tag:blogger.com,1999:blog-71793845368948806422023-11-15T07:48:57.941-08:00bluebirdballadadminhttp://www.blogger.com/profile/15505428162663321851noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-7179384536894880642.post-61437518974321987392014-03-20T10:40:00.005-07:002014-03-20T10:40:38.210-07:00The Secrets to Buying the Right Business For You in Today's Economy<div id="article-content" style="text-align: justify;">
<div style="text-align: justify;">
From the first day of your life that you enter the work force you
have had a choice. And that choice has always been to either get a job
or buy yourself a job. You probably didn't look at it that way, but
stand back and think about it now. If you continued on with your
education, you were preparing yourself for a job. You can call it a
career if you like, but in simple terms it was a job regardless if it
was the president of a large manufacturing company, the local bank or an
executive position on Wall Street. You still had a job with an
employer. Your other choice has always been to buy yourself a job. By
this statement I am referring to by either becoming an entrepreneur or
buying yourself a business. Which in turn means that you have bought
yourself a job.</div>
<div style="text-align: justify;">
Some people are made to have a job and work for
someone or some company and do very well and are very happy or content
in that position. Others would be restless in working for someone else
and feel the need to make their own rules and have more control over
their work place. Because we only have one of the other choices in the
matter of how we spend our time you would think it would be a pretty
simple decision wouldn't you? Well sometimes it is, but here is the
clincher to this situation.</div>
<div style="text-align: justify;">
People change. Change is the only
constant we truly have in our lives. You may stay with the same partner
for 50 years and you may stay at the same company or work in the same
industry for years, but the one thing that is constant in all of this is
change. People change, industries change, families change, economies
change. Everything changes. And that is where the confusion and anxiety
comes from. It is when the change occurs and we don't know how to react
to it. Plus a lot of the time change has a tendency to sneak up on us
and before we know it. We need to change. And then we are in a
reactionary mode instead of being in a responsive mode, therefore
creating the anxiety and uncomfortableness that comes with change.</div>
<div style="text-align: justify;">
The
change feelings that may occur in ones like can come in many different
forms and have many different reactions to oneself, but the one I want
to address here is the one regarding whether you get a job or buy
yourself a job.</div>
<div style="text-align: justify;">
Buying or starting a business is an area that I am
an expert on since I have owned 35 different businesses that I have
either bought or started and probably managed to make more mistakes in
the short time that I was buying, starting and selling business than
most people could make in their lifetime, therefore enabling me to write
and comment on this subject for your benefit.</div>
<div style="text-align: justify;">
In today's economic
climate we are experiencing a large number of people who had been
employed and have had a job and their job was eliminated and they are
out on the hunt to find another job. A commendable quality for them. But
the chances of them finding another job is probably pretty thin,
especially if they are looking to stay in the same field they were in,
with the same amount of pay and in the same geographic area that they
were working in before. As my old science teacher used to say. "It is
very possible, but not very probable" that they will find such a
position. So what are their choices? Back to what I mentioned earlier.
Either they go out and find a different job or buy themselves a job.</div>
<div style="text-align: justify;">
Since
I am a qualified expert on the buying oneself a job you need to take
heed and review the 11 different points I have listed below. These are
short, but substantive issues that you must address if you are going to
be buying yourself a job and be happy and successful at it. Not
following the listed information could determine you financial failure
and or the cause of your personal unhappiness.
<br />Take your time and study each of the listed areas of life and business I have described and then move forward.</div>
<div style="text-align: justify;">
I
have not gone into great detail as to all of the ins and outs and
intricacies of operating a business. There are plenty of books on that
subject for ever particular business that is available. What I want to
address and for you to think about is whether you want to or have the
qualities to be the one who buys themselves a job or not. The final
decision if for you to make, but by following the listed points I have
made there is a very good chance of you actually making the right
decision for you and your family and your future happiness, which is
what it is all about.</div>
<div style="text-align: justify;">
Good luck and good hunting for the business of your dreams and enjoy the journey.</div>
<div style="text-align: justify;">
1. First decide what you like and don't like to do.
<br />Sounds simple, but if you don't like cooking or working around food
then why would buy a restaurant? Because you tried to justify it by
saying it is really marketing and the food is only an end to the means?
You can say that and part of it is true, but in the beginning you will
BE working with food. So to begin with find something you like to do and
gravitate in that area. Reflect on what you enjoy doing. Your hobbies.
