His email, though, was a reminder that we are all getting older, and even though we sometimes live in denial about the aging process, it’s still wise to prepare for that day when we can no longer work. It’s also wise to plan for the future of our video business. Will we sell it? Pass it on to a family member? Close it down? And what can we do to create value for our video business so that it will be an asset and not a liability when it comes time to retire? Just as we “preach” about the need to have a professional videographer capture an event as opposed to an “Uncle Charlie,” I believe it is also wise for us to consult a financial planner who is qualified to give good counsel instead of trying to take care of these things on our own.
I’m fortunate to have access to an extremely qualified financial planner. I know that he makes good decisions because 15 years ago he made the decision to marry my oldest daughter, Jennifer! Jim Uren is a certified financial planner with Phase III Advisory Services in Buffalo Grove, Ill. (www,phase3advisory.com). Recently, I asked him, “What advice would you give to videographers so that their video business will have the greatest value when it comes time to retire?” Here are some lessons I learned from that conversation.
1. Build a brand bigger than yourself. It is nice to have your customers think highly of you, but that good will is not transferable to anyone who buys your business. If you develop a recognized and trusted brand that has good will, then that is worth something to a potential buyer. In other words, “Memory Vision” will be much easier to sell in the future than “Alan Naumann Productions.” I realize that there are times when a personal name will be sufficient—such as, say, the “Ford Motor Co.” But as a rule, find a name that can be used by anyone.
2. Have a well-maintained CRM (customer relationship management) software program. This would have names, phone numbers, addresses, and email addresses of existing, past, and prospective customers. Part of the value of your business is the list of satisfied customers served over the years. We need to see that the value of our businesses is not just in the equipment of facilities we have but also in the “blue sky” we can offer so that the next owner can build on what we have accomplished.
3. Keep very detailed financial records. A buyer will want to see these before purchasing the business. If we pull out a shoebox with a lot of receipts and other financial information, the potential buyer will not be impressed. However, if we can go to our computer and produce a profit-and-loss statement (using a program such as QuickBooks Pro), a prospective buyer will have a basis for evaluating the opportunity to purchase our company.
4. Bring on potential buyers as partners or junior partners. They can learn the business and your customers can get to know that person. This works especially well if you have loyal employees who desire to take over the business. By using this approach you will have a smooth transition, and your customers may not even be aware of the change in ownership.
5. Save for retirement so you don’t need much from your business. As self-employed individuals, we have certain tax advantages that we need to use. This will not only give us money for retirement, but it can also potentially reduce our tax liability if done properly. Jim and I also talked about other things, such as the need for life and disability insurance, as well as structuring the legal status of your business (for example, why “Sole Proprietor” may not be the best classification when it comes to selling your business). Again, this will require the guidance of a professional—whether a lawyer, accountant, or financial planner.
In addition to those in our industry (such as Steve Yankee or Matt Davis) who can be a good resource for us on the business side of things, you need to find someone in your area who understands your unique business and can give you practical guidance. You may also want to check out www.allenbusinessenterprises.com. Clifford Allen specializes in building the value of small businesses and may prove to be very helpful.
Someone once said, “He who fails to plan, plans to fail.” After years of being successful in our video business, it would be wonderful if the end proved even better than the beginning.
Alan Naumann (alan at memoryvision.tv) is co-author, with Melonie Jeska, of The Complete Guide to Video Biographies, a newly released, comprehensive set of training materials for professional video producers. A featured speaker at WEVA Expo 2004–2010 and a two-time EventDV 25 honoree, he is based in Minneapolis.