Accepting a Position as a Director in a Company

 

Being invited to join a promising young startup is certainly a boost to the ego. Clearly, your qualifications and experience have impressed someone enough to offer you a position as director. However, you have to think like a business professional. Put aside the compliments and ask “Do I know what I’m getting myself into?”

 

Because you might be taking a radical change in your career path it’s vital that you do research before accepting a position as a director. The following are some key areas you should thoroughly understand about the start up.

1)      Their Finances

Start with asking, “How much money do they have in the bank?” and build from there. What you should be looking for are actual funds and not the promise of investors coming on board. A line of credit is a good thing for the company to have but without working capital, that credit can quickly exhaust itself and add to the red ink in a ledger. Beyond the working capital, you also want to examine the company’s valuation. This will include income projections versus expenses. Bottom line: You need to get the complete financial picture.

2)      Their Competitors

Every startup begins with the notion that they are better than their competitors. It’s your responsibility to take off the “rose colored glasses” and garner a true look at the marketplace. Their competitors wouldn’t be in business if they weren’t doing something right. What exactly are they doing that your startup can’t do? The opposite question applies as well when asked about the strengths of your potential company’s abilities. Not only are competitor’s sales important to review but also their approach to marketing strategies. How will your startup do things differently?

3)      Their Investors

In your new position as director for a startup you might be charged with the task to bring in new investors. Hopefully, that company will already have a few investors supplying capital and intelligence. You would be at an extreme disadvantage if there were no investors already on board. That might prove to be too daunting of a challenge.

4)      Their Board of Directors

Who will you be working with in this new venture? This is crucial to understand because engaging in a startup will have your mettle tested. You might be asked to work long hours with this group in addition to making other sacrifices in your personal life. Will it be worth it? It’s hard to judge that until you have some tangible sales figures but you certainly don’t want to invest your time and energy with a group of directors who aren’t up to the task. Don’t ever forget that the solid reputation which earned you the offer to join the startup is the same reputation that will be at risk.

Selling your business – what to do for an easy sale

Selling your business could be one of the most important and difficult decisions you will make in your business career. When things are going well – your business is making money, you’re enjoying yourself, and the future looks great -  you’re not thinking about preparing for your retirement. 

The earlier you start planning for your company’s sale, the better you’ll be able to take advantage of a higher valuation and a quick turnaround. Here are some good reasons why you should be prepared to sell:  

·         You may fall sick unexpectedly

·         Your life goals change along the way

·         Not having a successor to replace you as you retire

·         Business partnership issues and you want to sell your shares

       ·     Lifestyle change


When you are ready to sell your successful company, you should keep these three things in mind:

·         You must make a profit from your investment in the company

·         The sale of your equity should be converted into liquid assets such as cash

·         The amount you receive should meet your needs for your professional and personal life

What is the value of your business?

Determining the value of your business is like sales – what are your potential buyers willing to pay for a business like yours? With the help of a Chartered Accountant, you can run various accounting models to come up with a number using data that comes from the economic strength of your business, your industry, how much your competitors are worth, your sales revenue and profit margins.  All these must be taken into account. Remember, the buyer is not looking at purchasing the cheapest business they can find, they are looking for a company that can potentially make them more money in the future. So you need to prove to the buyers that your business will continue to grow in the industry you’re in.  

Work with a third-party business valuator whose objectivity can help smooth the sale for both yourself and your buyer.

Are your finances in shape?

You should already have your books kept in order while you’re running your business. When it comes to a sale, nothing is more important to a buyer than your accounting.  They will be asking questions such as:

·         Are you making money?

·         Are your profit margins healthy?

·         Does the company have any unmanageable debt?

New owners want to buy businesses that are healthy and thriving.  You'll also want to be sure that you've reduced your liabilities as much as possible, doing things such as settling any lawsuits and making sure all tax payments are up to date.

Gather a professional team

Selling a business is complicated.  With a complex transaction like this, you want to make sure that all your bases are covered.  By hiring a professional team to guide you in the sales process, they can provide you with the objective advice that you need to sell your business at the best value.  In recruiting a team, make sure that you choose consultants who have experience in your industry and your type of business, be it a small business or a large multi-national corporation.

Other than a corporate lawyer who can help you with the legalese and contracts, you should also take a look at hiring a good accountant. If your business has assets such as a manufacturing plant and warehouses, you can also recruit a corporate realtor who may have contacts in your industry.

Make sure that you take the time and effort to do it right the first time. By preparing carefully and using the best resources that you can hire, you are increasing the chances of selling your business at a great price.