Do you enjoy working one on one with people? Old people, young people.
Maybe you are tired of working with people and want to work in an
indirect manner with people on a business to business level instead.
This is probably one of the most crucial parts of the equation you need
to address before you go any farther.</div>
<div style="text-align: justify;">
2. Where do you want to live?
<br />Generally people want to work close to where they live. This is not
always true, but for the most part it is. Are you willing to buy a
business that is 1 to 2 hours away from your home and commute daily to
it? Or do you want it to be across town within 5 minutes of your home?
Or do you want something that involves traveling all over the country
and enjoying a different setting every day?</div>
<div style="text-align: justify;">
In today's business
with an individual's access to the internet, cell phones, web sites, asp
systems on the internet, outsourcing of administrative duties and
pcAnywhere you can be doing business literally around the world from
your bedroom at home while never leaving home and having the perception
of a large company. So your ability to reach a large audience of
customers without leaving a geographic area is available to you. So if
you want to live in a resort town and work across the world it is
possible for you to do in today's economy.</div>
<div style="text-align: justify;">
3. How much money do you want to make?
<br />Don't give the lame answer of a lot? Be definite. Determine how much
you need and then add to that amount to get a realistic number. You
have got to have a goal as to how much money you want to make before you
set out to buy or get into a business. Before you get into a business
you HAVE to know the dollar amount as to what you want to make, because
without this number you will never be able to determine if the business
can support that amount.</div>
<div style="text-align: justify;">
All too many times people jump into a
business not having a clue as to how much money the business can really
generate and then after they get into the business they are disappointed
that they have invested a large amount of time and resources only to
find out the business could not support them.</div>
<div style="text-align: justify;">
That is why we want
to know on average how much income a business will generate before we
start or buy the business and then having that number we work backwards
to see if it meets our requirements of being capable to support us in
our financial needs.</div>
<div style="text-align: justify;">
4. What is your risk tolerance?
<br />Are you willing to put everything you have on the line to get into
business and sink or swim or are you only wanting to put your toe in the
business and try it out to see if it is for you or not. If you are not
one who has a high risk tolerance then maybe you should be looking at a
franchise where they already have systems in place and if you follow the
tried and true program of the franchise you should be successful. But
keep in mind that the more you put into the business the more you are
going to get out. So if you think you can only work 20 hours a week at a
business instead of devoting 60 hours a week to knowing everything
there is about your business and industry there will be a difference in
the results you receive from the business. Plus, if you are concerned
about not wanting to lose all of your money I would suggest that you
start out small with a low investment business, because you will make
mistakes and you will end up paying tuition to learn the business so you
might as well start out with a small investment and work your way up to
a larger business later.</div>
<div style="text-align: justify;">
5. Do you buy or start a business?
<br />When offered the difference between the two I always suggest buying
an operating business. Why? Because the day you purchase an operating
business you have a cash flow. It may not be the greatest cash flow in
the world, but you have a cash flow and with that cash flow you have a
jump start with the business and all you will need to do is to
concentrate on growing the business and cash flow. Where if you start
out with a new business you have nothing. Only a hope and a dream and it
will be exciting, but you have no cash flow.</div>
<div style="text-align: justify;">
Buying a business is
always a safer bet than starting a business. At least with buying a
business the day you take the business over you have a cash flow and all
you have to do is build the cash flow. Starting a business regardless
how good of a franchise or idea it may be you are starting with zero and
when you start at zero it can take a long time to get to breakeven let
alone profitability.</div>
<div style="text-align: justify;">
6. What is the upside to the business?
<br />If you are buying an existing business you need to know if there is
an upside to the business. In other words is the present business owner
getting all there is out of the business or have they been lazy and not
advertised or marketed the business and not paid attention to it and all
it needs is your attention. Do your due diligence and check out the
business and chances are the present owner of the business has gotten
tired and burnt out and left a lot of opportunity in the business.</div>
<div style="text-align: justify;">
You
never want to buy a business that has no upside to it. Sometimes there
will not be any upside to a business, because the previous owner has
owned it for so long and ran it so well that you can never duplicate
their business model. Sometimes there is no upside to a business,
because the industry has changed. One does not want to be selling horse
whips, when cars were first coming onto the scene.</div>
<div style="text-align: justify;">
Check the
competition of the business. Generally speaking regardless if you are
buying an existing business or starting a business the success of the
business if going to be determined by the amount of competition you
have. Very simple to find and very definite the reason for the success
or failure of the business.</div>
<div style="text-align: justify;">
7. Where do I find a good business to buy?
<br />Good businesses are hard to find. There are many of businesses for
sale on the internet on business for sale web sites like bizbuysell.com,
businesssesforsale.com, bizquest.com, AmericanBusinessBrokers.com and
dozens of other web sites. But some of the best businesses you could buy
are not on the internet. They are being run by their present business
owners and all that is needed is for them to be asked. Yes, just ask.
