How to sell a business? That simple question explodes with so many variables. Do you want to sell to family or a friend? Do you want to sell today or in a month or sometime ‘soon’ with no firm date on when ‘soon’ will start or finish. What about the question that relates to ‘how to sell a business’ and that is ‘how much do you expect or want for your business?’ Do you want all cash up front or are you willing to carry some of the finance? So that simple question, ‘how to sell a business’ all of a sudden comes with a few more complications. The answer to the question of ‘how to sell a business’ reminds me of that expression, ‘it is like peeling an onion.’If I was to answer the question, how to sell a business using the skills and techniques I have learned from being a business broker I would answer as follows.The most important first step is to understand the motivation of the seller and specifically their timetable including when they want to start to sell their business. Selling a business is not a quick task that can be done in a week or two. It generally takes between 6 to 12 months to sell a business with the average sale time 8 months, if it sells. The most surprising piece of data is that only 25% of businesses actually sell, that is, to put it bluntly, 75% of businesses close down.Once the motivation and timeline of the seller is clear the next most important step is to get the seller and the business ready for sale. Too many sellers approach the selling of their business very timidly with no clear direction and not embracing the process. Selling a business is not an easy journey as it touches a myriad of decisions that are part of owning and operating a business. This includes the main decision making areas around operations, finance, accounting as well as management and other sensitive areas of the business but also the raw emotions of the seller/owner including their fear of leaving the business, whether customers will continue to come, the employees will stay and if the legacy of the business will continue and more.Once there is clarity on the above two steps, it is now time to drill down into the details of the business and understand specifically what is for sale. Too many sellers go to market to sell the business but do not have the necessary documents ready and just as importantly, fail to get a professional review to make sure what the documents say are up to date and accurate. There is an adage in the business brokering industry that ‘time kills deals.’ Buyers do not like surprises or matters outside their control. Initially they may have some patience but waiting too long creates a fear they are missing out on other opportunities or this is a sign that this isn’t the right business for them and that they should move on and look at other opportunities. The window of time a buyer is prepared to look and buy a business is very small so even a slight delay can make the difference between buying and not buying the business.When I am selling a business, at a minimum I get from the seller or put together myself the following set of documents. Each transaction is different so there may be other documents to organize but a basic set of documents includes the last 3 years Profit and Loss Statements, Tax Returns and Balance Sheets. It also includes a copy of the lease, a list of fixtures, furniture and equipment, and a Sellers Disclosure statement that explains to a buyer the conditions the business needs to successfully operate including regulatory requirements such as licenses, permits and other critical information they need to know or take to ensure the business will operate legally under a new owner.Part of my approach is also to create two important documents. The first is a Blind Executive Summary of the business that is sent to an inquiring buyer so they get a high level overview of the business and decide if they wish to keep moving forward with their inquiry to buy the business. If the buyer wants more information, at that point they complete and sign a Non Disclosure Agreement and I then present a Confidential Business Review or Confidential Business Summary which has more in depth and commercially sensitive information about the business. With the above in place, after reviewing these documents and speaking with the seller they should be able to make an offer.Once the offer is negotiated and accepted by both parties, the transaction moves into due diligence where the buyer is available to verify and validate the representations of the seller and get access to all the sensitive documents they need that I have on a secure password protected website.This part of the transaction also requires keeping things moving forward with items such as obtaining a new lease or assigning the current lease. Additionally, if the buyer is organizing third party finance such as an SBA loan, the buyer also needs to stay on top of this process to prevent the deal collapsing.The final step is to move into escrow so monies payable to the various parties in or connected to the transaction are handled and the legal title for the business and its assets correctly change hands.Selling a business is not a sprint and at different times in the transaction can appear more like a marathon. Another piece that I have begun to accept as a truism is that most transactions die at least three times before they close. That is, at different points in the transaction the buyer gets cold feet or it’s the sellers turn because things are not going the way each part expects. It is what it is.
