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Willing Buyer and Willing Seller Required to Sell a Business

Possibly one of the most complicated sales is that of a business. Not only are there typically a lot of moving parts, but also credibility issues for both the seller and the buyer. There are plenty of reasons that businesses don’t get sold, but let’s start with one of the most common: The parties need to truly be dedicated to the process.

From the seller’s side, there might be an interest to sell, until they get their valuation. Many business owners believe their business to be worth more than the valuation. The basis of these beliefs might include:

  • Stock sells for 20 times earnings, why doesn’t my business?
  • My friend Joe sold his business like mine for twice as much as your valuation.
  • I need more than that to retire on.

By placing a business on the market with an unrealistic price, it indicates the seller isn’t really serious about selling their business.

Another common barrier to a willing seller is the demand that the business be sold for an all cash price. This can work, but typically the buyer will drive down the asking price significantly since all the risk now resides with the buyer. By working with the seller on flexibility for financing, either seller and/or SBA financing, things are more likely to get done. That’s right, even with SBA loans to buy the business, the seller will be required to take some portion of the sales price in the note. What’s more, the amount may not be repaid until the loan is seasoned, or worst case, the SBA loan is completely paid off.

Another common seller issue will be the documentation for the business. Many businesses will be sold with poor, or even no documentation. Better documentation provides for a wider pool of buyers. Most buyers want to see financial records that will confirm what the business is really generating financially. If the seller isn’t able to provide documentation, sellers need to be more flexible in the due diligence process, like an observation period so the buyer can see how much money goes across the counter every day.

Finding willing buyers has its own issues. Many times buyers are so specific that it becomes a hunt for the purple squirrel- something that doesn’t exist. There are a wide range of businesses for sale at any given time, and having an idea of what you want, and what you don’t want is useful. By being too specific you may exclude yourself from buying any business.

Another buyer issue is the nothing down offer. Buying business is not like buying real estate. The fraud potential for nothing down business sales can be very destructive. An unscrupulous buyer might get a business with no down, sell off the equipment, not pay the employees, keep customer monies and withhold taxes owed. The seller is left with nothing, the employees are left with nothing and the customers are left with nothing.

Buyers with a corporate background may also have some expectations about how books ought to be run. There is no razor sharp enough to separate a small business owner from their business. In many cases the owner will have legitimate, but discretionary expenses on the books. The company may not have to pay for the owner’s car, or cell phone or training in Hawaii, but that’s how the current owner chose to run the business. The business broker will recast the financials to account for these entries. As a buyer you want to have a realistic idea of the cash flow generated by the business. Your due diligence is to make sure the business is “as represented”. You want to make sure the books with the recast show how much cash is generated, because that’s how you can value the business. Stay focused on the important stuff- what is the real cash flow, and what could happen to impact that cash flow?

In my experience, the better the relationship between the buyer and seller, the more likely things are to proceed, because trust is developed between the parties. If both parties are sincere about a deal, things can usually be negotiated to a mutually satisfactory conclusion.

Expanding Your Business And Getting Customer Flow

If you are in the small business industry you’re going to need small business consulting for ideas on how to get a customer flow and for excellent marketing tips. You are going to need to know current marketing trends and tips that will put money in your pocket and will become a good investment for your growing business. Below are a few tips on how you can establish a customer flow effectively and cheaply. These tips will help you expand your business and hopefully, increase profits.

1. First, you want to introduce your business to the public, especially if it is new. Even if it is old it is good for business to be introduced as if it was new, give your old business a fresh start. A way to do this is to bond with the public in social events such as a cookout or fair. Any small business consulting agent will tell you advertising is key to expanding business which is very logical. Use your parking lot or a small space and send out flyers that invite people to join you for a good time for a cookout. While the people attend, have speakers for your business talk about your business and give the public a good view of you and what you are trying to gain with your business. You want to sell your business as best as you can and make it stand out in a positive light.

2. Second, if you are an older business and have acquired a group of repeat customers who are loyal to your business treat them to something special such as a free movie, free lunch or dinner or something small but generous. It is wise to keep repeating customers happy, because they are the ones who bring the most business to you and can also bring in new clients. However, be smart about this and include some sort of business discussion or purpose for the special entertainment so you can claim half of the expenses as a tax deduction at the end of the year!

3. Third, for good measure, you should find ways for your business to be involved in the community. If potential customers see that you are giving to the community and not being greedy with all your funds, they’re more likely to be partial to the idea of giving you their business. It also shines a positive light on your business and allows for more tax deductions at the end of the year, especially if your business gives to charity.

4. The final tip to consider is to have discounts or promotions on your products. You don’t need small business consulting to tell you this. No one likes to pay full price for items so give out coupons or discounts and watch your business soar; if it does not increase profits then you should get small business consulting to figure out a better marketing strategy.

