difficult to start the conversation around transition or succession. She recommends starting with the following three questions:

Have you thought about the next chapter in your business?
This question may prod an owner to be able to describe verbally a picture of the business within the next five years. As an extension of this question, it can be useful to include the next generation of leaders if there are any tapped to take over the business. Ask them to share how they want to build the business in the longer term. Like the son working with the 70 year old owner encountered by Maria, the truth will come out that they have no interest. Many next generation family members are not wanting to take over the business and doing this type of exercise will bring this urgent issue into the light sooner than later.

How can we plan that future together?
Suggest setting aside some time with a facilitator or business adviser and describe how critical conversations can be shared in a relaxed, reflective and safe situation. It makes it a safer process. It also means someone else brings energy and an outsider perspective to winkle out those tough questions business like to avoid but that need to be addressed.

What will your life look like in three years?
It can not be underestimated how difficult it can be to step away from a business, even if the Chairman role is still offered with a desk at the office. The emotional challenges of giving up control over a privately owned business and transitioning into a new role as “ex-entrepreneur” – whatever this new role may be – requires reflection about one’s identity and about other family members. This is not a natural state for most high-action owners. Dealing with this identity change can be very important to helping the transition to take place. However, this can be the most tricky question to bring up as it starts to deal with the prickly topic of the business transition. Peter Pan whispers that planning for life after the business means retirement, and that's for old people, not a dynamic business owner, no matter the biological age. That way of thinking can be disastrous for a family if the owner is forced to reduce his or her time at the business or stop altogether. It is better to address changes while everyone is healthy and has the time and energy.

 

"At every juncture," Milanetti says, "We recommend planning. That is planning for the mentoring of next generation leaders, for the transition between current leadership and successors and, most importantly, planning for the owner to be clear what will make their lives meaningful in their next chapter. These are not people who are used to doing nothing. they need to see the door opening to welcoming place."

 

Jacoline Loewen is director of business development of UBS Bank (Canada). 

She is also author of Money Magnet: How to Attract Investors to Your Business. 

You can follow her on Twitter @jacolineloewen.

  

The article above first appeared in the Globe and Mail online.

Learn from the Best

If I had asked people what they wanted, they would have said faster horses. - Henry Ford

10 Questions Anthony Lacavera wants us to ask

Seeing Anthony Lacavera in his casual suit and hip haircut at my formal Bay Street Investment Club made me curious. Yes, Anthony has his book to promote, but what would be his message for the room of mostly public market investors?

I was not disappointed. Anthony challenged the room of influential investors about our shared responsibility for the future of Canada. Anthony quickly picked apart the realities of our laws and our attitudes that if changed, could mean a radically different future for Canada. All of these points are expanded upon in his very good book, How We Can Win.

I have entrepreneurs as my client base, and Anthony’s book is giving me a treasure trove of discussion points for my client meetings in 2018. There are stories about Canadians such as heroes I have been fortunate enough to know such as Claudia Hepburn who helped found The Next 36, Michael Serbenis who created the Kobo, Andy Burgess of Somerset Entertainment, Michael Hyatt of Bluecat and Craig Campbell who built a security company. 

There are also discussions about the Canadian-centric issues I have heard too many times and, quite honestly, I have stopped discussing because they do not seem to change. It was refreshing to hear Anthony's passion.

These were my pick of Anthony’s many questions directed to my Bay Street Finance Club. These ten points particularly sparked me and made me grit my teeth. This year, I hope to use these to bring my best to Canada:

