Posts Tagged ‘small businesses’
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.
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The problem with free advertisements along with other free online marketing and advertising channels is that they might give the unsuitable impact to your company. Several free ads come off as inexpensive and second-rate, phrases you actually wouldn’t like to link to your company. It’s nice to save cash with guerrilla marketing techniques, however, you shouldn’t sacrifice the image and credibility of your business along the way. Good guerrilla marketing such as a rewards-based customer referral program helps improve your business organically and project a professional image.
Instead, below are a few popular web marketing strategies, which you could use instead. Link exchanges could be terrific, particularly when your advertising budget is restricted or nonexistent. Find merchants that sell supplementary items, and offer to trade text links or ads with them. In case you are just starting out and your site doesn’t get much traffic, you may not get a one-to-one trade; be prepared to make concessions, at least until you have a track record and traffic to indicate. Having said that, most companies is not going to ignore the opportunity for more exposure, so you will likely find a few happy to exchange links on you.
Newsletter advertising is a great way to reach select groups of consumers. For instance, when you sell health products, you may advertise in a newsletter that gives health tips and advice. Because newsletter advertising is specific, it is usually really expensive. If your budget is tight, you can start your own newsletter campaign. Budgeted advertising, like Google AdWords, allows you to get a set of keywords, set a limit on how much you would like to spend, and have your ad display until the limit is attained. It is a specifically useful way to track your campaign success, and has been a boon to small businesses proprietors.
When you have graduated from these techniques, or if your budget allows it, try approaching popular news services, Web-based email providers, and other sites that reach a big segment of the population. While this can prove extremely expensive, in return, you have the potential of reaching countless new clients. No matter what method you may take, provide serious thought to your “creative” the actual ad itself. Be it just a text link, or whether it’s an extensive banner-ad campaign, the creative can make or break your advertising effort. Try several versions, track them, and see, those that perform best.
Local Business Advertising is effective however, you need to be wary of sites offering to provide a free link in the interest of increasing your search engine rank. Search engines caught on to these so-called link farms a long time ago and a link there is more likely to hurt your ranking than improve it. In fact, it could even get you banned from search engines altogether (something called ‘being in the sandbox’). There’s nothing ever really free. Whatever looks free eventually ends up costing you in the long run.
There are two strategies you can use to market your small business: (1) Market Research; and (2) Target Marketing.
Let’s focus on market research so you would have a better understanding of this strategy.
Market Research
Having a market research is a great help for small businesses as it provides you information on what your industry is about, as well as what your prospects are looking for that is still not being offered in the market. By knowing this information, you will be able to position yourself in a way that you will be offering exactly what your target clients are looking for. This way, you will be able to customize your marketing tools such as your poster printing or print posters into materials that generate leads every time.
Here are the questions you need to answer when market researching:
- What kind of goods and services will provide you with the most interest? Would your products and services be better off alone or offered in combinations?
- What makes you different? What is your advantage over the others? Is it the price? The quality of the product or service? Do you have faster turnaround in delivery and shipping?
- What should you highlight about your business? What are you an expert on?
- What’s your history as a business?
- Can you really compete with the rest of the businesses already in the market?
- Who is your competition? What’s their edge over you?
- Who would be most interested in what you have to offer? Who would most likely buy your product or service?
- What would be your benefits? How can you make your business more interesting and exciting in the eyes of your prospective clients?
- How do they want to respond to your marketing collaterals? More importantly, what types of marketing materials do they find interesting?
After gathering all the information you needed to answer these questions, you should then be able to determine the following details:
- What does your prospect look for? What do they need and want? Where would you be able to get more profits?
- How can you improve on what is already out there? For print posters for example, how can you make yours more interesting and effective generators of clients?
- How can you compete? How can your competition stop you from gaining success?
- How can you gain customers? How can you lose them?
- What should you do so your product offer doesn’t become outdated and outmoded?
- What are the trends in marketing that can affect your small business?
- What new ideas can you get from your research? Who can help you implement your ideas?
As a final rule when doing your market research, the information you culled from it would determine the efficiency and effectiveness of your research. When you have high quality and reliable information, you will be able to have a successful business as a result.
Like any other product, you can pay for it or you can take it for free. The great majority of the free accounting software products is not very complicated and is easy to use. Although they are not suitable for large companies, they can easily be used by small businesses, because they focus on simple accounting. Many people say that with free accounting software they can perform the same tasks as with a paid version.
Anyway, either paid or free, you need to choose your accounting software correctly, a thing which, as it was mentioned earlier, can be a quite difficult thing. Here are a few pointers that should cheer you up a little bit and help you find the best solution available for you:
1. Think about and write down your needs. What’s the main objective of your company? Do you plan on making it a big one?
2. Don’t get carried away by product reviews, recommendations from friends, although you should consider them. First and foremost though, you need to concentrate on what’s suitable for YOU;
3. Don’t consider only the first few highly rated products;
4. Write down a list with all the available pieces of software. Carefully thinking about your needs, your available budget and their specifications, rule out the first few which clearly don’t fall into your preferences from the start;
5. By now, you should have narrowed down your list to about 2 or 3 products that meet your demands. Make your final decision by re-checking all of their features and making sure you check out all the other available products for that specific price. Usually, it’s best if you decide on a product made by a known company, rather than a more obscure one. Although it’s sometimes wrong to judge by that, sometimes it’s plainly safer.
Also, you may hear about a growing number of companies which are developing and providing free accounting software for marketing campaigns. Don’t discard such an option and pay attention to everything, as you may find a pleasant surprise among those products. After all, what do you have to lose if it’s free?
Still, a recommendation would be that it is always best to simply test the trail version, if you ever consider downloading free accounting software. It is the best way to see whether it suits you or not. This is because you don’t have to commit yourself to anything, and if you decide to try another one, you can simply search for it until you find the right demo for you.
So which one is going to be your option? Whatever you should finally decide upon, remember to patiently look for the right option for you. Take into consideration the nature of your business, your plans with it, its domain of activity and all the other variables. If you do all that, you will be able to find the accounting software that best suits your needs.