The time you spend evaluating your company's weaknesses is, as it turns out, one of the single best investments you can hope to make. No one should understand your company better than you. But to fully understand your company, it is essential that you invest the time to understand your company's various strengths and weakness. Your company, from the beginning, has been an investment. It's an investment in your time, your mental energy and, of course, your financial resources. The time and effort you expend to locate, understand and then fix your businesses' weaknesses is time very well spent. Addressing and remedying your businesses' weakness will not only pay dividends in the here and now, but will also help get your business ready to sell. Let's turn our attention to some of the key areas of weakness that can cause some buyers to look elsewhere. An Industry in Decline A declining market can serve as a major red flag for buyers. You as a businessowner must be savvy enough to … [Read more...]
What Should You Evaluate When Buying a Business?
Buying a business can be an exciting prospect. For many prospective business owners, owning a business is the fulfillment of a decades long dream. With all of that excitement comes considerable emotion. For this reason, it is essential to step back and carefully evaluate several key factors to help you decide whether or not you are making the best financial and life decision for you. In this article, we'll examine five key factors you should consider before buying a business. What is Being Sold? If you hate the idea of owning a clothing store, then why buy one? The bottom line is that you have to have a degree of enthusiasm about what you are buying otherwise you'll experience burnout and lose interest in the business. How Good is the Business Plan? Before getting too excited about owning a business, you'll want to take a look at the business plan. You'll want to know the current business owner's goals and how they plan on going about achieving those goals. If they've not been … [Read more...]
The Top Three Major Legal Mistakes to Avoid During a Sale
The business sale process can be complex, which is part of the reason why it makes sense to have expert help in the form of a business broker. Legal mistakes can be very costly mistakes. A legal mistake can also bring the entire sale process to a sudden and complete halt. Let's take a closer look at what you can do to avoid these kinds of issues when selling your business. Major Mistake 1 – You Skipped the Non-Disclosure Agreement Nothing quite invites trouble like skipping the non-disclosure agreement. If a deal falls through, then you have the NDA backing you up. This document ensures that the prospective buyer doesn't tell the world that your business is up for sale. Never assume that a deal is going through until it actually is 100% complete. Buying or selling a business is a complex process with lots of moving parts. There is plenty of room for things to go wrong, and that is why you always need to have an NDA in place. Major Mistake 2 – You Don't Work with an … [Read more...]
Interested in Buying a Business? Check Out These 3 Commonly Overlooked Areas
When it comes to buying a business, nothing is more important than the factor of due diligence. For most people, this investment is the single largest financial decision that they will ever make. And with this important fact in mind, you'll want to leave absolutely no stone unturned. Let's examine the three most commonly overlooked areas when it comes to buying a business: retirement plans, 1099's and W-2's, and legal documents. 1. Examine All Legal Documents While it may sound like a “pain” to investigate all the legal documents relating to a business that you are vetting for purchase, that is exactly what you have to do. The very last thing you want is to buy a business only to have the corporate veil pierced. Everything from trademarks and copyrights to other areas of intellectual property should be carefully examined. You should be quite sure that you receive copies of everything from consulting agreements to documentation on intellectual property. 2. Retirement Plans Don't … [Read more...]
5 Key Factors in Transferring Your Business to a Family Member
The odds are that you've put a great deal of yourself into your business. Inevitably, the day will come when you have no choice but to walk away from your business and begin a new chapter of your life. Quite often, businesses are transferred from one family member to another. In this article, we will examine 5 of the key factors you'll want to consider when transferring your business to a family member. Factor #1 Gifting Can Have Numerous Benefits Will you be selling your business to a family member or simply gifting that business? Gifting comes with several major advantages, for example, this approach can reduce your real estate taxes. Also, the gifting process can allow you to maintain a level of control if the agreement is written properly. Factor #2 The Buy-Sell Agreement Don't overlook the importance of the buy-sell agreement, which works to put everything in writing. You may be tempted to forgo a contract since you are dealing with a family member, but this is a mistake, … [Read more...]
