Updated on June 30, 2022

Challenging situations, like the tumult of the past two years, can provide a valuable opportunity to reassess your business and reflect on its future.

One of the best things an outgoing business owner can do for their company is to transfer it to the right people, at the right time and under the best possible conditions for all stakeholders. But hitting all these targets at once can be difficult at the best of times, and especially during a crisis period. So what’s the best course of action?

A pandemic is a good time to assess leadership

You might think that a crisis would cause companies to automatically hit the breaks on their business transfer plan or even postpone it altogether. But the opposite is often true. A crisis can be a good time to verify whether or not incoming leaders have what it takes. What better way to know if you’ve chosen the right person for the job?

If your business transfer process is underway and you’ve already picked a potential buyer, this is an invaluable opportunity to see how they respond to urgent and stressful situations. In the event that they don’t rise to the occasion, ask yourself if it’s because of their attitude, leadership or capabilities.

The unpredictable nature of a crisis can influence all stakeholders involved in the business transfer process. Everyone—including banks, other financing sources, customers and suppliers—is looking for security. The appraiser tasked with assessing your business’ fair market value will try to determine what facts and figures have been stable over the years.

But the crisis may have impacted your sales, Earnings before interest, taxes, depreciation, and amortization (EBITDA), liquidity, and borrowing capacity. From a financial perspective, this is probably not a good time to assess your company’s value, unless your business provides essential goods or services. For sellers, it might make sense to put the business transfer process on hold for a few months.

On the flipside, buyers may want to have the fair market value reassessed, in the hopes that the numbers will have come down. When the parties have divergent interests like this, it’s unlikely that you’ll reach an agreement quickly.

A crisis can also provide an opportunity for new leaders to emerge from within your company. If this happens and you see that your prospective buyer can’t manage things alone, ask these leaders how they envision their future at the organization.

On the other hand, if your buyer shows improved leadership, provides you with support and communicates effectively with employees, you may want to reassess your planned phase-out schedule.

Your skills are a gift worth giving

When a business transfer process is planned over several years, you have a unique opportunity to share your skills and knowledge, so make the most of it!

Ask the buyer to accompany you to bank meetings when it’s time to finance the company’s liquidity, as well as to meetings with your suppliers, accountant, etc. Now’s the time to start transferring your skills, contacts, roles and responsibilities.

Take action today

The COVID-19 pandemic underscored the importance of being agile, creative and adaptable when faced with unforeseen situations. However, there are some things that are entirely within your control and shouldn’t increase risk, stress and uncertainty for you or your business.

You can get started with your succession plan now, adjust it as needed, based on what you learn, and then move forward with its implementation. If you’re planning on phasing out or moving into a more strategic role in your organization within the next 10 years, it’s time to give some thought to your succession plan. The investment will be an important legacy to protect your business’ survival.

Our experts can help you structure your succession plan and guide you through its development. Together, we’ll make sure you create the right conditions for a successful transition and a bright future for your business. Why wait to take action?

One thing we’ve learned from the pandemic is that healthy businesses depend on healthy entrepreneurs. Here’s one business owner’s story.

It’s now been more than a year since the pandemic began. As the situation evolved, new issues emerged and society had to be resilient and adapt. Unfortunately, this led to a rise in anxiety, distress and fatigue.

Entrepreneurs worked hard to protect their employees’ physical and mental health, sometimes at the expense of their own needs. They also contended with changing realities, new priorities and evolving client needs.

Business owners have born the brunt

Did you know that people in leadership positions are less likely to ask for help? But that doesn’t mean they’re immune to psychological distress, whether or not they recognize the signs or admit to it.

All this rings true for Annik Lachance-Gravel, President and CEO of Lachance et Gravel, a Chicoutimi-based company that specializes in cleaning solutions for the industrial and commercial sectors. And she wanted to do something about it.

Annik Lachance-Gravel aka Robin Hood!

Like many entrepreneurs, Annik’s story breaks from the norm. Even in her youth, she thought of herself as being like Robin Hood—not because she aspired to be a bandit, but because she had a big heart.