Once you have determined what kind of business you want to be in and
where you want to be, then start asking around with the present business
owners if they have every considered selling their business. You will
be surprised that there are many business owners that would like to sell
their business, but don't know how to or have just been putting it off
and all they are needed is to be asked. Take it upon yourself to ask and
if they are not interested in selling their business you will at least
get a preview and education of the business is all about.</div>
<div style="text-align: justify;">
8. How do know what a business is worth after you find it?
<br />Valuation is one of the toughest things about buying a business. ALL
sellers think their business is worth more than what it really is. It
is just human nature and you are not going to change that. Part of the
valuation process is going to be decided as to what kind of buyer you
are. By that I mean are you looking to buy yourself a job or are you
looking to buy a business to sell in a few years? It makes a difference
when it comes time to buy. If your goal is to buy yourself a job and
expect to keep the business for quite some time then you can afford to
pay a little extra for the business. But if you are planning on buying a
business and then selling it in a few years you have to make sure that
you get it as cheap as possible so that you will have a larger profit
margin when it comes time to sell. There are several different ways to
determine the value of the business. One is to hire business valuation
consultant and have them review the numbers and quality of the business.
Another way is to purchase the book "The Business Reference Guide" by
Tom West, which lists hundreds of different business and what the
general rule of thumb of valuation for each of these businesses is. It
is the same book that is used by business brokers when valuing
businesses. And another way is to hire a knowledgeable business broker
and pay him to do the valuation for you. But make sure they are an
experienced business broker and are not going to school on you.</div>
<div style="text-align: justify;">
9. Do you have the money or where do you get the money?
<br />Depending on the total cost of the business and if it has a good
cash flow stream you will be able to find the money. A lot of businesses
are still being sold with the seller doing owner financing or at least
partial owner financing and I suggest to buyers that they look for this
kind of arrangement. Because, if the seller is willing to finance part
of the sale they are electing to remain a part of the business and are
your partner until you can get them paid off and they will be more
willing to take your phone calls or offer advice if you still owe them
money. Local banks are the next choice for getting money to purchase a
business. They will be very conservative and probably only want to loan
on a business that has real estate included as opposed to a Subway or
something that is in a leased space with very little in the form of hard
assets for them to collator, but they will probably loan in the 60% to
70% of the total sale price of the business. However, you get the money
whether it is from your savings, relatives, friends, or banks get the
money so you can get into the game so to speak. Once you get into the
game and own your own business all of the banks, relatives, friends
etc... will treat you differently, because you are now a business
person. It may sound weird, but it is true.</div>
<div style="text-align: justify;">
10. When do you buy the business in today's economy?
<br />As soon as you find the right one. It is not all about the price.
Sure price is important, but the quality of the business, location,
industry of the business, whether you like it or not and especially if
you are going to be staying in the business for a while are more
important than the price. Of course you don't want to over pay above the
market price and end up behind the eight ball right from the start, but
when you find it. Buy it. Don't get caught up in the small details of
trying to save a ½ point on the financing or a few thousand dollars on
the purchase price. Your goal is to get into business and stay in
business and make a profit. Until you get into the game you are nothing
more than a wanta-be who is setting on the sidelines talking about. I
don't care if you have hundreds of thousands of dollars in the bank.
