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18 Essential Tips That Get Businesses Sold Fast & For Top Dollar

For most people, selling their business means cashing in their biggest asset. In other words, in must be handled with great care if you hope to protect and capitalize on your investment.

This guide was written with one goal in mind; to give you the tools you need to maximize your profits, maintain control, and reduce stress that comes with the business selling process.

1. Know why you are selling. The reason you look closely at why you want to sell is that your motivations play an important role in the process. They affect everything from setting a price to deciding, when is the right time to sell your business.

For example, what’s more important to you: the money you walk away with, or the length of time your business is on the market? If your goal is a quick sale, that can dictate one kind of approach. If you want to maximize your profit, the sales process will almost certainly take longer.

2. Once you know why you are selling, keep it to yourself. Your reasons will affect how you negotiate the sale of your business, but they shouldn’t be given as ammunition to the person who wants to buy it. For example, a prospective buyer who knows you must move quickly has you at their mercy in the negotiation process.

3. Do your homework before setting a price. Settling on an offering price shouldn’t be done lightly. Do not try to sell your business without having it priced correctly and knowing how that price was derived. Even though the final price will be decided on whether you decide to take all cash or elect to participate in financing some of the purchase price, you will need to have a starting point that has some substance and basis to it. Too many people decide to sell their business, advertise it and then expect the buyer to know what it is worth. Most of the time they don’t sell their business, because they are unprepared and if they do manage to sell their business they may sell it for less money than what it was really worth. Don’t make these mistakes. Be prepared.

Once you’ve set your price, you’ve told buyers the absolute maximum they have to pay for your business. The trick for the seller is to get a selling price as close to the true value of the business as possible. If you start out pricing to high, prospective buyers might not take you seriously. A price to low can result in selling for much less than you hoped for.

Ask a business broker to do a valuation of your business based on the current market for your kind of business. A knowledgeable business broker will have the information and tools available to give you a current market valuation.

4. Find a good business broker. The majority of the people who sell their own business say they wouldn’t do it themselves again. Sellers surveyed point to difficulties in setting a price, marketing handicaps and liability concerns among the primary reasons they would turn to a business broker next time. And selling a business yourself usually eats up more time and effort than you might initially expect. Plus the concern that when you are dealing directly with a buyer you are in an adversarial situation. As the old saying goes, “Do what you do best in your profession and let the professionals do what they do best”.

Once you understand how much work it will be to sell the business yourself, talk to a business broker you trust, even if you decide to strike out on your own. At least you will have a relationship with a broker if problems do arise that requires professional help.

If you decide to work with a business broker contact two or three. Explain to each that you’re thinking about putting your business on the market and you’d like to meet to talk about pricing and marketing. By having this group “evaluation” done, you should end up with a fairly tight price range to help guide your decision. The business broker who is substantially higher or lower than the group should be able to justify their valuation. Just as you should be concerned about to low of a price, beware of a broker who gives you the highest price, they may be trying to buy your listing.

A good business broker knows the market. They will supply you with information on past sales, a marketing plan, something on their background, and references from past clients. Take the time to carefully evaluate candidates on the basis of their experience, qualifications, enthusiasm, and personality. More importantly, make sure you choose someone who’s going to put in a lot of hard work on your behalf.

5. Give yourself room to negotiate. Make sure you leave yourself enough room in which to bargain. If what you ask for is unacceptable to the buyer, and their first offering is unacceptable to you, then you better make sure you have someplace to go that it is acceptable to you.

Start with the absolute minimum price you would accept, and then pick the price you’d get if the world were perfect. This gives you your range to keep in mind when working with your business broker to negotiate the sale.

In setting your asking price review your priorities. Do you want to maximize your profit or sell quickly? You’ll price high for the former and closer to market value if the latter is the case.

The rule of thumb when selling a business is, if a buyer is going to pay all cash for a business the business will generally sell for lower than the asking price. However, if the seller is willing to carry some of the financing in the form of a note, with the buyer paying a substantial down payment, the seller is more likely to get a sale price much closer to the asking price.

6. Rely on other people’s judgment as well as your own. The key to effective marketing is knowing your products good and bad points. In the case of your business, accentuating the good can mean a faster sale for more money; failing to deal with the bad can mean months on market and a lower than desired sales price.

The biggest mistake you can make at this point is to solely rely on your own judgment. Are your books and records in order? Do your tax returns and profit and loss statements show the same gross sales? If your books and records in good order, and if they show an upward trend in sales and profits this will help you to achieve the sales price you are asking for.

After a business broker has reviewed your books, records, tax statements, and inspected the business, ask them what needs to be corrected. An experienced broker will not be bashful on sharing with you the pluses and minuses of your business.