Often I hear of people who have invested in a home business, have performed their due diligence on how much it costs to set up the business and yet within a few months find themselves in a worse financial position than when they started. For all businesses whether they are small home business or multi-million dollar corporation, there is one law that runs throughout. This law states that “cash flow is king.”Poor cash management is probably the most frequent reason for home businesses failing to succeed.There are numerous examples of companies who have had full order books but who were unable to maintain themselves in business due to cash flow problems. If it is true for large corporations, then this is also true all home businesses where income is essential to pay for mortgages and to feed and clothe ones family.So let’s get back to basics. There is a fundamental difference between the increase in profit and having cash. Profit is defined as the amount of money you expect to make over a given period of time. For tax purposes this will be for a specific financial year. For the vast majority of businesses the first year or sometime a couple of years the business will not have profits. Cash, however, is the key to make a business run. You need the cash to purchase supplies, training, marketing etc. You can’t spend profit; you can only spend cash.Cash flow therefore defines the movement of money in and out of a business. Positive cash flow means that more money is coming into the business than going out. Negative cash flow means that more money is going out than coming in.I would propose that there are three elements to successful cash flow management.
The business owner needs to have a good idea of when, where and how cash will be moving within his business. This need not be complicated, but it is essential. I was recently reviewing the development of a small business with a friend who was looking at expanding. I had to admit, that they had an impressive vision of where they were going. However, I drew to their attention that if they were to grow as they projected then they would need to have the resources to meet the expected demand. They did not have the cash available to invest in those resources. There was no point in investing in extensive marketing if in the end a business does not have cash to deliver to its customers.
Each business will require investment. I do enjoy watching the television programme called “The Dragons Den.” In this programme people with “ground-breaking” ideas (as well as those not so ground-breaking!) present their ideas to a panel of successful business investors who review what is being offered. The ideas that the “dragons” believed would be profitable would be invested in. They all realise that in order to achieve their dreams, they need financial input. Other investment sources may include an owners own savings as well as private and commercial loans.
It is important to review on a regular basis the cash flow situation and to take decisions on whether to progress based on hard facts. It is no coincidence that accountants of large organisations provide monthly reports on the organisations financial position. If this is important for large organizations, it is also true for home businesses. A home business that on a regular basis requires considerable amount of money invested into it and offers a small return should be seriously reviewed.
During my time working in project management consultancy, one of the control points that we used was known as a project “gate.”This gate normally took the form of a senior managers meeting during which time the project manager provided details, amongst other things, of a projects progress, it costs, its risk and issues and how it aligned with the original business requirements as well as reviewing its assumptions and expected benefits. For smaller businesses especially those with limited financial support this exercise is crucial.The home business owner should also set have financial goals and objectives that allow him to evaluate whether a business is going to be a profitable business or not. Cash flow is undoubtedly one of the most important elements that need to be included in any business plan.It is important to ensure especially in the first few months, that the home business owner has enough financial resources available to allow the business to grow. The vast majority of people setting up a home business will not have the benefit of a bank loan or significant financial resources to get started. It is crucial therefore that operating costs are kept to a minimum.So the question that I get asked is why did I get involved in Forex as a business. I was successful in project consultancy as well as running a property business. In response I will refer back to the three elements of cash flow managements detailed in this article.
Before starting out spending too much money, I ensured that I had a good idea of how much I would need a) to start the Forex business and b) to grow the business. I was not naive enough to believe that I would be successful from day one. I realised that apart from investing in training, there would be a number of lessons to learn that would have a financial impact. I therefore put aside a set amount that would determine the maximum that I was prepared to lose.
One of the beauties of Forex trading is that one can grow from a small amount and watch the cumulative growth of the business. I would not need to approach anyone for any loans. My strategy was that on achieving a certain level of competence (this was defined by having an account of a certain size) I would further introduce funds into the business. This would provide injections of cash into my business that would bring instant rewards.
In order to measure progress I had designed and built a financial model that would track all the transactions, my investments into the business and also withdrawals. This was linked to my business plan that I had devised. The model tracked progress on both monthly and weekly time periods. In the first couple of months, I made some serious mistakes which brought me close to failing. It was the analysis of my weekly trading patterns that helped me identify where money was being lost and where it was growing. I plugged the gaps and exploited the growth.