Until you get into the game of business you just a wanta-be on the
outside looking in.</div>
<div style="text-align: justify;">
11. Bonus Tip.
<br />DO NOT search for the perfect business. Why? Because there is no
such animal. All businesses will have some warts on them and what you
are looking for is a business that will meet your general needs and
wants. Just like in friends, spouses, co-workers there are no perfect
people or perfect businesses so you might as well accept this fact
before you begin your search.</div>
<div style="text-align: justify;">
People have a natural tendency to
look for and talk about the things that are wrong about a person or a
thing. Become a good finder and look for the things that are good about
the business and how many of the points I have listed here that meet
your criteria and then go forward. Nobody bats 100% and you won't
either. But by following my list of what to look for in the buying or
starting of a business you will come much closer to your goal of having
an enjoyable journey in your life as a business owner.</div>
</div>
adminhttp://www.blogger.com/profile/15505428162663321851noreply@blogger.com0tag:blogger.com,1999:blog-7179384536894880642.post-60919256019074339512014-03-20T10:40:00.002-07:002014-03-20T10:40:15.991-07:00Three Levels of Business Succession Planning<div style="text-align: justify;">
One of the chief concerns facing family business owners is how to
effect an orderly and affordable transfer of the business to the next
generation and/or key employees. Failure to properly plan for a smooth
transition can result in monetary losses and even loss of the business
itself. This article will explain how to keep the family business in the
family.</div>
<div style="text-align: justify;">
There are essentially three levels to a business
succession plan. The first level of a business succession plan is
management. It is important to recognize that management and ownership
are not the same. The day-to-day management of the business may be left
to one child, while ownership of the business is left to all of the
children (whether or not they are active in the business). It is also
possible that management may be left in the hands of key employees
rather than family members.</div>
<div style="text-align: justify;">
The second level of a business
succession plan is ownership. Most business owners would prefer to leave
their businesses to those children that are active in the business, but
would still like to treat all of their children fairly (if not
equally). Yet, many business owners lack sufficient non-business assets
to allow them to leave their inactive children an equal share of their
estate. Thus, a business succession plan must provide a means of
transferring wealth to the children who are not interested in, or not
qualified for, continuing the business. Business owners must also assess
the most effective means of transferring ownership and the most
appropriate time for the transfer to occur.</div>
<div style="text-align: justify;">
The third level of a
business succession plan is transfer taxes. Estate taxes alone can claim
up to 45% of the value of the business, frequently resulting in a
business having to liquidate or take on debt to keep the business
afloat. To avoid a forced liquidation or the need to incur debt to pay
estate taxes, there are a number of lifetime gifting strategies that can
be implemented by the business owner to minimize (or possibly
eliminate) estate taxes.</div>
<div style="text-align: justify;">
LEVEL ONE - MANAGEMENT</div>
<div style="text-align: justify;">
Whether
management of the business will rest in the hands of the next
generation, in the hands of key employees, or a combination of both, the
business owner must learn to delegate and work on the business. It can
take many years to train the successor management team so that the
business owner can walk away from day-to-day operations. For many
business owners, giving up such control can be difficult.</div>
<div style="text-align: justify;">
All too
often, business owners focus more on the ownership and transfer tax
issues involved in a business succession plan and ignore the people
issues. In the typical family business, the future leader is likely to
be one of the business owner's children. If so, steps must be taken to
assure that the future leader has the support of the key employees and
other family member owners. Generally, a gradual transfer of roles and
responsibilities gives the successor time to grow into his/her new
position and allows the business owner some time to get use to his/her
diminishing role. Thus, lead-time is important for a smooth transition.</div>
<div style="text-align: justify;">
Many
family businesses are dependent on one or two key employees who are
critical to the success of the business. These key employees are often
needed to manage the business (or assist in the management of the
business) during the transition period. Therefore, the succession plan
must address methods to guarantee that key employees remain with the
business upon the death, disability or retirement of the business owner.
