Posts Tagged ‘company’
If you are determined to receive the best price for your business when it’s sold, it is important to prepare your business for its eventual sale.
The five key aspects of the preparation process are.
1. Stop Running the Business
Many buyers have been conditioned to think that a business cannot perform without the original owner. Many prospective purchasers are afraid that once the current owner leaves, the company will underperform and this fear prevents many businesses from ever being sold.
When preparing your business for sale it is a good idea to reduce the amount of time you spend running the business on a day to day basis. Most small businesses are built around the owner/manager which is why prospective buyers feel the business will falter once it has changed hands. If you can show that the business can operate profitably without you then you have a business with value that should sell for a premium.
2. Hire Managers
Buyers like stability and they dislike risk. One way you can decrease the perceived risk of acquiring your business is to put good managers in place. If you are able to hire managers and build in a chain of command that removes you from the day to day running of the business, while ensuring it still runs efficiently, you have taken away a significant stumbling block for many buyers.
A profitable business which comes with well-trained managers who know the business well, and are willing to continue running it from the day one, is an attractive proposition that many buyers will not pass up on.
3. Put Business Systems in Place
During the preparation period, aim to have all your business processes documented and working in a defined system. All business practices should be well-defined and each member of your organisation should have a clear role with a well understood job specification. Use the preparation period to build in systems which explain and document how each process of your business works and all employees should be well versed in how these systems work.
Building in systems is important as it will improve a buyer’s confidence and this will lead to better offers. A business that works smoothly and efficiently, with clearly defined processes and systems, is a positive for many buyers as this reduces the amount of time and resources they have to spend understanding and fixing inefficient practices.
4. Legal Issues
It is very important to settle any legal disputes or issues that may affect the sale of your business as any buyer worth their salt will conduct some form of due diligence if they are serious about purchasing your business.
Many deals have collapsed due to legal issues or disputes that the vendor has failed to sort out or disclose. If you are able to solve these issues prior to negotiations and due diligence you have paved the way for a successful sale. Issues such as lease agreements on property and equipment, outstanding payments or court settlements and other potential liabilities should be tackled prior to the negotiation period as these issues are notorious for collapsing deals.
It’s also a good idea to turn any verbal agreements you have with key suppliers and customers into written contracts. Prospective buyers want to feel confident that all the key aspects of the business are tied down and enforceable by law.
5. Housekeeping
It is important to pay attention to your premises and ensure that all equipment and stock is up to date, that your office looks neat and professional and all unsold or out of date inventory is moved on. First impressions of your business count so it’s important you make a good one.
You should also use this period to begin looking at your company accounts. Many small businesses are set up to minimize tax but this method of accounting leads to lower valuations as many offers are made by applying a multiple to yearly profits. If you are able to adjust your accounting methods or at least build in a framework that shows the business’ true profitability this will eliminate much of the time wasted haggling over the business’ value.
It is a good idea to look at the situation with your debtors and reduce the amount of bad debt on your books. Buyers are weary of purchasing businesses where it seems the level of bad debt is too high or businesses where the customers take too long to settle accounts. You should use the preparation period to reduce the amount of bad debt and possibly restructure how certain accounts are paid.
If you are determined to receive the best possible price for your business it is important that you take the time and effort to prepare your business for sale otherwise you risk leaving money on the table. A poorly prepared business is rarely sold so it is important not to cut corners during this period.
Bankruptcy records are documents of declaration that an individual or a company no longer earns sufficient income to finance the business and pay other financial obligations. In the United States, bankruptcy is divided into two categories. The first type of bankruptcy is called liquidation. Liquidation means that an individual or a company already has all their assets sold off and therefore, rids itself of its debts. Reorganization, the second kind, is when either the person or the business files for a new plan of action to still address its remaining financial responsibilities. Either way, filing a bankruptcy record gives a signal that a person or an organization is admitting that they can no longer turn losses into profits.
However, business persons who are considering of filing bankruptcy records simply to escape paying debts are in for some major disappointments. These records are actually created under an individual’s name or the business name and will then be made available for access to the general public. This is all because bankruptcy records are considered public records.
Such records may limit business opportunities later and may discourage potential business partners. In our days, most wise business persons check bankruptcy records before doing business with individuals and companies.
So, whether you are the type of entrepreneur who wants to work solo or someone who prefers to work with a partner, it will do you good to check bankruptcy records. You can check bankruptcy records to check if a potential business partner ever had a bad business history. From there, you may decide for yourself if you really want to do business with the person or organization.
Discover why you need business coaching, and why which business coach you choose is so vitally important to your business.
A business coach is like a personal trainer–for your business. A good business coach will help you to realize your dreams, goals, and achieve success through careful step by step planning and processes. The business coach is there to help you with resources, support, motivation, and planning of your business venture. If you already have a business, the business coach is there to help your business succeed and grow in ways that you could only imagine. You can find a business coach in a number of different ways, and in many places. The key is to find the right business coach for you and your company.