Maintaining Confidentiality Throughout the Sale Process
There are two key ingredients when it comes to selling a business: professionalism and confidentiality. If either of these two ingredients are lacking, then you'll most likely run into problems. Sadly, many sellers see their deals fall apart due to a breach of confidentiality. You certainly don't want to be among their ranks. The simple fact is that a breach in confidentiality can negatively impact everyone from suppliers and vendors to creditors. For example, vendors could change their terms and this, in turn, could have a major, negative impact on cash flow. There can be a chain reaction of events that spirals out of control. The potential negative outcomes of a breach in confidentiality are quite numerous, for example, employees and customers alike could begin to worry about the future of the business. Employees could begin to worry about the safety of their jobs and begin looking for a new position. Dangerously, this situation could lead to changes in management and the loss … [Read more...]
Key Elements for Every Partnership Agreement
You should never forget that your partnership agreement is, in fact, one of the most important business documents you will ever sign. Many people go into business with loved ones, relatives or lifelong friends only to discover (once it's too late) that they should have had a partnership agreement. A partnership agreement protects everyone involved and can help reduce problems that may arise. Outlining what will happen during different potential situations and events in a legal framework can help your business keep running smoothly. What Should Be in a Partnership Agreement? Every business is, of course, different; however, with that stated, any partnership should outline, with as much clarity as possible, the rights and responsibilities of all involved. A well written and carefully considered partnership agreement will keep small problems and disagreements from evolving into more elaborate and serious concerns. There are times to take a DIY approach and then there are times when … [Read more...]
Embracing Retirement and Selling: 4 Tips for a Smooth Transition
No one works forever. Regardless of how much you love your business, sooner or later you will have to step away. Owning a business can be very demanding. This fact can be doubly true for owner-operators of businesses. The simple fact is that you'll have to embrace retirement at some point. Most business owners have never sold a business before and may not know what to expect. The good news is that prospective buyers usually like the idea of buying an established business directly from a business owner. It is key, however, to do everything possible to make selling your business, as well as the transition period, as easy for a buyer as possible. Prepping your business for sale has many diverse parts that need to be taken into consideration. Prospective buyers want to feel as though they will have a seamless transition, so it's in your best interest to evaluate what steps you need to take to make the transition smooth. You are the world's greatest expert on your business. As a … [Read more...]
Is It Time to Become a Business Owner? 3 Questions to Ask Yourself.
Many people know that owning a business isn't for them. But for others, the appeal and lure of owning their own business can be powerful indeed. If you are uncertain as to whether or not this path is for you, there are a few simple questions you can ask to gain almost instant clarity. In this article, we will explore those key questions and help you determine if owning a business is in your future. 1. Are You Dedicated to Growing Your Income? Quite often people like the idea of making more money, at least in the abstract. But when presented with what it takes, many people realize that they don't want to do what is involved. Owning and operating a business can be a lot of work and it's not for everyone. Yet, those who embrace it can find it rewarding in a variety of ways. Being a business owner is radically different than being an employee. As an employee, you simply don't exercise much control. Summed up another way, your financial fate is clearly in the hands of someone else: … [Read more...]
The Top Two Ways to Purchase a Business without Collateral
Banks love collateral and for a very simple reason. If you have collateral, then the bank has something it can take if you fail to repay your loan. At its heart, collateral is a remarkably simple concept. However, unfortunately, many people who want to start a business lack it. All of this leads us to the simple question, “Can I start a business without a collateral. 1. Try the SBA There are ways that you can start a business without collateral, but you will need some amount of money. The larger the business, obviously the more money you'll need. Those interested in the zero collateral route will want to take a look at the SBA's 7 (a) program. This program incentivizes banks to make loans to prospective buyers. Through this program, the SBA guarantees an impressive 75% of the loan amount. Of course, the buyer still has to put up 25% of the money in order to buy the business, but for those looking to own a business without having to put up collateral, the SBA's 7 (a) program is … [Read more...]