Among the commonly used techniques used to assure that key employees
remain with the business during the transition period are employment
agreements, nonqualified deferred compensation agreements, stock option
plans and change of control agreements.</div>
<div style="text-align: justify;">
LEVEL TWO - OWNERSHIP</div>
<div style="text-align: justify;">
Often,
a major concern for family business owners with children who are active
in the business is how to treat all of the children equally in the
business succession process. Other concerns for the business owner
include when to give up control of the business and how to guarantee
sufficient retirement income. For example, selling (as opposed to
gifting) the business to the active children results in all children
being treated equally and provides the business owner with retirement
income. For those business owners that are not reliant on the business
for their retirement, they can gift the business to the active children,
and leave the inactive children non-business assets. If, as a result,
the inactive children will not receive an equal (or fair) portion of the
business owner's estate, make up the difference by establishing an
irrevocable life insurance trust for their benefit.</div>
<div style="text-align: justify;">
Simultaneous
with the gifting and/or selling of business interests, the new owners
should enter into a buy-sell agreement. A buy-sell agreement is a legal
arrangement providing for the redistribution of shares of the business
following the death, disability, retirement or termination of employment
(triggering events) of one of the owners. The buy-sell agreement would
also set forth the purchase price formula and payment terms upon the
happening of a triggering event. If properly designed and drafted, a
buy-sell agreement will create for the departing owner a market for what
otherwise would be a non-marketable interest in a closely held
business; will allow the original owners to maintain control over the
business by preventing shares from passing to the departing owner's
heirs; and will fix the value of a deceased owner's shares for
estate-tax purposes.</div>
<div style="text-align: justify;">
LEVEL THREE - TRANSFER TAXES</div>
<div style="text-align: justify;">
The
transfer tax component of business succession planning involves
strategies to transfer ownership of the business while minimizing gift
and estate taxes. The gift and estate-tax consequences deserve special
attention. Unanticipated federal estate taxes can be so severe that the
business may need to be liquidated to pay the tax.</div>
<div style="text-align: justify;">
While there is
currently a lapse in the estate and generation-skipping transfer taxes,
it's likely that Congress will reinstate both taxes (perhaps even
retroactively) some time this year. If not, on January 1, 2011, the
estate tax exemption (which was $3.5 million in 2009) becomes $1
million, and the top estate tax rate (which was 45% in 2009) becomes
55%.</div>
<div style="text-align: justify;">
For business owners with taxable estates, a gifting program
can be used to reduce estate taxes. For lifetime gifts or sales of the
business, nonvoting shares are usually used for two reasons. The first
is to accomplish the business owner's desire to retain control of the
business until a later date (i.e., the owner's death, disability or
retirement). The second reason is to reduce the gift-tax value of the
shares because of valuation discounts for lack of control and
marketability.</div>
<div style="text-align: justify;">
Gifts of business interests up to $13,000 ($26,000
for married couples) can be made annually to as many donees as the
business owner desires. This amount is adjusted for inflation in
increments of $1,000. Such gifts not only remove the value of the gifts
from the business owner's estate but also the income and future
appreciation on the gifted property.</div>
<div style="text-align: justify;">
Beyond the $13,000 annual
gift tax exclusion, the business owner can gift $1 million ($2 million
for a married couple) during his/her lifetime. While the use of the gift
tax exemption reduces (dollar for dollar) the estate tax exemption at
death, such gifts remove the income and future appreciation on the
gifted property from the business owner's estate. Unlike the estate tax
exemption, the gift tax exemption remains fixed at the $1 million level.</div>
<div style="text-align: justify;">
While
a business owner can gift shares in the business outright,
consideration should be given to making the gifts in trust. One
advantage of making gifts in trust for the benefit of the active
children is to protect them from their inability, disability, creditors
and predators, including divorced spouses. Another advantage to making
gifts in trust is that the assets in the trust at the children's deaths
can (within limits) pass estate-tax free to the business owner's
grandchildren (and perhaps more remote descendants depending on state
law). These are sometimes known as generation-skipping or dynasty
trusts.</div>
<div style="text-align: justify;">
For business owners with very large estates, there are
sophisticated gifting strategies that can be used with little or no gift
tax, such as installment sales to a grantor trust, private annuities,
grantor retained annuity trusts, and self-cancelling installment notes.
There is also statutory relief, including Internal Revenue Code Section
303, which permit the tax-free use of a closely held corporation's cash
to pay a deceased shareholder's estate tax; and IRC Section 6166, which
allows the business owner to pay estate taxes on installments.</div>
<div style="text-align: justify;">
Life
insurance often plays an important role in a business succession plan.
For example, some business owners will wait until death to transfer all
or most of their business interests to one or more of their children. If
the business owner has a taxable estate, life insurance can provide the
children receiving the business the cash necessary for them to pay
estate taxes. As mentioned above, business owner can use life insurance
to provide those children who are not involved in the business with
equitable treatment. Finally, life insurance is a popular way to provide
the cash necessary for the business or the surviving owners to purchase
a deceased owner's interest pursuant to the terms of a buy-sell
agreement. In many instances, the cash surrender value in a life
insurance policy can also be used tax free (by surrendering to basis and
borrowing the excess) to help pay for a lifetime purchase of a business
owner's interest.</div>
adminhttp://www.blogger.com/profile/15505428162663321851noreply@blogger.com0tag:blogger.com,1999:blog-7179384536894880642.post-91547903148177409322014-03-20T10:39:00.002-07:002014-03-20T10:39:55.348-07:00Selling a Business - 12 Steps to Success<div style="text-align: justify;">
Simply put, selling a business is complex. Business owners who
decide to sell their business should be prepared, patient, responsible,
and realistic about the process. When owners strategically plan the
sale of their business, from start to finish, they put themselves in a
much better position to succeed. Below are some essential steps
required for successfully selling a business.</div>
<div style="text-align: justify;">
<b>Commitment to selling</b></div>
<div style="text-align: justify;">
Deciding
to sell a business is one of the greatest challenges that a business
owner will face. When debating your company's future ownership, it is
imperative that when the business owner makes a rational decision to
sell, they see the plan through. It is only human nature to question if
it's the right time to sell, but those owners who see their calculated
decision through, will be successful in the end.</div>
<div style="text-align: justify;">
<b>Bring in professionals</b></div>
<div style="text-align: justify;">
The
sale of your business will require the expertise of many professionals.