1. Why do we think it normal to go for gold when it’s hockey but we are satisfied with being fourth or tenth in business ratings? The Americans go for survival of the fittest but Canadians think it is mean to crush competitors like cockroaches. Anthony says, "We need to start clawing our way up the value chain."
2.  Why do our government leaders go to the Google offices to get their photo ops? Surely, politicians should prioritize their support of Canadian companies such as Hootsuite? Stop by the Hootsuite HQ in Vancouver, politicians, and you will be surprised by the results. 
3. Can we stop being afraid of picking winning companies and rewarding them? This requires we get past the “everyone’s a winner” attitude and to pick one leader and focus the financial rewards.This means putting government funding in large placements into fewer businesses. We need to be comfortable that competition is positive.
4. Why is not one Canadian VC or private equity firm invested into one of the leading Waterloo area companies, Thalmic Labs? Why does it take Americans to do the investing? Thalmic Labs comes out of the Next 36 program and are a great Canadian venture. 
5. Why should we care where investment money originates? Globealive had the government tell him his investors had to get out of his company because they were from a different part of the world. The Middle East is not banned from my bank as potential clients and Anthony's investors certainly cleared the barriers. 
6. Why do we have such difficult inter provincial trade barriers and what does it cost business?
7. Why do most Canadian companies not think of being an export business? They are satisfied with being big enough. 
8. What is Canada known for? Why do we have investors into cannabis but not into Ai, Machine learning? Uber, co-founded by a Canadian, is in MaRS and has a Canadian Ai expert leading it. Surely our VC investments should be going into these tech endeavours but we seeem to like the drug industry more.
9. Why are Canadian entrepreneur leaders not known and celebrated?  We all know Bill Gates or Elon Musk (ironically a Canadian) of America but how about Ryan Holmes of Hootsuite?
10. What can we do to reduce the brain drain of our tech students to America? We are losing our youth to the USA. My son is graduating from Waterloo and is off to Seattle to work for Microsoft so that point really hurts! Ouch.

Waterloo students create WatVision to help visually impaired to read touch screen

The Waterloo student teams create products in their fourth year and I was impressed with my son and his group - WatVision. 

Their product is to help visually impaired people read a touch screen. The idea developed as a visually impaired person talked about how the new coffee maker at work had a touch screen which he could not use, unlike the old coffee machine.  

This product has been created to help a visually impaired person use a touch screen. Check out the video.

https://www.youtube.com/watch?v=HI3hGIS06DM&feature=youtu.be

The video shows Craig demoing how to use our system. Here is a breakdown of how he did it.

1. Start the app and point your phone camera at the touch screen you are trying to use
2. Listen to the app, it will guide you to aim the camera at the entire screen. It will give commands such as “Move Left” or “Move Up” to help the user capture the whole screen.
3. Place the finger wearing the ring on the touch screen and begin exploring!

That’s all it takes, let the app do the reading for you. When your finger moves over text or buttons, the app reads out what its for so you as the user can decide whether you want to use it or not.

Interesting in trying it?

We are looking for participants to try out the system and give us feedback as we continue to develop. If you or someone you know has a visual impairment and would be interested in trying out the Watvision system, contact us at watvisionteam@gmail.com.

Annual Investment Luncheon at The Empire Club

2018 Investment Outlook Luncheon

I was honoured to be invited to join the head table at the Annual Investment Outlook Luncheon held at the Empire Club. We were joined by the CFL players who impressed me with their knowledge of blockchain and crypto-currencies.

@Empire_Club 2018 Investment Outlook Luncheon #gold #investment #outlook2018

Top Forecast awarded by Bay Street Finance Club to Jacoline Loewen

Jacoline Loewen with trophy for #1 Forecast

It was thrilling and humbling to be awarded the #1 Forecast.  There were 150 competing financial experts, many of whom run leading funds and who are pre-eminent names in the investment industry.

My forecast made at the beginning of 2017 was the most accurate. As a result, I get this huge trophy with darts as the symbols on top.  You can surmise why the use of darts as an understanding of the accuracy of forecasts.  Many people have made or lost their fortunes using the forecasts of experts, including Ray Dalio.  My name has been engraved on one of the markers which is an honour to join the list of top forecasters of the Canadian economy.

This finance club has been going since 1929, and will no doubt carry on for another 100 years, and so it is a great honour to be able to win top forecast. I was told that lightening does not strike twice and this is forecasting, after all. However, I have seen in my business that there is some methodology and process that certainly helps to predict the road ahead.

If you are curious about the forecast itself, there were market indicators to predict and a list of stocks to choose as going up or down.

I did have access to my bank's economic views which were different from the Canadian banks, being a global player. No doubt, access to that gave me a proverbial leg up but in the end, I did put in the time and effort to really look at the upcoming year. Now, let's see how my 2018 forecast fares!