In 2014, she took over her father’s janitorial business and suddenly everything changed. She’d found her calling.

Lachance et Gravel before the pandemic

Six years after Annik took the helm of the company, her father had doubled his salary and the business had grown from 0 employees to 70. During those years, Annik applied a rigorous management approach and helped keep the company out of the red, year after year. She also made sure profits were reinvested to help grow the business.

She worked hard to elevate the image of janitorial services. This is a point of pride for Annik, along with the knowledge that she’s helped provide an income for many families while helping her own family prosper.

The pandemic and its collateral damage

“A total free fall.” That’s how Annik describes the early days of the pandemic and how it affected her business.

Since most of her customers are businesses that were forced to close, demand for janitorial services plummeted. Although many of these customers were bound by contracts, Annik decided not to bill them. This courageous decision, which reflected the entrepreneur’s personal values, made sense for the business’ long-term interests, but it could have been devastating over the short term.

When revenues fall off a cliff, you have no choice but to cut costs. Annik was forced to lay off 60 of her 70 employees. Each worker received a personal call, a visit from a company representative, a gift and a special request: to trust Annik and her ability to turn things around. Despite the crisis, she hasn’t lost a single employee to date.

But on a more personal level, this phase was really tough for Annik. During the first wave, there were virtually no confirmed cases in her region. To avoid hemorrhaging money, she had to lay off the vast majority of her employees—and not even her husband was spared! This meant Annik had to assume almost all of the company’s administrative positions.

Then came the second wave

When the virus took hold in the Saguenay–Lac-Saint-Jean region, the phone rang. The area’s integrated university health and social services centres (CIUSSS) needed 22 custodians for the next morning. Annik said yes on the spot. She put together a crisis unit to respond to the urgent needs in facilities that were now in over their heads.

Within two weeks, everyone who had been laid off during the first wave was recalled and another 85 new employees were hired and given express training. Her business was now the region’s most trusted cleaning and sanitation service provider.

This sharp upturn was very demanding for Annik, who had a lot to juggle and numerous sources of stress. There was a risk that her workers wouldn’t have sufficient training, the company’s reputation would be affected, and that cash flow wouldn’t cover the financial obligations related to hiring new staff and adjusting for the turbulent past few months.

When Robin Hood runs out of steam

Annik would do anything to prevent her business from failing. Her top priority is to protect its long-term viability. Even though current and potential customers recognized everything the company has achieved, the fact that office buildings remained closed or with just a handful of occupants meant that customers were still wary of paying for cleaning services. New players also entered the market.

But what about Annik? Has she recovered from the year of unprecedented work-related stress? Are the sleepless nights, constant worries and countless hours to save the company well behind her? Not quite. Tough periods can take a bigger toll than you might think. Your resilience starts to erode. Your body feels the effects of accumulated stress and fatigue. And your support system starts to run out of steam.

Then there are the impacts on your family. That heartbreaking moment when your kids say they don’t love you anymore because you’re never around. The time you realize just how powerless your partner feels in the crisis management whirlwind. Our whole family felt turned upside down and reacted to the changes. Then, little by little, guilt set in. I struggled to balance my responsibilities as a mother, business owner and wife. But failure wasn’t an option, so I put a smile on my face as I went into the office and kept it there all day, trying to convince everyone that “everything’s going to be okay.”

The impact on my social life? What social life? Socializing got put on the backburner because when you’re in survival mode, having fun is the least of your worries.

Anik shook off social expectations and made the decision to focus solely on her business and her kids. She knew it was impossible to be Superwoman indefinitely. She accepted that others could help her with grocery shopping, meal preparation and housekeeping. And she had faith that her friends would understand and would wait for her to resurface.