In order to maximize deal value, terms and closure seek out trusted
advisors to protect your best interests. In most business transactions,
this team would consist of an attorney, business broker, and CPA.
Mixed into these roles and responsibilities is that of a business
valuator. More times than not, CPA firms do not specialize in business
valuations and getting the price right from the start is a must to
maximize seller's value.</div>
<div style="text-align: justify;">
Selling a business is a long, arduous
process full of hurdles and bumps in the road. It is at the business
owner's peril if they try to go at it alone. Not only will they most
likely encounter unforeseen challenges and mishaps, but their business
will most likely deteriorate while they're trying to juggle all of the
responsibilities involved in successfully selling a business.</div>
<div style="text-align: justify;">
<b>Conduct a business valuation</b></div>
<div style="text-align: justify;">
An independent, third party business valuation
is expected in today's business selling marketplace. The objective and
value of a business appraisal is to set a fair asking price so that
your business assets (both tangible and intangible) are fairly valued
and attractive to savvy buyers. The business valuation will validate
your asking price, enabling a seller to significantly reduce buyer
negotiations and confidently stand by their asking price. In some
cases, the professional broker will have access to a reputable business
valuation firm and may be able to facilitate the process of preparing
your company for a business valuation. Many brokers do offer an opinion
of value, but using the expertise of a credible, business valuation
firm can be one of the best decisions a business owner will make; <i>inaccurately</i> valuing a business (high or low) can be very damaging to a business seller.</div>
<div style="text-align: justify;">
<b>Confidentiality, Confidentiality, Confidentiality</b></div>
<div style="text-align: justify;">
It
is obvious that the majority of business owners do not want to hang a
for sale sign on their business, alerting employees, customers, and
vendors of their intentions. Maintaining discreetness during the sale
of your business is a must. All parties advising you on the sale of
your business should first sign a confidentiality agreement. You can
prepare a simple mutual NDA or ask these professionals for their
boilerplate agreements. In addition, all potential buyers will need to
sign a non-disclosure agreement before any material information about
the business is shared. Once the business is being listed, your broker
should operate carefully as a blind business listing is meant to peak
buyer interest, not to give them enough details to figure which specific
business is for sale. It is at the owner's peril if they do not ensure
confidentiality is maintained throughout the process; if a prospective
deal goes south or if the seller changes their mind about selling, the
business will be protected going forward when confidentiality has been
preserved.</div>
<div style="text-align: justify;">
<b>Get your affairs in order</b></div>
<div style="text-align: justify;">
When
entertaining prospective buyers, they will want to closely analyze your
financial statements, both past and current. It is important that all
adjustments and reporting be made prior to presenting balance sheets as
any material change prior to closing will have an impact on the final
purchase price. In addition, larger operations with $5MM+ in annual
sales should have their financial statements audited. While this is not
cheap, it reassures buyers that your asking price is fair based on
legitimate financial reports and studies have indicated this serves as a
value driver in purchase price. Other areas you should focus on
include lease agreements (if you do not own real estate), key employee
contracts, key client contracts, etc. Finally, get your physical
business location(s) in presentable order by cleaning, organizing and
preparing for VIP visitors.</div>
<div style="text-align: justify;">
<b>Package the business</b></div>
<div style="text-align: justify;">
Presenting
your company's information to buyers is going to be important to ensure
they are informed, educated and more importantly disclosed about the
state of your business. They'll want to learn about your operation,
industry, financial performance and future prospects. A confidential,
presentation package is needed with most buyers. Professional business
brokers should be able to extend these types of value added services in
order to properly package your business for a professional presentation.</div>
<div style="text-align: justify;">
<b>Market the business</b></div>
<div style="text-align: justify;">
Finding
qualified buyers that meet your criteria is absolutely critical. This
step requires an added layer of discretion. Take time to use the right
marketing channels for your type of business, discreetly promote the
business to buyers, and rigorously qualify interested parties. The more
popular outlets for business listings include local/national