There are several things to consider when looking for a business coach. The first thing that you will be likely to consider is cost. Many business coaches are quite expensive, but there are some that are extremely cost effective. The important thing to remember when considering the cost of a business coach is the cost of not getting the business coach. Starting a business can be difficult and costly, but starting that same business can be more costly if you are not sure what you are doing. When you have a business that seems to be failing, or if your business is simply not going anywhere, you are more likely to lose money by doing nothing than by spending the money on a good business coach.
There are several steps that your business coach will lead you through to help you create a successful business. First, your business coach will make sure that the business that you want to develop is a sound business venture. To do this, the coach will take your skills, talents, experience, and resources into consideration. Once these assessments are completed, the coach will help you with your business development by walking you through the steps of a marketing and business plan. When you are ready, the business coach will help you to develop your business by implementing the plans that you made while under their care and tutelage. If any problems arise or you begin to have doubts, your business coach will be there for support, guidance, and resources.
You also want to make sure that the business coach that you choose specializes in business start ups and development, not one or the other. Someone that can only assist in business development will not be able to help you start your business effectively. Likewise, you will quickly outgrow a business coach that can help you start your business but not manage it effectively. Our business coaches are trained and educated in all aspects of starting, running, and growing a business. We are committed to building long lasting relationships will all of our clients, and taking your business from conception to perfection.
Our group of business coaches and professionals are available to you with inside information about legal matters, tax matters, registration requirements, and the best structure options for your business venture. This type of information is important and likely one of the reasons that you are looking for a business coach in the first place. Like other business coaches, we will also have information available to you about resources for funding, grants, loans, and other financial resources that you may be unaware of.
With the ever-changing economy, today’s businesses are looking to make sure the choices that they make are the best ones possible for the long term. More often than ever, this means planning far into the future, making smart financial investments. But the term financial investment can be loosely interpreted.
In order to ensure that the future your business is as secure as possible, you must look at both existing assets for the company in addition to considering looking into technology based investments for the good of your business. But before jumping into this arena, consider that you must do your research first in order to sure that your choices are providing investment that is future-proofing your company. Some examples are provided below.
Long term vs. short term software investments – A short term investment is a license to run a certain number of software titles according to its licensing agreement. A wiser and longer term investment is hiring a company to come up with an open source software solution that can be crafted to meet your company’s needs to the letter. An example of this is live chat software for the company website. It will require a bigger initial investment, but will cost much less in the long run as it prevents any sort of vendor lock-in headaches. This alone can save your firm thousands of dollars down the road and will also provide you with real security knowing that your software can be updated anytime you need it to be.
Long term vs. short term hardware investments – One common misconception is that investing in lots of the latest in notebooks and smart phones is a solid long term investment. Nothing could be further from the truth, as both have a relatively short shelf life in the long term value department. While there is nothing wrong with a limited number of both items listed previously, I’d suggest putting the bulk of a company’s long term hardware investment into virtualization and server access. Both of these can help your company grow without significant hardware investment later on. Bundle this with the software investment of open source software, it’s easy to see how long term investments that will benefit your business for years to come can be put into play pretty easily.
I was having this conversation with a business coach colleague yesterday. She deals with a lot of business owners, especially those starting out and those experiencing rapid growth. She’d been doing some research and one article she read suggested that a major reason that businesses fail is because of a lack of capital. This got me thinking about how people fund their ventures and whether they need a lot of capital to start their own business.
To be honest this really depends. If you are a product based business obviously you will need capital to invest in product but, if you were to start a service based business, you can often times get your business started with little or no investment plus time. You will need some capital though and there are some options available to you:
Friends and Family- Many people look to family and friends to fund their business ventures, especially if the funding required is small. Family and friends will generally offer you generous repayment terms on your business loan but make sure everything is done professionally. You don’t want to ruin relationships with friends and family for the sake of a few dollars. Also, if you get money from family and friends, make sure you allow them to share in your business successes.
Business Credit Cards- Business credit cards are another popular option that people look at when they aim to grow their business. Business credit cards can help with cash flow and, if you pick the right card, you can sign up to a rewards program and get points that can be redeemed for flights, accommodation or a variety of other rewards that may be useful to you. These rewards can be a pleasant little bonus for all of your hard work.
Investors- If your business idea is groundbreaking, or if your business plan is solid, you may be able to pitch to investors and get some investment in your company. If you expect rapid growth or you have a ground breaking product, then this may be the option for you. The problem with investors is that you may lose some of your decision making power as you give away part of your business to an investor.
At the end of the day, the most important factors for business success are clearly defined goals, the dedication to achieve them and then a marketing plan that will get your business in front of people. If you do need business finance there are options available to you. I have outlined three of these above.