In conclusion, freshen up your business by bonding with the people and introducing your business in a professional and friendly manner. If you have repeat customers do something special for them and make them feel appreciated. Don’t be greedy with your money especially if you’re doing well, give to charity. Finally, don’t be a stick in the mud, every now and then offer discounts for new upcoming products. If these tips don’t help you out consider small business consulting to help you strategize better.

Are These Key Spokes Missing From Your Business Cycle?

Have you ever ridden a unicycle? I tried one as a kid, and remember how wobbly that first ride was. The cycle had one wheel, one rider, no handlebars for support. All it took to navigate it was a strong set of legs and a good sense of balance. I remember how exhilarating it was to stay upright, and the humility when I realized there was no one but myself to blame when I fell.

Some equate business ownership to walking a tight line or being on a unicycle. “It’s lonely at the top,” one business owner told me. And yes, keeping everything in balance, leading, managing, hiring, firing, tracking is a lot to juggle. But being alone is not one of the rules of business or leadership. Being on top of things, aware of trends, educated, and involved is. Getting help is an admirable trait, not a fault.

Business is a very unique game. Imagine making the decision to go into sports without knowing anything about the game.

Like tennis.

If you know nothing of the sport, then court is a place you go to pay tickets, and a racquet is what the kids were making when you were trying to get to sleep. And “Love alll?” Isn’t that a common phrase from the 60s?

Sports teams have coaches. Business owners have business coaches. Why? Because, like sports, business is a game – a very strategic game with very specific rules, processes, and systems. The playing field might be different than a tennis court, football field, baseball diamond, bowling alley, but there are specific things found in both sports and business that are similar and imperative. These include:

* Rules. In sports, the rules are the specific guidelines that must be adhered to. In business, these are the policies, systems, and regulations you put into place that are not to be broken.

* Connection. To get home, you have to hit the ball. In business, you have to connect. It’s great to have a product or service, but if you can’t get it to the customer, you’re not in the game.

* Systems. Imagine if you orchestrated the same play, play after play. There’s arguments for consistency, but there are arguments for switching things up; when one play doesn’t work, try another. There are some systems that are set, but within those systems are options to magnetize efficiency. Those options are called strategies.

* Team. Clearly if the team is not on the same page as you or each other, things will fall apart. It’s no different in business. I’m sure you can come up with more parallels, the point is business owners wouldn’t think of having a sport that didn’t have these key “spokes” in place, yet often don’t equate the same importance with running a business.

Rules are pretty straight forward. What do you accept and not accept as permissible in your place of business? What do you need to make clear to employees so that they are clear on what is acceptable and what isn’t? Don’t chalk good behavior up to common sense. You’d be surprised at how many employees don’t share the same values. Clue them in.

Connection is all part of the business cycle. The business owner supports the team. The team supports the customer. The customer supports the business. The business supports the business owner and round and round it goes.

Systems in sports are well laid-out and practiced plans of action. In business, systems are applied to each department and to each project. The areas to systemize are:

* People and training/education

* Delivery and distribution

* Testing and Measuring

* Technology and processes

What’s better? To train and then retrain employees or to put effective training manuals in place so that training is systemized?

What’s better? To reinvent the wheel every time something needs to be delivered and distributed, or to have a system in place to automate delivery and distribution?

What’s better? To guess on numbers and hope traffic converts, or to have a system in place to test and measure everything, giving you real numbers in real time with real results to work with?

What’s better? Is it more effective and efficient to cut corners and keep ancient equipment and outdated processes in place, or to keep up with software and technology and keep current with modern forms of communication?

While the answers may seem clear, you’d be surprised at how many business owners don’t have employee handbooks or manuals in place, don’t have a delivery and distribution system in place, don’t test and measure anything in place, and barely know how to do basic computer navigation, let alone tackling anything dealing with social media. In a short amount of time, they burn out, and burnout is the #1 cause of businesses failing.

Ultimately, the daily cycle of business may leave you feeling like you’re all by yourself, but you’re not alone.

Business Coaches are business owners themselves. They know what goes into running businesses, systemizing, testing and measuring, and staying current with technology, and they can help you get in the game. After all, isn’t that what a coach is for? To teach, train, encourage, help, and hold you accountable for reaching the goals set forth?

Okay! Ready for the triple play? Remember that business cycle? Let’s add a key spoke. In this new cycle:

The business coach supports the business owner. The business owner supports the team. The team supports the customer. The customer supports the business. The business supports the business owner. The business owner is supported by the business coach and round and round it goes.

Business is not a unicycle. It’s not a tight rope. It’s not even a juggling act, though it might at times feel like all of these. Business is business.

A unique game. Complete with:

Rules.

Strategies.

Goals.

And, ultimately:

Results.

Business coaches help business owners strategize, implement, and profit. Let’s get the dream team in place and “go for the goal”.