newspapers, internet directories, direct mail and networking. Your
intermediary should facilitate and execute this step so that you can do
the next step. Your representative's role in this phase is to attract,
identify, qualify and introduce appropriate buyers for your business.</div>
<div style="text-align: justify;">
<b>Keep Running Your Business</b></div>
<div style="text-align: justify;">
While
selling your business may prove distracting, it is imperative that the
owner continue to run his or her operation; almost as if it wasn't for
sale. While you will be making sure your ducks are in row and ready to
put on its best face for potential buyers, taking care of your employees
and your customers is important. It is to the owner's detriment if
business sales decline, staff begins asking questions, and if the sale
takes longer than anticipated. Maintain business as usual and let your
business selling team run the ball to the goal line.</div>
<div style="text-align: justify;">
<b>Entertain multiple buyers</b></div>
<div style="text-align: justify;">
A
business seller who is entertaining several qualified buyers is in a
position of strength leading up to the sale of a business. Not only
will this inherently solidify the value of a business with the prospects
of a bidding war, it will ensure the most appropriate buyer is found
for the future health of the company. Selling a business
is not just about money, it is also about a simpatico with a buyer and
their intentions with the business operation. Looking out for the
overall best interests of your employees, customers, and brand should be
an emphasis for a responsible business owner.</div>
<div style="text-align: justify;">
<b>Due Diligence is a two-way street</b></div>
<div style="text-align: justify;">
Following
an Offer to Purchase or Letter of Intent, your qualified buyer is most
certainly going to conduct due diligence on your business, its
financials, customer lists, employee contracts, vendor relationships and
other elements you claim to be in place with the sale of the business.
While this is a normal process, typically lasting a couple of weeks
(sometimes longer based on deal size), due diligence should not just be
from the buyer.</div>
<div style="text-align: justify;">
You, the business owner, should be conducting due
diligence on the potential buyer. Beyond financial buying power and
purchase price, you should be interested in their background, intentions
with the business and its key employees, management philosophies,
maintaining culture, etc. Instruct your business broker to find out why
inquiring buyers are interested in your business, ask for a resume, and
dig for answers.</div>
<div style="text-align: justify;">
<b>Close the Deal</b></div>
<div style="text-align: justify;">
The professional
team you assemble to help execute the sale of your business, should
serve as a buffer between you and potential buyers when it comes to
negotiations. Common areas that are negotiated are purchase price,
terms and deal structure, non-competes, owner training/support, etc.
Your business broker is a conduit and should be able to effectively
represent you when it comes to terms, inclusions, and exclusions. Above
all else, it is critical that you not only rely on your broker, but
also your attorney, when negotiating, drafting and accepting terms in
the Purchase Agreement. The seller's attorney and buyer's attorney will
need to actively communicate with one another to get everyone to the
closing table and seal the deal.</div>
<div style="text-align: justify;">
<b>Don't fumble the handoff</b></div>
<div style="text-align: justify;">
Most
buyers will seek assistance from the seller in the transition of the
business. The involvement and seller participation is going to
significantly vary by industry and type of acquisition, but you should
prepare to stay on board for a reasonable period of time. This is an
essential step in the successful transfer of a business so that the
company's operations, employees, customers and overall stability are
protected. Just as a quarterback has to mechanically hand the ball to a
running back, so does a seller hand the business off to a buyer. If
this is rushed or done in a nonchalant manner, the business could
stumble, take a dip and experience rough road ahead. A responsible
business seller will dedicate time to work with the new owner, at no
cost, typically lasting several weeks to a couple of months. Any period
longer should come at the business buyer's expense and a previously
agreed upon rate of compensation.</div>
<div style="text-align: justify;">
There are all types of
complexities in planning and executing the sell of a business. The
smart business owner will enlist the services of professionals who can
help them carry out a full exit strategy which will most often lead to:
securing a higher purchase price, selling to the most qualified
buyer(s), ensuring the business is prepared for a handoff, and
protecting the futures of existing management, employees and clients.</div>
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