Owning a business and owning the right kind of business for you are, of course, two wildly different things. Owning the wrong kind of business can make you absolutely miserable. So if you are considering buying a business, it is prudent that you invest the time and effort into determining the best kind of business for your needs and your personality. In a recent Forbes article, “What is the Right Type of Business for You to Buy?” author Richard Parker explores how buyers should go about finding the right business fit.
Parker is definitely an expert when it comes to working with buyers as he has spoken with an estimated 100,000 buyers over his career. In that time, Parker has concluded that it is critical that you don’t “learn on your own time.”
His key piece of advice concerning what type of business to buy is as follows. “While there are many factors to be considered, the answer is simple: whatever it is you do best has to be the single most important driving factor of the revenues and profits of any business you consider purchasing.” And he also believes that expertise is more important than experience. Parker’s view is that it is critical for prospective buyers to perform an honest self-assessment in order to identify their single greatest business skill and area of expertise. The last thing you want to do is pretend to be something that you are not.
Parker makes one very astute point when he notes, “Small business owners generally wear many hats: this is usually why their businesses remain small. Remember that every big business was once a small business.” As Parker points out, whoever is in charge of the business will ultimately determine how the business will evolve, or not evolve. Selecting the right business for you and your skillsets is pivotal for the long-term success of your business.
All of this adds up to make the process of due diligence absolutely essential. Before buying a business, you must understand every aspect of that business and make certain that the business is indeed a good fit for you. According to Parker, if you don’t love your business, it will have trouble growing. This point is impossible to refute. Owning and growing a business requires a tremendous amount of time and effort. If you don’t enjoy owning and/or operating your business, success will be a much more difficult proposition.
Finding the right business for you is a complicated process even after you have performed a proper evaluation of your skills and interests. After all, do you really want a solid business with great potential for growth that you would hate owning? By working with brokers and M&A advisors, you can find the best business fit for your needs, personality, and goals. These professionals are invaluable allies in the process of discovering the right business for you.
https://i2.wp.com/touchstonebiz.com/wp-content/uploads/2020/03/bigstock-Business-Concept-Business-Peo-341288161.jpg?fit=900%2C600&ssl=1600900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-03-21 03:01:352020-03-21 03:01:35Finding the Best Business for You
It takes preparation and focus to sell most businesses. The reality of the situation is that it can take years to achieve this goal. Partnering with a business broker or M&A Advisor is a smart step towards selling any business, as these pros know the very best tips. In that spirit, let’s take a look at some great tips for selling your business.
Getting your business ready to sell means carefully evaluating the foundation. Any significant problem can send buyers “running for the hills,” so be sure that you work out any problems well before placing your business on the market. If you have any litigation or environmental issues, you most definitely want to address those issues before it is time to sell. Nothing will scare away prospective buyers quicker than pending litigation or the specter of a potentially costly environmental clean-up.
A second key issue you’ll want to address is determining who exactly has the legal authority to sell the business. If a board of directors or majority stockholder situation is in place, then selling a business can become more complex than it would be if you were dealing with a sole proprietorship or partnership. Again, the last thing you want is for “legal surprises” to occur when you get ready to sell a business.
If you have non-negotiable items, be certain that those items are discussed upfront. Revealing your non-negotiable items at the very beginning of negotiations will save everyone involved a great deal of trouble.
Tip three involves maintaining a flexible mindset. In most circumstances, you simply can’t have everything that you want. Both buyers and sellers need to be flexible. Sellers will want to be flexible about any real estate. Buyers may not want real estate associated with a given business, and you need to be prepared for this. Sellers should also be prepared to accept valuation multiples for lack of management depth and other factors, such as reliance on a small number of customers.
At the end of the day, sellers should partner with experienced professionals such as attorneys and business brokers. You’ve put a lot of time, energy and resources into building your business. When it comes time to sell, it is only prudent to put together the best team in order to achieve optimal results.
https://i0.wp.com/touchstonebiz.com/wp-content/uploads/2020/03/bigstock-Silhouettes-Of-People-Against-338238304.jpg?fit=900%2C540&ssl=1540900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-03-14 03:00:582020-03-14 03:00:58Great Tips for Selling Your Business
Being a successful small business owner requires a dedication to hard work, confidence, and the adoption of positive habits (to name just a few requirements). We all know how detrimental bad habits can be to building a business: poor time management can push back project milestones; poor focus can distract you from your priorities— the list goes on. But what are the habits that small business owners must have in order to succeed? What should a small business owner be doing on a daily basis to ensure his or her profitability? Consider the following habits, which are of course not the only things you need to be doing in order to be successful, but a good start to put you on the right path.