One of the great attractions for me is that although there are costs associated with starting up a home forex business, once the skills of money management are mastered they will last a lifetime.
Does the cost of having the wedding of your dreams frightens you? With the rise of oil prices and in view of the current economy, many brides and groom are afraid that having the wedding of their dreams is out of the question. Is it? No! You can have your dream wedding for a fraction of the price you thought it would cost, as long as the bride and groom plan together, set and adhere to a realistic fixed budget, use good organizational skills, ingenuity, flexibility, hone your negotiating skills, and enlist the help of friends and family. Many components go into planning a wedding day. Many details need to be completed and intertwined to create not only a wedding but a dream wedding as the bride and groom pictured it. Today, about 70% of the marrying couples pay for their own weddings so, setting a realistic wedding budget and sticking to it is a must if you are to keep the cost of your wedding within your budget. There are many options to choose from and many ways to save. So keep on reading.Now, get creative and examine your options.SEARCH THE INTERNETSearch the Internet thoroughly and you can save time and money. The World Wide Web Provides you with information and resources for making purchases on-line. Many wedding web sites provide links to wedding related businesses that could be your answer to quality products and services. A-wedding Day offers you a series of wedding planning articles that concentrate on how to choose and work with wedding vendors, professionals and service providers, a wedding resource directory, a wedding planning checklist and a discount bridal mall where you save on wedding gifts and accessories.SET YOUR PRIORITIES AND YOUR BUDGETAs you plan your wedding create three categories:Must have
Nice to have.Base your decisions on availability, on your budget and on your ingenuity. Once you decide what your priorities are, use your ingenuity and creativity. Involve yourselves, your friends and your families in at least some of the preparations. Loved ones will appreciate the opportunity to contribute to your happy day, have fun and save you money. Choose vendors and service providers who can assure that your priorities will be met and that yours will be the wedding you dreamed of. Before you do, read the series of wedding planning articles devoted to choosing and working with wedding vendors, professionals and service providers.When you negotiate with vendors and service providers, be firm. Stick to what you decided you want and to what you budgeted for. Do not let them talk you into anything you neither budgeted for, nor want. But by the same token, be flexible enough to spend more or substitute, if you cannot find exactly what you considered a priority, within your budget. Be sure you are familiar with all changes, return and / or cancellation policies before you sign any contract or finalize any arrangement. Having to buy something twice, or having to pay additional fees for changes can and does add up. Always keep documentation of every contract and receipt in a safe place and pay special attention to deadlines for returning items. Whether you are looking for a service provider, wedding accessories or wedding supplies, always comparison shop. Interview at lease 3 service providers before you select the one who will accommodate you best.Look for discount malls on and off the Internet. Shop for bargains and clearance sales. If you are careful, you can save a lot of money. Do not get confused between inexpensive and cheap. If you purchase at a discount mall, you’ll generally receive the same merchandise you would at a more expensive shop and be able to return or exchange items. However, when shopping for reduced priced and clearance items, check to make sure that they are not of inferior quality since most closeout or special sale items indicate Final Sale and can not be returned or exchanged.WEDDING CONSULTANTS AND WEDDING PROFESSIONALS CAN SAVE YOU MONEYHere too, base your decision on your budget. If your budget permits, engage a wedding consultant to help you with tasks as small as locating trusted vendors and service providers, to tasks as large as organizing your entire wedding event from A-Z. Wedding consultants work with local vendors and service providers, who like the referrals generated by them. As a fair trade, they often have special arrangements for reduced rates which when added up will save you money. Yet, the least you engage outsiders and the more you enlist friends and family and do yourself, the more money you save. It is not only a wonderful feeling of great satisfaction to plan your own wedding, it is also a lot of fun.WEDDING STATIONERYYou’ll probably want to send engagement announcements, save the day, invitations etc… If you are willing to depart from the traditional printed invitations you can save not