Top 10 Questions for Families with Wealth

Family is important.
We can agree with that sentence as family relationships nudge, bump. poke at our course in life. You have heard the quality of your life is determined by the quality of your relationships. I would add, "family relationships." Many factors shape family relationships and money is one of them. Both when it is abundant and when it is scarce, money is key in shaping family relationships.
Money and its impact causes problems in family relationships. Who gets the money? Who receives the information about the family's wealth? Who actually has the control over that wealth - is it really family wealth or one person's wealth?
Tough questions that many choose to skip with resulting drama that fills movie scripts but also real lives.
Money also brings the opportunity to discover what money means to a family. It can be an open discussion to discover how a family can work together and clarify their thinking about the purpose of the money.

Family

What is money's purpose? What does money mean to the family?
Rather than divide the family, money can have a beneficial affect on bringing together a family and have a surprisingly beneficial effect on family dynamics. Relationships can be cemented.
In fact, the hardest issues facing families are usually not the money but the family relationship based and family based. You can begin to set a positive family dynamic by asking yourself questions and your family members these probing questions about finances and philanthropy.
In my experience, there are questions to get the process started. You can pose these top ten questions to each of your family members. What is most important is to listen and observe how family members respond is more important than the answers.

1. What challenges do we face in regards to our family and to our money?
2. What is our vision for our family's future?
3. What is our family's definition of success?
4. What principles will guide our decisions about asset allocation?
5. What has been our experience of the family working together?
6. How do we prepare our children to steward a financial inheritance?
7. Should we bring our son or daughter in law into the conversation on finances and philanthropy?
8. What are our core philanthropy interests and how did these become so important to us?
9. How may we enable the next generation to create a shared dream with a family foundation while also fulfilling the founder's vision?
10. How do we promote a togetherness while also promoting the individualism of each family member?

What do you think of these questions? Are there any more that you would add?

How the developing world is shaking up tech from Mexico to Chile and Kenya

In New York with Wondereur for Fintech Finals

Fintech early stage companies were part of my company's Global Fintech challenge last year which I got to roll out and manage across Canada. What was surprising to our head office was the sheer number of good fintechs in Canada, not just Silicon Valley. That is what struck me as I read this article about how Silicon Valley and Canada are no longer the only place where fintechs are growing - Mexico with its lack of banking is shooting ahead with Fintechs too.

The magazine Unlimited has an interesting article on technological development outside of Silicon Valley and how fintech in the developing world is gaining traction.

I had been surprised last year, when the head of Blockchain in my company told me how Africa had played a huge role in developing blockchain as there were so few legacy banking systems in place. There you have it, straight from the horse's mouth about blockchain and developing countries technology sectors.

Here's the article...

Today earbuds can translate foreign languages in real time, while scientists are developing ‘living’ solar panels that can be printed on paper. Meanwhile, tech pioneers are setting their sights on still grander goals, like enhancing the human brain with implants raising the possibility of telepathic communication.

The pace of change in the sector continues to accelerate. In the US alone, the number of tech-related patents has doubled over the past decade.But, while expertise has been concentrated around California’s Silicon Valley, in the coming years technological disruption is increasingly likely to blossom in the developing world. Emerging markets are already undergoing a radical transformation. A decade ago the tech industry accounted for only 10% of the benchmark MSCI Emerging Markets index. Now that figure has nearly tripled to 29%, with four of the index’s five largest-capitalized companies coming from the tech sector. 

In China, the education system currently produces three million science and engineering graduates each year – five times that of the US – and the nation is already on the way to joining the long-standing tech leaders, Taiwan and Korea.In neighbouring India, already a global player in the IT services industry, the government now has the world’s largest biometric identification system, with fingerprints and iris scans of more than one billion residents. 

Yet, the technological shift is not being limited to Asia. Coordinated public and private efforts to foster tech start-ups in Chile have earned the country the “Chilecon Valley” moniker, drawing comparisons with the famous California innovation hub.Mexico has also made progress in promoting start-ups through the creation of the National Institute of Entrepreneurship, with similar programs running in Colombia and Peru, now beginning to trigger rapid start-up growth in cities like Bogotá, Medellín and Lima.Given the large population in Latin America who are without banking services, a key growth area is fintech. According to Finnovista, the number of fintech start-ups in the region recently surpassed 1,000.

Read the full article here.

Follow me on Twitter @jacolineloewen

You can read my author's profile on Amazon here.