Plan your time in advance using value driver “buckets”
All successful small business owners know that time can be their most limited resource. That’s why the most effective small business owners have a method of allocating their time effectively. One strategy is to plan your time in advance by using the bucket system. This means that you should focus your time and energies around your to-do list items that drive business value. While this can be a challenge even for the most skilled time-managers, don’t get bogged down on the little things, which will only get in the way of achieving your big-picture tasks. This minutia doesn’t drive value for your business, so why focus all your efforts there? Every weekend, try to plan out the next week by deciding how much you will spend on each big category. However you decide to divvy up your schedule, the key is to plan ahead, so you don’t get off track when the week actually rolls around.
Know your numbers
Without keeping track of your income, expenses, and profit, you’re flying blind! You need to know your numbers inside and out, and that requires careful, regular check-ins. Devote time each week to reviewing your revenue, margins, expenses, cash flow, inventory and net profit. To keep track, you can do it the low-tech, manual way and keep an Excel or Google spreadsheet, or, you can use QuickBooks or a bookkeeper to manage and report your numbers to you. Regardless of your preferred approach, knowing your numbers is critical to being a successful small business owner.
Always look forward
It’s easy to get bogged down in your current workload, but in order to grow your income streams, you need to always be looking for the next deal or client. High-performing businesses are always generating leads, so it’s key that you have your sights on the future, even while working with current clients. Practically speaking, try to set a daily goal for yourself. For example, commit to reaching out to a minimum number of business development contacts each day. While some days may be a bust, if you’re consistent, you will inevitably generate real positive returns on this allocation of your time.
It’s rare that you’ll have customers knocking down your door for business opportunities, especially as a young business. Instead of assuming that business will come your way, take action: take initiative by making cold calls, sending emails, and following up until you get a definitive ‘no.’ Be persistent. These days, everyone gets distracted, and leads may need a friendly reminder from you that you’re still interested in their business. To follow up effectively, leverage technology to reach more people with your business opportunities. You can try email add-ons, which will remind you to follow up on emails from potential clients that are sitting in your inbox and/or schedule emails for later, more optimal times. The idea is to keep the conversation moving. Ultimately, you will see the pay-off via your bottom line.
https://i2.wp.com/touchstonebiz.com/wp-content/uploads/2020/03/Habits-scaled.jpeg?fit=2560%2C2496&ssl=124962560Andrew Spickerthttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngAndrew Spickert2020-03-09 11:36:512020-03-09 11:37:46Habits of Highly Successful Small Business Owners
You are more likely to have success as a business owner if you are motivated to help solve other people’s problems, not your own. Karma describes the concept of getting back whatever you put forth, good or bad, into the universe. By definition, it’s central to Hinduism and Buddhism for determining a person’s next existence based on the ethical net of their current life. But no matter which belief system you follow (or don’t), many believe the concept of karma plays a role in our lives – and by extension, the return we will receive from our business ownership.
When you run your business in accordance with the 12 Laws of Karma, you create good karma in your business life, increasingly the likelihood for good things to happen in the future. Below, find a breakdown of what each of the laws mean, plus tips for how to harness their power for your business’ success.
The great law
Also known as the law of cause and effect, the great law is what comes to mind for many people when considering what karma means. It states that whatever thoughts or energy we put out, we get back—good or bad. It’s like sowing and reaping. If you truly are an ethical proprietor, the kindness, knowledge and extraordinary help you bestow on your customers will net you greater returns in terms of revenue and profits.
The law of creation
The law of creation is all about creating. You don’t just wait for good things to magically happen in your business; you have to actively go out there and make things happen. Highly successful businesses are prime examples of people who embody this karmic law. They are constantly searching for creative ways to identify customer needs and offer products and services to meet those customer needs.
The law of humility
In order to change something in your life, you first have to accept what currently exists. That is the premise of the law of humility. This is also a trait shared by many highly successful business owners. Highly successful business owners are constantly assessing their current knowledge and seeking out education, training and/or new employees that will help them to better serve their clients.
The law of growth
As its name suggests, the universal law of growth is about expansion, namely within ourselves. As we grow, change, and evolve internally, our external reality will change and grow as a result. This, again, is where personal development, education and training can come into play. And growth potential never ends—there are always new things to learn, and better ways to be that trusted business owner.