7. Fix everything no matter how insignificant it may occur. Don’t have unnecessary equipment or fixtures sitting around. Nor do you want non-functional equipment or fixtures, on site for the buyer to observe.

They might be minor annoyance to you, but they can also be deal killers. The problem is that you never know what will turn a buyer off. Even something minor that’s gone unattended can suggest that perhaps there are bigger, less visible problems present as well. Don’t leave the door open for possible deal killing items that may surface after price and terms have already been negotiated.

8. Let your business shine. I am sure you have heard the old clique that you only get one chance to make a first impression? Well, the first impression that your business gives a buyer will set the tone and mood for any future consideration that a buyer may have in pursuing the acquisition of your business. Do not stumble when making a first impression.

Present your business in it’s best light. Have prepared and be willing to use a business profile. What is a business profile? A business profile tells a story about the business. It is a short story that is written answering the basic questions about the business, such as the history and background of the business, where the business is located, the amenities of the location, the physical assets, the operations, employees, working conditions, possible competition, skill level sought, owners reason for selling, the offering, price and terms and financial statements. You may ask why do I need all of this? Well, these are the same questions you would ask if you were buying a business. Well, you say why I am going to tell a buyer all of this? Because people will believe the written word before they will believe everything you are going to tell them. Plus most of the time they are either not going to be paying attention or forget to ask some of these questions and will want the answers to these questions sooner or later. It also gives the buyer a reference tool to refer to and discuss with any of the other parties involved in the purchase of the business. To many times I have seen people try to sell their business without any details of the business in written form. As a matter of fact when they talk to one person they tell them one thing and when they talk to a second person they will tell them something different forgetting to inform the buyer of the information needed to sell the business.

9. Disclose everything. Smart sellers proactively go above and beyond the laws to disclose all known defects to their buyers. If the buyer knows about a problem, he can’t come back with a lawsuit later on.

10. The prospects, the better. By maximizing your businesses marketability, you’ll increase your chances of attracting more than one prospective buyer. Why is this better? Because several buyers compete with each other; instead of a single buyer competing with you.

11. Don’t get emotional during negotiations. The extent of most people’s experience in the art of negotiation begins and ends at their local auto dealership. Few of us have pleasant memories of haggling with a car salesman. Just let go of the emotion you’ve invested in your business and approach negotiations in a businesslike manner, then you’ll find the process to be a lot less painful. In fact, you might even enjoy it and you’ll definitely have an advantage over prospective buyers who get caught up in the emotion of the situation.

Remember; “never fall in love with a business, because a business can’t love you back.” You may have grown the business from its inception to a thriving business, but it’s still just a business.

12. Know your buyer. In the negotiation process, your objective is to control the pace and set the duration. The better you know your buyer, the more easily you can maintain control.

As a rule buyers want the best business they can afford for the least amount of money. Knowing specifically what motivates your buyer enables you to negotiate more effectively. Maybe your buyer needs to move quickly, or maybe the maximum amount he can spend is just a little below you’re asking price. Knowing this information puts you in a better bargaining position.

13. Find out what the buyer can pay. As soon as possible, try to find out the amount of money the buyer is willing to invest and the size of their down payment. If you are dealing with a qualified business broker, they will be able to eliminate the “lookers” from the buyers. If the buyer makes a low offer, question the buyer about their ability to really pay what your business is worth.

14. Find out when the buyer would like to close. When a buyer would like to close is often when they need to close. Knowing this gives you his deadline for completing negotiations–again, an advantage in negotiations

15. Don’t give yourself a deadline. Forcing yourself to sell by a certain date adds unnecessary pressure and puts you at a serious disadvantage in negotiations.

16. Don’t take a low offer personally. The first offer may invariably be below what you know the buyer will end up paying for your business. Don’t get angry or feel insulted; evaluate the offer objectively. Make sure it spells out the offering price, adequate earnest money, amount of down payment, mortgage amount and terms, (if you are to be carrying a note), the closing date and any special request. Now you have a point from which you can negotiate.

17. A really low offer may mean the buyer is not qualified. If you feel an offer is inadequate, now would be good time to make sure the buyer has is qualified and is capable of an opportunity of this size. Ask how they arrived at the figure, then suggest that they get additional information or contact a broker to establish what businesses are selling for in your marketplace.

18. Don’t take a low ball offer seriously. An unacceptable a low offer should not be taken personally or seriously. Rather, it should be countered, even with the slightest reductions in your asking price. This lets a buyer know that their first offer isn’t seen as a very serious one.

If this all sound like a lot of work, it is. But it’s to be expected when you’re selling anything of such great value. And you’ll thank yourself for all expense and hard work when the outcome works to your satisfaction.