only money but time and anxiety. Create your own wedding stationery and invitation right on your computer and print it on blanks. You can purchase all your wedding stationery needs including papers used by professional printers, and print your own wedding invitations and stationery. If you have a good printer, your stationery and invitation will look just as professional as the expensive ones ordered from printers. So, get creative and design your own invitation and stationery. Do you have a wedding theme? Do you want to insert a photo? Go ahead, incorporate them.WEDDING ACCESSORIES FOR CEREMONY AND RECEPTION Following are the basic wedding accessories: ring pillow, champagne flutes, cake serving set, guest book, pen, garter, a unity candle set. Additional accessories most brides add are a flower girl basket, a bridal purse, a keep sake cake top and a photo album. As most brides opt for coordinating accessories, complete collections are available. You can purchase your collections in an online discount mall and save anywhere from 10 to 25 percent, or you can have others purchase your desired accessories as gifts. Your friends and family will most probably celebrate your engagement and up-coming wedding with engagement parties and bridal showers and of course gift giving holidays. Most guests need some guidance regarding appropriate gifts but few consider items for the wedding. This is why bridal registries are so helpful. So if you let the hosts of your wedding celebrations know what you want, not only will they be able to coordinate it but they will assure the guests that their gifts are wanted and will be highly appreciated. A win win.CEREMONY SITEThe only decorations expected in the ceremony site or sanctuary, are 2 standing flower bouquets. Use flowers that are plentiful and inexpensive. Today, many supermarkets, even Costco and Sams Club sell wonderful fresh and silk flowers and bouquets at a very reasonable price. You may wish to add pew bows. If you make your own you’ll save a lot of money. Making the bows is easy and fun and all you need is wide ribbon, scissors and a little time. You can make your ceremony special by lighting a unity candle and if you have children, involving them in the ceremony. You can buy unity candles in stores, you can order custom designed candles from artisans who will create personalized candles just for you, or you can create your own.ATTIREWedding gownWedding gowns are very expensive but there are many options you may exercise to get what you want and save money. Do you have a friend or a family member who sews? Engage them and in return give them the honor of serving as an attendant at your wedding party. If you shop for a gown, before you decide to have it custom made, go to department stores and check their sale corner. Occasionally, Department stores have wedding gowns on clearance and you can buy a gown at a fraction of its original price and save a “ton” of money. Another option is buying a sample gown which was used for a fashion show or a display. If you still can not find just that special gown, and you need to purchase one, consider a simple gown off the rack. Or comb the wedding ads and auction sites on and off the web. You’ll probably be able to buy a gown that was used only once or even a brand new one for peanuts. To save even more, you may considered a white “prom” or a bridesmaid dress.Bridesmaids dressesToday it is customary for the bridesmaids to purchase their own dresses shoes and accessories. Since they intend to gift their maid of honor and bridesmaids, most brides provide the bridesmaids with custom jewelry that coordinate well with their gowns or dresses. The jewelry does not have to be expensive but does need to be of good quality and look good.Groom and grooms menDepending on your wedding motif, the groom and grooms men can wear a dark suit and white shirt they probably own. Gift them with matching ties for uniformity. If your wedding calls for tuxedos, have the men in the wedding party rent the tuxedos, shoes and accessories. Here too it is customary for the groomsmen to pay for the rental of their attire. Many rental places will furnish the groom’s attire for free if all the men from the wedding party rent at the same time as one package. A saving for you.FLOWERSYou can save money on your flower arrangements if you are willing to be ‘original’ and creative. If any of your guests create flower arrangements even as a hobby, ask them to do the flower arrangements. If you can not find a capable guest, you’ll need to purchase the bridal bouquet and the flowers for the altar at a reputable florist. But, consider giving the bridesmaids mixed seasonal flowers. They are available in supermarkets and Even at Costco and Sams Club, at a fraction of the price charged by a florist. Ask your bridesmaids to insert their bouquets in vases to serve as centerpieces for the reception tables. Your bridesmaids will oblige with pleasure knowing that after the reception they will take home not only