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Young Professionals
REALTOR® Emeritus |  | SELLING YOUR BUSINESS | | ||
|  Are You Ready to Retire? Retirement Budgeting Sources of Retirement Income Tax-Deferred Savings Vehicles Estate Planning Selling Your Business Getting Your Business Ready for Sale Working With a Business Broker Closing-Your-Business Sale More Resources: Retirement Planning | Selling Isn't the Only Option You don't have to sell your business outright to break away. Bill Barrett of Bill Barrett Seminars in Rochester Hills, Mich., offers two creative alternatives to an outright sale. 1.Partnership.Team up with a younger broker who can handle the day-to-day business in exchange for a percentage of the business. In this instance, you need to be willing to keep up contacts with major clients and come back for the big deals. Structure the percentage you give based on how much involvement you want to have and whether your new partner can contribute cash or other assets to the deal. 2.Earnout.Sell your company not for up-front cash, but for a percentage on total revenues. Set a minimum purchase price and a cap amount you will receive, and then structure the deal to pay a higher percentage of gross revenues in the early years and taper off over time. Or set the payouts so that you receive a higher percentage of sales if revenues exceed a certain amount. It’s not essential that you remain involved in the business with an earnout structure, but it’s probably a good idea. TIP: Because your future income depends on the success of the business in both of the sell-off options, you will have to exercise more oversight of the business than you would with a direct sale or short-term payout. Advanced Tip: Becoming a Consultant If you’re ready to retire from business ownership, but want to stay active in the field, consider using all those years of hard-won expertise to help consumers or other real estate professionals. Julie Garton-Good, Garton-Good Seminars, provides this advice on finding consulting opportunities. Q: How do you know if you’d make a good consultant? Garton-Good: Generally someone whose been in real estate sales from seven to 10 years has the expertise to become a consultant. Usually, these people have found some sort of niche—either a demographic or geographic area they specialize in or a particular aspect of real estate selling that they excel at and could be paid for as a consultant. Good consultants are usually more entrepreneurial and better analytical problem solvers than their peers. And often, they have some sort of business background, either a business degree or experience in another field. Q: What should you do to get your consulting practice started? Garton-Good: Start by deciding what your special expertise is. Are you offering a service free to customers—such as improve vs. buy analyses—that they might be willing to pay for? Do all the salespeople in your office ask your advice in a particular area? I always suggest that people ask themselves, “If there was just one real estate activity that I’d like to do all day, what would it be?” That’s probably the area you want to consult in. Next, get over the idea that people won’t be willing to pay for a service, even if you’ve given clients free consulting services in the past. Today, people are often more comfortable paying a fair price for an objective real estate consultation on a fee basis, rather than getting it free on the assumption of future business. Even your peers might be willing to pay for your advice; just ask. Q: Can you do consulting while you’re still active in real estate sales and brokerage? Garton-Good: As long as the consulting activity doesn’t interfere with your sales or brokerage management activities, why not? In some cases, the two roles may even complement each other. For example, let's say that you specialize in move-up sellers, who are constantly calling you to ask if they should improve their current home or move to another one. And even though you've typically given that service away for free, why not charge for the two-hour consult? When I polled more than 100 seller-consumers one on one, they told me that they would pay up to $350 for an improve vs. move analysis. In fact, consumers like the idea of paying for this type of service since they often wonder if the traditional salesperson isn't slanting the information to take the listing and get paid the commission fee. Paying for what they need allows consumers to obtain the facts to make an informed decision without feeling undue sales pressure. And collecting fees as a real estate consultant allows you get paid for years of hard-won knowledge—a winning combination in any profession. For more advice on how to develop a consulting practice, visit the National Association of Real Estate Consultants. TIP: If you want to stay involved in the business after retirement, consider helping new real estate salespeople as a mentor or offering your services as a business advisor and consultant to fledgling business. One way to do this is through the Sevice Corp of Retired Executives, a service of the U.S. Small Business Administration. 8 Value Enhancers for Your Business > | |