Retirement planning and client scheduling

Q: I’m trying to figure out my net worth for future retirement planning. How do I come up with a ballpark figure on how much my company is worth at the present time?

A: First, calculating your net worth is certainly not rocket science. You merely add up the value of all of your assets (cash, bank savings, stocks, bonds, accounts and notes receivable, real estate including your personal residence, vested interests in pension/profit sharing/and deferred compensation programs, IRA/Keogh accounts, equity interests in any businesses, personal property, etc.) and deduct all of your liabilities (credit card debt, both secured and non-secured notes payable, unpaid taxes, mortgages, accounts payable, etc.). That is your current net worth.

It is really quite difficult to tell anyone what their business is worth or what it might bring in a sale as there are various approaches to valuation and many factors to consider.

Generally accepted valuation principles require an appraiser to rely upon three basic approaches to value: market, income and cost. The market approach is a valuation technique in which the estimated value is based on market prices in actual transactions. The income approach is a valuation technique that capitalizes the anticipated income stream from the appraised entity. The cost approach is a technique that uses the concept of replacement as a value indicator. The use of more than one approach is desirable because it provides a check on the other approaches. Weights may be given to each approach and may vary directly with the amount of information available.
Academically speaking, fair market value is defined as the dollar amount at which the assets acquired would equitably exchange between a willing seller and a willing buyer, if neither is under compulsion and both have reasonable knowledge of all relevant facts.

Among the many factors which could affect valuations include:

• The nature and mix of your business, your overall volume, the percentage of recurring income and future growth opportunity
• The outlook for the economy in general; the specific economic conditions in your region and the outlook for your type of business
• Your current financial condition, the historical trend of your earnings and future earning potential
• The financial history of your company as reflected in your financial statements and their comparison to industry averages
• The extent, if any, of goodwill or any intangible or off-balance-sheet assets
• Your client list, including the tenure of key clients, and your retention rate
• The market price of other businesses comparable to yours
• The number and quality of potential buyers for your business
• The quality of your managers and workforce
• The risk involved in the investment as related to earning stability, capital structure, the strength and number of competitors and the overall potential.

But always remember, no two businesses are exactly alike.

The best advice I can give to anyone contemplating retirement and/or the sale of your business is if you do not have an accountant, attorney and financial planner, get them. The financial planner can help you determine how much you need to retire and a good tax attorney working with your accountant will be able to arrange your finances and structure the sale in a manner most favorable to your estate.

Ron Kujawa, CCLP
Kujawa Enterprises
Oak Creek, Wis.

Q: Could you recommend a simple or technology based means of scheduling appointments from the office to the sales person for new clients?

A: I typically use Microsoft Outlook to schedule new appointments. If you grant access to your calendar to the receptionist, that person can then schedule the new appointments directly into your calendar. This requires some coordination up front though. For example, you will have to give the receptionist some parameters as to how many new calls can you handle in a week. You may also want to designate certain days to handling calls in certain areas of your market area (e.g., Tuesdays you cover the North side, Wednesdays the South side, etc.). That way you are not wasting a lot of time driving from one end of town to the other.  

Judson Griggs, LICM
Lambert Landscape Co., Dallas

Click here to download a spreadsheet that Lambert Landscape uses to track new calls and special customer requests.