Growing Your Business in 2010 – Seven Steps to Ensure Success

So you’re ready to shake off the doldrums of 2009 and really take a giant leap forward in 2010. There are simple ways to grow your business that will have a massive impact and won’t cost you anything but some time, effort and good old-fashioned brain power. Get ready to kick some butt and take some names with these seven steps.

1. Start with a strategic plan. You already have a business plan (you do have one, don’t you?). But even that needs to be revisited at least once a year. So here’s your perfect opportunity to tie some things together and get your organisation pulling in the right direction. Try to get away from the office for a day or two so that you really have the opportunity to focus, think and challenge the way you look at your business on a day to day basis. Ask yourself some questions to get the new year started with a strategic plan that will really explode your business growth:

  • What really worked well in 2009? Do more of it!
  • What didn’t work so well in 2009? Analyse exactly why it didn’t work and either do it differently this year or stop doing it!
  • Where are you at now? This calls for honest assessment of the facts of your current situation. Part of answering this question would be a robust SWOT analysis.
  • Where do you want to be by the end of the year? Be precise; know how you are going to measure success and what steps it will take to get there.
  • What are the top priorities that your business must address and accomplish this year to get where you want to be? Keep this list short and determine what is critically important. Remember, if everything is important, nothing is.

This should be a process by which you come to a clear understanding of your goals for the year and exactly how you will execute a strategic plan to achieve those goals. This process is different to forecasting. Your forecasts should be separate to your strategic plan (although they are obviously closely related) and they should be expressed in the form of 3-way financial projections that you use on a month-to-month basis to keep track of your progress. What you’re trying to do with a strategic plan (what I like to call your framework) is apply some foresight to your business goals (your forecast). Foresight has to do with anticipation and goes beyond simply extrapolating what you know today into the future. Dictionary.com defines foresight as “care or provision for the future; provident care; prudence; knowledge or insight gained by or as by looking forward; a view of the future”.

That being said, here’s a simple way to explain and remember the strategic planning process:

“Apply foresight to your forecasts to establish your strategic framework”

Once you’ve completed the strategic planning process (for now – planning should always be ongoing), there are six other things you should consider doing that will maximise your business growth in the coming year.

2. Target new customers. Call that list of prospective clients that you’ve been avoiding for the past several months. Think of new ways to reach your target market that you’ve never used before – Google AdWords, email marketing, contests, special events, publicity stunts, joint ventures – anything that will get your message out to people that haven’t heard it before. Think about not only how to sell more of your products or services today, but how you can use new methods to build your list of prospective clients. Take the immediate and the longer term view of winning new customers for your business.

3. Re-engage with “dormant” customers. Do you have a list of people that have done business with you in the past that haven’t bought from you in over 6 months? If not, put a process in place to keep track of this aspect of your business right away. Contact those customers and find out why they haven’t come back for such a long time. When you’ve reached them, ask them three questions:

  • Why haven’t you bought from me for so long? If the reason is something negative, figure out what it’s going to take to fix the situation and make them your customer again. If there isn’t a negative reason (“I just haven’t thought about it”, etc…) give them an immediate incentive to buy from you again.
  • What would make you purchase my product or service more frequently? This question can give you valuable insight into how you could provide your product or service in a better or different way in order to attract more clients and more frequent sales. Maybe there are obstacles to doing business with your company that you are unaware of. Maybe you could find out about a whole new niche market that only you can exploit.
  • Who do you know that uses my product or service that you would be willing to refer to me? This is a simple way to get more customers, but many business owners are afraid to ask for referrals from anyone. By asking your former customers that have “fallen off the radar”, the risk (or, more accurately, what is mistakenly perceived as risk) is less than asking your existing repeat customers. In this situation, anyone should be willing to ask away – what’s the worst that could happen? They’re already not buying from you. And you’ll be surprised at the number of referrals you actually get by simply asking this question.

4. Do something unexpected and exciting to turn your current repeat customers into raving fans of your business. This is a kind of indirect way of getting referrals from your existing clients. Do something that will create a stir, drum up some publicity or just generally get people going “Wow! Now that’s something you don’t see every day”. You should use every opportunity to continually and pleasantly surprise your best customers. By doing so, you will create raving fans that can’t help but to spread the word about how everyone should be doing business with you.

5. Clean house. Get rid of underperforming products, services, customers and suppliers. You should be aware of the profitability of every product or service you sell, the profitability of every one of your customers and the value for money you are getting from each of your suppliers. If you are not aware of these kinds of statistics, set up a system to track them immediately. Running a business is challenging enough without breaking your neck to buy stuff from people that are ripping you off to sell that stuff at a loss to customers that generate insignificant returns on your investment and aren’t helping you build a strong, sustainable business. Where can you get your inputs cheaper or better inputs at the same price? What customers are generating a reasonable return on your investment of time and effort? What products return the best margins? Concentrate your efforts where you can get the most impact and stop wasting your time and money on the rest.