The law of responsibility
The law of responsibility is about taking ownership for everything that happens in our lives, including the not-so-good stuff. We are responsible for how we show up in the world, how we allow others to treat us, and how we treat other people. In order to put this law into action, take responsibility for the part you play in every customer interaction.
The law of connection
The law of connection states that everything and every person is connected in some way. For example, although the past you, the present you, and the future you may seem entirely different, they are all still you. Everything you’ve experienced has led to the next thing and the next thing and the next thing. It’s all linked. The same applies to your business. Recommendations come from past customers. Your reputation is the sum of your past actions.
The law of force
Although some of us may claim to be a pro at multi-tasking, the inclination to do everything at once often just slows us down. The law of force states that you cannot apply your energy toward two things simultaneously. Our days are full of distractions. Realize there are times you will need to give full attention and devotion to a customer to serve their needs.
The law of giving and hospitality
This law of karma is all about selflessness, giving to others, and practicing what you preach. It’s about ensuring that you’re not simply saying and thinking good thoughts, but that you also walk-the-walk and follow those beliefs with action. Some of our best referrals come from helping a customer solve a problem – even when extra time or expense was necessary.
The law of here and now
The law of here and now is all about being present. Many of us dwell too much on the past – to the point of distraction. If, instead, we live in the here and now and are attuned to what we are doing, seeing, and really listening, we won’t be disconnected when we are interacting with customers. You will notice that the energy is different, and the experience is more engaging and rewarding, and your mind will be more keenly focused.
The law of change
If you’ve found yourself experiencing the same undesirable situation over and over again, this may be due to the law of change in action. It’s the universe’s way of nudging you to learn a lesson. The pattern will continue to repeat itself until you connect your feelings and learn from the experience; and take action in order to change the pattern.
The law of patience and reward
This karmic law essentially translates to “hard work pays off.” It’s about showing up and doing the work and not giving up on your big goals, even when you don’t see any progress made toward them quite yet. Live in accordance with this karmic law by knowing that achieving great things requires time and persistence, not giving up, celebrating yourself, and savoring every little milestone you achieve along your journey.
The law of significance and inspiration
The law of significance and inspiration tells us that we all have value to give. By extension, your training, experience and commitment are gifts meant to be shared with your customers and you will make a positive impact. Many of our customers have less than full knowledge of your product/service. So, your expertise is critical to them. Tap into this karmic law whenever you need a boost of motivation.
There is nothing more rewarding than positive feedback, and in this modern age – positive reviews. The resulting karma you have created nets immediate financial reward, as well as likely referrals in the future. And, it is one more experience which you can catalog for the benefit of future customers.
https://i1.wp.com/touchstonebiz.com/wp-content/uploads/2020/03/5BE07B6F-97AD-4438-AAE1-E655A1D0A929-scaled.jpeg?fit=2560%2C2560&ssl=125602560Andrew Spickerthttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngAndrew Spickert2020-03-05 19:13:562020-03-12 10:45:00The 12 Laws of Karma Applied to Business Ownership
Business owners sometimes make value judgements that affect net income. Legitimately, some income statement entries are estimates. If you overstate or understate such entries as inventory, net income can be shifted up or down. That may give the owner, prospective buyers and/or the IRS a distorted idea of how your business is doing. At worst, a business owner may be accused of fraud or tax evasion.
Why Net Income Matters
Investors and lenders study financial statements to decide if a business is a good risk. The income statement, which shows how much a business earned in a given period, is particularly important to investors. Public company dividends are paid based upon net income; dividends divided by the number of shares yields earnings-per-share. Overstating net income can make earnings per share better. It may also affect performance-based bonuses. Conversely, understating net income can make a company look less profitable, and therefore less desirable. Even so, there are reasons business owners deliberately opt to understate it.
The top of the income statement deals with revenue for the period. Income includes cash sales and credit sales, which are accounts receivable as credit sales are income a company has earned but haven’t received yet. Some of that debt may never be paid, for example when customers refuse to pay or go bankrupt. By looking at how many bills went unpaid in the past, a company can estimate how much of current debts will also go unpaid. Understating the amount of bad debt makes both the income statement and balance sheet look stronger and healthier. For every debt not written off, net income gets a little bigger. Likewise, if a company understates the amount of bad debt anticipated, that makes the revenue and net income figures higher.