their flowers but the vases as well. The flowers will not keep forever, but the vases will become keepsake mementos of your wedding and, you’ll save money.WEDDING RECEPTION SITEThe reception is the most expensive part of your wedding. But, you can plan it within your budget and have a memorable event. You must be very particular when choosing the site. It must be appropriate and fit in with your reception plan. It does not have to be a traditional hall. How about having your wedding in a historical home, a park, a museum, fair grounds, public gardens, on the beach, etc… You also need to know if it supplies you with all your furniture and dining needs. If not, you must calculate rental fees. When choosing a wedding site, choose slow period and either a Friday evening or a Sunday afternoon and you’ll be able to negotiate the best deals.FOODIf you invite some good cooks to your wedding, you may ask them to prepare their favorite recipes for your wedding reception. Also, if you invite some good bakers, ask if they could prepare sweets and desserts or maybe even your wedding cake. You’ll save money and they will feel honored for being asked. In fact they’ll be delighted to serve too. If you have your reception catered, you must consider the number of guests, the time of day and the manner in which food will be served. Will it be refreshments only? dessert only? light snack? a sit-down? a buffet? will you serve alcohol? If bar tenders will serve alcohol will it be an open bar? will you or the guests pay for the drinks? There is an enormous difference in price between a light brunch, for example, and a five course sit-down catered dinner. Following are some suggestions you may check out to fit your budget. Have a brunch or an early lunch and you need to serve fruit and vegetables, salads, eggs, cheeses, pastries, coffee, tea and cold drinks buffet style. Have a late lunch and you’ll need to add some meats and poultry. You may still serve it buffet style, or as a sit-down meal. A sit-down dinner is by far your most expensive choice. DRINKS Purchase the drinks yourself, at a location that will accept the return of un-opened cans and bottles.MUSICWhen it comes to music, you’ll need to decide what fits in with your personalities when choosing whether to use instrumental music, a band or a disc jockey. Check out the local colleges and universities and find out if they have a music department. If so, inquire if there are students in the music program who will be able to perform at your wedding. We thank Meredith from Phoenix, AZ who sent us the following information about how she is saving money on wedding music while helping the local high school band in their fund raising efforts. She writes:I am getting married and paying for it myself. So, I have had to cut costs like you wouldn’t imaging! One thing that was very important to me and my fiance is music. We both were in band and choir in high school and love music to this day. Unfortunately, having a string quartet was entirely too expensive and forget the live band or even a DJ at our reception, so i had an idea. I was in jazz band in high school and we were very good, winning all kinds of awards and stuff. High school bands are always looking for fund raisers and so we approached my old high school jazz band about playing at our reception. We worked out a great deal for paying them but significantly lower than getting a professional band. AND, the school usually has uniforms already – just request that as part of the package. Thank you for you web site it has been very helpful. Meredith from Phoenix, AZ. Do not overlook your guests. If you invited singers, let them sing. Have them sing a solo or as a group during the ceremony And / or at the reception.PHOTOGRAPHERS AND VIDEOGRAPHERSWhen it comes to photographers and videographers, choose your professionals very carefully. Your wedding day will come and go and the photos and video will serve as mementos and memories of your big day. Viewing them you shall re-live it and be able to share it with your kids and theirs building a family history. Before hiring a photographer or a videographer compare prices and references. Choose the very best that are within your budget. Even if you need to choose a smaller package. Here is where you want the very best. Go for it. Just like personalized wedding gifts and accessories, photos and videos will become treasured keep sakes to share with and hand down your children. However, consider placing disposable cameras on each table at your reception so your guest will take pictures too. These pictures will usually be real and spontaneous and reflect your wedding as seen by your guests.MISC. Ask friends to serve as your drivers and save. Instead of a limo, rent a luxury car and have a friend drive. Ask friends to
help decorate the reception room,
be the disc jockey,
help with the seating, etc… Good friends and family will be honored and you’ll save money and know that your wedding needs were fulfilled with love and care.