6. Self development (and staff development). Identify ways in which you can become a better manager, explore new business opportunities, strengthen one of your personal weaknesses, take better advantage of one of your strengths or simply be a happier, healthier human being. You could take a course, enrol in some sort of martial arts class, start working with a coach, start becoming a specialist in one particular area of your industry or volunteer your time to charity. And don’t forget that, if your business has employees, they all want to find a sense of purpose and achievement in their work as well. Don’t ever neglect your need to grow as a person, and don’t impede your employees from pursuing that same need.

7. Get some help. You’ve heard it before, but it’s true. “Do what you’ve always done and you’ll get what you’ve always gotten.” If you want to grow your business, you need to be prepared to do things differently from time to time. One of the best ways to successfully “change things up” is to employ a fresh set of eyes to see your business from a new perspective. Hire that new employee you’ve been avoiding putting on. Or get an expert consultant to help you with strategic planning, marketing, branding, expansion or more effective management. No one can do everything on their own. Bringing in outside help is a great way to kick-start a huge growth spurt for your business. Getting an outsider’s perspective (even one from someone in a completely different industry to the one you operate in) can be particularly helpful when it comes to eliminating or mitigating your weaknesses and threats to your business and taking advantage of your strengths and opportunities.

Takeaways – Seven Things to Do Right Now:

  • Take time out to establish and write down your strategic plan.
  • Target and contact at least ten prospective new clients.
  • Contact every one of your clients that hasn’t bought from you in the past 6 months to find out WHY.
  • Do something unexpected and exciting that will get your best customers singing your praises to the world.
  • Determine which of your products, services and clients are unprofitable. Then, find ways to make them profitable or dump them.
  • Sign up for a course that will make you better in an area of management that you consider a weakness. Don’t have time to take a course? Train up one of your employees to do part of your job so that you do have time.
  • Pick one of the top priorities from your strategic plan and get some expert advice on how best to accomplish that priority this year.

Would you like to learn more about making your business a success? Alan has helped hundreds of business owners, check out his website for more details.

Small Business Finance Success Improves With Realistic Options

The goal of being realistic when seeking new commercial loans and working capital financing will help commercial borrowers avoid a number of commercial finance problems. With proper preparation business owners should be in a better position to obtain new financing despite the difficult challenges impacting most working capital loans and small business financing. Nevertheless it should be anticipated that terms of financing will be different from prior commercial financing. Because of recent commercial lending difficulties, business owners actively assessing the most effective options for their small business finance decisions are likely to find the smoothest path to business loan success.

In view of volatile conditions which have recently impacted credit markets, this will not be a simple task. A very common example of the problem is illustrated by how much misinformation and confusion there has been about business financing and working capital availability. Getting more accurate information about what is realistically possible can be one of the most difficult challenges for commercial borrowers.

When seeking to identify realistic choices in a confusing working capital management climate, a number of harsh realities must be confronted by all small business owners. For most current commercial financing decisions by business owners, there are several major factors to anticipate. In the first example, additional small business loan collateral is being requested by most commercial lenders. Second, many regional and local banks have discontinued lending for business financing and working capital. In a third example, businesses which are not currently profitable or not current in their debt payments will have extensive difficulties. Fourth, business construction funding currently is very limited in most areas. In a fifth example, lenders are eliminating unsecured business lines of credit for most small business owners.

Despite the new business financing limitations just noted, there are practical working capital options for small business owners to consider. An increasingly effective commercial financing option in the midst of an uncertain economy is a merchant cash advance program based on credit card processing activity. Even though this commercial funding option has been available for a few years, it has not been used by most small businesses. For most businesses which accept credit cards, merchant cash advances should be evaluated as an important tool for improving business cash flow. Small business owners wanting to pursue this financing option should consult a business financing expert who is knowledgeable about this working capital management approach as well as other small business loans.

Even though working capital loans are not as widely available as they were just a few months ago, this kind of small business financing is still in fact obtainable. Since some of the largest providers have stopped making these business loans, the main change for business borrowers is the likelihood that they will be dealing with a different commercial lender. Small business owners will benefit from finding an experienced and candid business financing expert to assist in evaluating realistic options because the most effective working capital financing providers are not aggressively marketing this capability.

As stressed above, when making commercial financing decisions it is becoming increasingly important for business owners to first determine their effective business finance funding options. Because of recent volatility in financial markets, this task is likely to be much more difficult than most commercial borrowers realize. It is advisable to explore commercial finance options that might be necessary if economic conditions change even further even for business owners who are satisfied with their current working capital financing arrangements. The use of Plan B contingency financing is an important tool to assist commercial borrowers in this process.