Revenue minus cost of goods sold determines gross income. Various other additions and subtractions turn gross income into net income. Cost of goods sold is based on the difference between beginning and ending inventory. If a company overstates inventory, indicating they have sold fewer items, cost of goods sold shrinks and net income gets larger. If a company understates inventory, net income becomes smaller than it really is. Business owners may err in that direction to pay less in taxes in a given year. Or, inventory may be deliberately overstated to pad net income.
Problems with the Accuracy of Financial Statements
While a business owner can tout the success of a business, their financial statements are the proof that an investor or lender will ultimately rely upon. Inaccurate financials may result in:
Ruining buyer trust – If a buyer believes that an owner intentionally withheld or falsified information, the buyer may just choose to walk away from the deal, even if it truly was an honest mistake.
Delaying the process – When a buyer or a financial advisor that they have hired discovers an error, the sales process can grind to a halt. The sale of a business can be delayed for weeks or a month or more while an owner and the prospective buyer try to reconcile the error and/or dive deeper into the financials.
Loss of financing – A buyer who is relying on outside financing or investors to raise funds for a purchase might lose their opportunity to obtain funds, causing the deal to collapse.
Legal liability – In the event that the sale is completed without a material error being discovered prior to closing, a business owner could one day run the risk of a claim or litigation for fraud, even though the error may be an honest mistake.
https://i2.wp.com/touchstonebiz.com/wp-content/uploads/2020/03/Tip-7-Understating-Inventory-Rev.jpg?fit=330%2C413&ssl=1413330Andrew Spickerthttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngAndrew Spickert2020-03-05 17:40:002020-03-05 17:40:00Net Income Effect of Overstating & Understating
Thinking about whether or not you are ready to exit is an important question. It’s something that every business owner will have to address at some point. Importantly, you don’t want to wait until the 11th hour to prepare to sell your business. There are far too many pieces in this particular puzzle to wait until the last minute. You’ll want to begin the process sooner by asking yourself some key questions.
First, you’ll need to determine the actual value of your business. It is a harsh truth, but what you think your business is worth and what the market feels that it is worth may be two very different things.
This point serves to underscore the importance of working with a business broker or M&A advisor early in the process. An experienced broker knows how to go about determining a price that will generate interest and seem fair. Remember that at the end of the day, it will be the marketplace that determines the value of your business, but working with a seasoned professional is an excellent way to match your offering price with what the market will ultimately bear.
Secondly, you’ll want to consider whether or not you truly want to sell. It is not uncommon for business owners to begin the process of selling their business only to realize a few hard facts. Wanting to sell and the time being right to sell are often two different things.
Upon placing your business on the market for sale, you may learn that you’re not emotionally or financially ready. If this happens to you, consider it a learning experience that will serve you well down the line.
Get Your Ducks in a Row
If you have done a financial assessment, a little soul searching and have begun working with a business broker or M&A advisor to determine that now is a good time to sell your business, then there are several steps you’ll need to take. You can be sure that any serious prospective buyer will want a good deal of information regarding your company.
At the top of the list of items potential buyers will want to see are three years of profit and loss statements as well as federal income tax returns for the business. Other important documents ranging from lease and lease related documents, lists of loans against the business and a copy of a franchise agreement, when applicable, are all additional documents that you will need to provide. You should also have a list of fixtures and equipment, copies of equipment leases, lists of fixtures and equipment, and an approximate amount of inventory on hand. A failure to not have this information organized and ready to present at a moment’s notice could be a costly mistake.
Working with professionals, such as accountants, lawyers, and brokers, is a savvy move. Owning and operating a business can be a complex process, and the same holds true for selling a business. Investing the time to seek out experienced and professional advice is the first step in selling your business.
https://i1.wp.com/touchstonebiz.com/wp-content/uploads/2020/02/bigstock-African-serious-businessman-wr-346102423.jpg?fit=900%2C600&ssl=1600900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-02-29 03:06:302020-02-29 03:06:30It’s Time to Exit. Are you Ready?
Business acquisitions are red hot, and all kinds of businesses are being snapped up. Some people are under the impression that only large businesses are being acquired, but this is far from the reality of the situation. It would surprise many to learn that so much of the “action” is, in fact, small businesses buying other small businesses.
In his Forbes article, “Take Advantage of the Golden Age of Business Acquisitions,” author Christopher Hurn explores the true state of the “acquisitions game.” His conclusions are quite interesting. In Hurn’s opinion, there has never been a more active time in the realm of business acquisitions.
