List of Documents to Prepare for Business Sale

May 15, 2011


Opportunity favors those who are prepared to take advantage of it. This has been the consistent theme in the last several posts we have written on how to prepare your business for sale. We mentioned that you need to start planning for business at least one year in advance. In addition there are additional items you need to take care of as the time to list your business for sale approaches.
Your primary goal as a seller is to allay potential buyer’s biggest financial fears as well as other FUDs related to the operation of the business. It is only through proper planning and careful preparation that you can dispel buyer FUDs and make your business sale go faster and smoother. After all the longer it takes for the sale to go through the more chances of something going wrong and the sale falling through.
One of the most important aspect of getting prepared for the sale is compiling all the documents related to the business finances and operations.
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How do you overcome Buyer FUDs when selling your business

May 12, 2011

In the previous post we discussed two biggest fears your potential buyers have when they are considering purchase of your business. We showed how you can help buyers overcome these fears and make the sale of your small business go through quickly and smoothly.
In addition to the two fears related to business finances, there are other operational FUD (Fear, Uncertainty, Doubt) factors that buyers, particularly those who have not owned small business before, are likely to have. With proper planning you can help alleviate these FUDs and make the selling process go faster. After all, it is in your best interest to shorten the sale process as much as possible. The longer it takes for sale to complete the more chances of something going wrong and the sales falling through.
Based on our experience with both buying and selling business, we have come up with several questions that are likely to surface in buyer’s head when he is going through due diligence. The sections below document those questions along with our advice on how you can deal with them.
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How can you overcome biggest buyer fears when selling your business

May 8, 2011


We have been discussing what preparations the small business seller needs to make before listing the business for sale. There are items seller needs to start taking care of as much as 1 year in advance As the sale process gears up you need to prepare number of documents for the sale to complete fast and without any major hiccups.
The biggest obstacle to the sale of small business stems from buyer’s FUD (Fear, Doubt and Uncertainty). When the buyer is betting hundreds of thousands of dollars on the business and is committing large part of his future life he is bound to have cold feet and second thoughts at some point in the process – just like in marriage!!! Your job as a seller is to address these FUDs and alleviate buyer’s anxiety.
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What do you need to Prepare before Selling Your Business

May 1, 2011


Selling a business is a lot like selling your house – only lot more difficult and time consuming. It is not uncommon to take more than year to sell the business – from the time it is put on market to the time the closing papers are signed. Anyone who has been through the selling process knows that there are number of aspects you need to take care of long before the business is put for sale. What makes it more challenging is the fact that you need to do it all while running the day-to-day operations of the business and ensuring that it does not suffer during the selling process.
There are steps you can take to make the process of selling the business easier for you. They can also help make the sale go faster; which is very important for any seller. The longer it takes to sell the business, the more chances of something going wrong and the sale falling through.
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External Market Forces that can Drive you out of Business

April 10, 2011


In case you have not heard Blockbuster; the go to place for video rental just a few years ago; was purchased by Dish Network for peanuts. This is the company that was valued at Billions of dollars before the market and technology changed around them and new competitors such as Netflix and Coinstar came along. They completely missed the boat.
Such is the power of free market economy! Business owners who focus only on internal operations of their business without paying attention to external market forces will get hurt. The market forces will put them in oblivion in a few short years or even months.
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Why Embracing KISS Principle Leads to Happiness

April 6, 2011


KISS -Keep It Simple Stupid.
Many small business owners like to take the road less simple. If a task takes 2 steps to finish they will manage to stretch it to 10 steps. They are wired to think complex. We have pondered on the question for some time – when you are running a small business should you opt for a simple operation or a complex one?
You can see the examples of simple and complex operations in franchises as well. On one hand you have a pizza franchise such as Little Caesar’s – home of $5 Pepperoni Pizza with no delivery. On other side there is Pizza Hut with large number menu items and toppings and it not only has carry out; but also delivery and dine-in. Which one is easier operation to run?
There are number of reasons why you should try to keep things as simple as possible.
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Do You have to be a Cook to Open a Restaurant?

March 23, 2011


Yesterday I came across this interesting article by Susan Reid at AmEx Open Forum about why you should stay within 2 degrees of separation when starting a business. She argues that you may end up feeling overwhelmed with everything you’ll need to learn just to get up-to-speed if you stray from 2 degrees of separation.
For the most part we agree with this. After all, there are number of benefits of staying within your comfort zone when it comes to starting a business – you have less of a learning curve; you can operate the business yourself and save on employee cost and most important you will enjoy what you are doing.
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Buy or Build? Buying Existing Business vs Building New one

March 20, 2011


Many buyers of small business are dismayed by the money they have to pay to buy an existing business. They think that they can build the same business from scratch at a much lower cost. And this is true. To understand why this is the case you need to know the concept of book value of a business versus its market value. Book value refers to the money you can get if you sell all of the business assets in the market. The market value is usually higher than book value and is a result of goodwill that is associated with the existing business. It is this goodwill that the buyers of existing business are paying extra for. The goodwill is a result of all the work that existing owner has done to bring the business to its current level.
While it is true that you can build a business from scratch at a lower cost; it comes with its own set of problems. You have to understand both sides of the buy vs. build equation before making a decision. Below we have highlighted pros and cons of buying an existing business as opposed to building a new one. You can make your decision after studying this and looking at your own situation.
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How to succeed in running absentee business

March 13, 2011


Small business owners run their business absentee for variety of reasons. Some owners are still holding full-time job while starting a business. Others have more locations than they can handle themselves. While still others just don’t want to spend their entire time on the business. Our estimate is that while majority of small businesses are owner operated, there are number of businesses that are run absentee for the reasons mentioned above.
While it is possible to run and succeed in absentee owner business you need to be aware of the problems that arise when you are doing so. Ignoring these problems can lead to deterioration and even disaster for your business. The most common issue in running the business absentee is that you may not be aware of what’s going on with your business or at least not to the same degree as when you are present 24×7. Even if you come to know about the issues it may be too late to act on. The issues can surface in all areas of the business ranging from operations, quality, purchasing and customer service.
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Do you have what it takes to be Small Business Owner?

March 2, 2011


Small business owners are a special breed. They don’t like to sit still or take orders from others. They also don’t like to stop even when they have become successful or when they have met with failure. That’s why the term serial entrepreneurs – once an entrepreneur; always an entrepreneur.
Many people who have held job for their life dream of owning a small business – either out of frustration with their current job or because they have lost their job and can’t find one in this difficult economy. They think that just because they have a strong desire to be a small business owner they will succeed. While having a strong desire is a good start; it takes more than that to be a successful business owner. Our experience has shown that the success in small business is dependent on a combination of factors including heredity, upbringing, determination, working style and external support.
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