Surrounding yourself with the right people

Like many other entrepreneurs, Annik slipped into survival mode in all aspects of her life. Looking back, she realizes just how lonely she felt and how reluctant she was to open up about her vulnerabilities. She now realizes that people need to talk about mental health prevention for entrepreneurs and the importance of getting support from a neutral person when the pressure becomes too great. She knows she ignored some of the warning signs, which are clearer to her today. More than ever, she believes that a healthy leader is more likely to have a healthy business.

Just as companies rely on good accountants, HR advisors and salespeople, she believes that business owners should set themselves up for success by having a good psychologist as an ally. It’s about breaking down barriers, opening doors and allowing others to act as your Robin Hood. Today, Annik’s company is thriving, but she realizes that she needs to take care of herself if she wants to be able to take care of others, including her customers.

What about overall health?

If a company is unhealthy, it’s sure to impact the wellbeing of its owner, and vice-versa. That’s why our firm is focused on promoting good overall business health. How? By working on:

• The business’s overall health (based on seven factors used to determine challenges and potential sources of stress for business owners)
• Entrepreneur mental health and wellness
• Strategies for transforming the reciprocal relationship between the company and business owner, where negative experiences for one have positive repercussions for the other
• Action plans that put people first

If you’re a business owner, take care of yourself and don’t hesitate to contact our experts. Our goal is to help you stay balanced as you safeguard the health of your company, employees, yourself and all facets of your business.

This article was written in collaboration with Nancy Boisvert, psychologist.

Updated on May 8, 2023

Inflation remains high in some industries. Does your business management reflect this?

In order to safeguard against the impacts of inflation, you need to ensure better control over your costs to protect your company’s profit margins.

What causes inflation?
How does inflation impact businesses?
How can you protect your profit margins in an inflationary market?

What causes inflation?

In 2022, the Consumer Price Index (CPI) grew at its fastest rate in 40 years in Canada, reaching 6.8 %. Fortunately, inflation has slowed significantly since the end of 2022 but prices are still high and the CPI remains above the Bank of Canada’s target of 2%.

The price increase affects all components of the total CPI basket. It is due to significant imbalances between supply and demand for many goods and services.

Much of the inflation is attributable to disruptions in the supply chain, workforce shortage that is pushing up wages, and other factors, such as the war in Ukraine. The restaurant industry, for example, is strongly affected by this situation.

How does inflation impact businesses?

Inflation erodes profit margins by increasing the cost of purchasing inputs.

In the construction sector, for example, contractors sold houses at prices set long before the materials were purchased and now have honour their commitment, even if the project is no longer profitable.

The erosion, or even disappearance, of margins, puts the financial health of these businesses at risk.

How can you protect your profit margins in an inflationary market?

Have a clear view of your cost

Only a minority of SMEs have a good knowledge of their costs. Many set prices according to market prices, without checking whether this makes sense in their own business. At a minimum, businesses should know their contribution margin, which is total revenue minus variable costs.

You have to make sure you cover variable costs when you sell your products or services. In today’s market, many variables are changing simultaneously (wages, inputs, cost of health measures) and it is important to have a clear view of the costs.

Secure your supplies

It is important to do everything possible to secure supplies. Can you sign longer-term supply contracts to guarantee your purchases at predictable prices?

You should also cultivate your relationships with your suppliers, because in the current context of shortages, some of them may choose to stop serving you in order to prioritize more profitable clients. A good relationship can potentially avoid this type of setback.

Optimize processes

Before passing on price increases to consumers, it might be better to consider your operational performance. So far, few companies in Québec have invested in a digital transformation. Optimizing processes generally increases productivity by 15% to 25%.

You can generate more services or products with less waste using the same work force, thereby reducing your costs. You are not responsible for inflation, but you have the power to adapt by taking action on this aspect of your activities.

Rethink the business model

Sometimes this is the only option remaining. In more vulnerable industries, rethinking the approach and being open to new business opportunities in a fluctuating market can be beneficial to keep margins at an adequate level.

In order to avoid taking the wrong approach, let our experts assist you. They can provide guidance and save you time and money. Moreover, many subsidy programs are available to allow entrepreneurs to benefit from such expertise.