If you own a business and are looking to grow, then you may want to consider acquiring a competitor in order to consolidate the market. As Hurn points out, there are many reasons that you might want to consider acquiring a business in addition to consolidating the market. These reasons include acquiring a new product or service, acquiring a competitor that has superior technology or even identifying a business that you believe is primed for substantial growth.
Yet, there are other forces at work that are combining to make this moment the “golden age of acquisitions.” At the top of the list of why now is a good time to investigate acquiring a business is demographics. According to a 2019 study by Guidant Financial and Lending Club, a whopping 57% of small business owners are over the age of 50. The California Association of Business Brokers has concluded that over the next 20 years about $10 trillion worth of assets will change hands. A mind-blowing 12 million businesses could come under new ownership in just the next two decades! As Hurn phrased it, “The stars are aligning for the Golden Age of business acquisitions.”
This all points to the fact that now is the time to begin understanding what kind of acquisition would best help your business grow. Hurn believes that turning to the Small Business Administration in this climate of rapid acquisition is a savvy move.
In particular, he points to the 7(a) program and a host of reasons that the SBA can benefit small businesses. Since the SBA lowered equity injection requirements, it is now possible to finance a staggering 90% of business acquisition deals with loan terms up to 25 years and lower monthly payments. Additionally, the SBA 7(a) program can be used for a variety of purposes ranging from expanding or purchasing an existing business to refinancing existing business debt.
Hurn truly does have an important insight. Baby Boomers will retire by the millions, and most of them will be looking to sell their businesses. With 12 million businesses scheduled to change hands in just the next 20 years, now is a highly unique time not only in the history of acquisitions but also in the history of business.
Business brokers understand what is involved in working with the SBA and acquisitions. A seasoned business broker can point you towards opportunities that you may have never realized existed.
https://i0.wp.com/touchstonebiz.com/wp-content/uploads/2020/02/bigstock-Blurred-Night-Architecture-B-350955650.jpg?fit=900%2C505&ssl=1505900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-02-22 03:00:252020-02-22 03:00:25What You Need to Know About the Golden Age of Business Acquisitions
Determining when it’s finally the right time to sell can be a tricky proposition. If you are thinking about selling your business, one of the best steps you can take is to contact a business broker. A good business broker will have years, or even decades, of proven experience under his or her belt. He or she will be able to guide you through the process of determining what you need to do in order to get your business ready to sell.
One major reason you should contact a business broker long before you think you might want to sell is that you never know when the right time to sell may arise. Market forces may change, unexpected events like a large competitor entering your area, or a range of other factors could all lead you to the conclusion that now, and not later, is the time to sell.
In a recent The Tokenist article, “When is the Best Time to Sell a Business?”, author Tim Fries covers a variety of factors in determining when is the best time to sell. At the top of Fries’ list is growth. If your company can demonstrate a consistent history of growth, that is a good thing. Or as Fries phrases it, “What never varies, however, is the fact that growth is a key component, buyers will look for.” Growth will be the shield by which you justify your price when you place your business on the market.
If your business is experiencing significant growth then you have a very strong indicator that now could be the time to sell. Fries points to a quote from Cerius Executives’, CEO, Pamela Wasley who states, “When your business has grown substantially, it might be time to consider selling it. Running a business is risky, and the bigger you get, the bigger the risks you have to face.” Again, growth is at the heart of determining whether or not you should sell.
Knowing the “lay of the land” is certainly a smart move. For example, have there been a variety of businesses similar to your own that have sold or were acquired recently? If the answer is “yes,” then that is another good indicator that there is substantial interest in your type of business.
Reviewing similar businesses to your own that have sold recently can help you determine how much buyers are paying for comparable businesses. This can help you spot potential trends. In short, you should be aware of market factors. As Fries points out, everything from relatively low taxes and low interest rates to strength in the overall economy and an upward trend of sales prices can impact the optimal times for a sale.
Now, as in this exact moment, might not be the right time for you to sell. Getting your business ready to sell takes time and preparation. Fries points out that smart sellers “look for a good time, not the perfect time” to sell a business. Working with a business broker is a great way to determine if now is the right time to sell your business and what steps you have to take in order to be prepared for when the time is right.
https://i0.wp.com/touchstonebiz.com/wp-content/uploads/2020/02/bigstock-Business-People-Electronic-G-282667750.jpg?fit=900%2C600&ssl=1600900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-02-16 03:00:132020-02-16 03:00:13Determining the Right Time to Sell
The foundation of determining whether or not now is the right time to sell must begin with market forces. Determining how much your business is worth is a key variable in any decision to sell.
The best way to determine the worth of your business is to have an outside party, such as a business broker, evaluate your business. What you believe your business to be worth and what the market dictates could be very different. You may discover that your business does not have the value that you hoped for. If this is the situation, then selling simply may not be an option.
What is Next for You?
Tied to knowing your market value is understanding what you will do next after you sell your business. For example, do you have a family member who can run the business without you? What will you and any family members who work for the business do after the sale goes through? You may discover that the sale could be very disruptive for you personally. All too often, people fail to recognize the emotional and mental stress that comes along with selling a business. Many owners begin the selling process only to discover that they are not emotionally ready to do so. While everyone wants to be unemotional in making their business decisions, this is not always the case.
You will also need to deal with the issue of due diligence. Working with a business broker is an excellent way to handle the due diligence process. Business brokers usually vet prospective buyers ahead of time, which can save you a great deal of aggravation and wasted time.
McCracken believes business owners should investigate how the prospective buyer handled previous acquisitions. Specifically, McCracken believes that business owners should look to how well the prospective buyer honored previous commitments, as doing so is an indicator of how trustworthy a buyer may be.
Planning for Negotiations
Finally, McCraken believes it is essential to know who will oversee negotiations. It is key to note that many deals that could have otherwise been successful, fall apart due to poor negotiations. A business broker can be invaluable in negotiations. After all, who wouldn’t want someone with dozens, or even hundreds, of successful transactions advising them?
Selling a family business can be emotionally charged and can cause significant life changes for not just you, but for members of your family as well. Often, family businesses were built up over a lifetime or even over generations, which can make the decision to sell quite emotionally charged.
https://i0.wp.com/touchstonebiz.com/wp-content/uploads/2020/02/bigstock-Modern-Asian-Couple-Making-Bes-233709730.jpg?fit=900%2C600&ssl=1600900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-02-08 03:04:172020-02-08 03:04:17Should You Sell Your Family Business?
If you are like many business owners, you are primarily focusing on building your business. Yet, as we’ve covered here many times before, you should start thinking about what you’ll need to do to sell your business before you even officially launch. Many businesses can take years to sell or even fail to sell all together. For this and many other reasons, it is important to invest some time and energy into thinking about proper exit planning and strategies.
Walker Deibel’s recent Forbes article, “How Proper Exit Planning Benefits the Buyer and Seller,” Deibel discusses his interview with Exit Planning: The Definitive Guide, author John H. Brown. Brown and Deibel both agreed that, when properly handled, exit planning can help both the seller and the buyer.
Exit planning can make a business more transferable. As Deibel points out, when buyers are evaluating businesses, transferability is a key factor. A buyer must feel that he or she can walk into a business, take it over, keep it running effectively and even grow the business in the future.
A key aspect of being able to buy a business and having that business be successful is that all relationships from vendors to customers are transferable. A good management team, one that can step in and help a new owner thrive, is a must. Building that team in advance is a savvy move for any business owner looking to sell his or her business. Concerns on any of these fronts can spell doom for a seller. If a buyer doesn’t feel that they can operate a business, then they probably shouldn’t be buying it.
Great exit planning most definitely benefits the seller as well. As Deibel notes, when sellers engage in exit planning, they realize how much money they need in order to exit. In turn, this forces sellers to become very focused and goal-oriented. Sellers will take proactive steps to ensure that their business is as appealing to a potential buyer as possible.
Ultimately, proper exit planning is a win-win, one that benefits both buyer and seller. Exit planning can provide sellers with much-needed clarity while simultaneously lowering the overall risk that sellers face.
Buying or selling a business is a multifaceted, and often quite complex, process. The sooner you begin working with a professional, like a business broker, the better off you’ll be in finding the right business for you and your particular needs. For most people, buying or selling a business is the financial decision of a lifetime. Having a proven trusted partner, one that knows the lay of the land, is simply invaluable.
https://i0.wp.com/touchstonebiz.com/wp-content/uploads/2020/02/bigstock-192409594.jpg?fit=900%2C600&ssl=1600900bbpadminhttps://touchstonebiz.com/wp-content/uploads/2015/02/touchstone-logo1.pngbbpadmin2020-02-02 03:12:472020-02-02 03:12:47Why You Should Focus on Proper Exit Planning