Day One is the Day to Prepare Your Exit

Pepperjam CTO, Greg Shepard recently published “Planning Your Exit Should Begin When You Launch” in Entrepreneur magazine. In this article, Shepard puts forward a variety of thought-provoking ideas including that entrepreneurs should be thinking about partnering early on with those they believe will ultimately want to buy their business. Thinking Ahead Much of Shepard's thinking centers around the fact that a large percentage of startups end in acquisitions. In particular, he notes that in 2017, “mergers and acquisitions accounted for 93 percent of the 809 ventures capital-backed exits, yielding a total of $45.6 billion in disclosed exit value.” Not too surprising, he also points out that according to a recent Silicon Valley Bank survey, over 50% of all startups are “hoping for an acquisition.” For this reason, Shepard points out that entrepreneurs should be thinking about who may potentially acquire them from day one. In particular, startups will want to build their companies in … [Read more...]

What Makes the Sale of a Business Fall Through?

There are a myriad of reasons why the sale of a business doesn't close successfully; these multiple causes can, however, be broken down into four categories: those caused by the seller, those caused by the buyer, those that just happen (“acts of fate”), and those caused by third parties. The following examines the part each of these components can play in contributing to the wrecked deal: The Seller 1. In some instances, the seller doesn't have a valid reason for entering into the sale process. Without a strong reason for selling, he or she has neither the willingness to negotiate nor the flexibility to see the sale to a conclusion. Without such a commitment, the desire to sell is not powerful enough to overcome the many complexities necessary to finalize the sales process. 2. Some sellers are merely testing the waters. As detailed above, they are not at that “hungry” stage that provides the push toward a successful transaction. These sellers merely want to see if anyone wants to … [Read more...]

When It’s Time to Sell, Put Your Strengths First

Putting your strengths first will help you sell your business. While this may seem obvious, a surprising number of business owners will either improperly index the strengths of their business or fail to emphasize those strengths adequately. In this article, we will examine five key business strengths that you should focus on when it comes time to sell. Understand Your Buyer You know your business, but you don't necessarily know what buyer is best for it in the long run. If you've never sold a business before (and most business owners haven't), then you may not know how to best position and present your business for sale. A business broker is immensely valuable in this regard. These professionals are very good at determining which prospective buyers are serious and which ones are not. Additionally, a business broker will use their own databases of prospective and vetted buyers and try to match your business up with the prospective buyers that are most likely to be a good fit. When … [Read more...]

Evaluating Your Company’s Weaknesses

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...]

Keys to Improving the Value of Your Company

The first key is to have your accountant take a look at your accounting procedures and make recommendations on how to improve them. He or she may also help in preparing financial projections for the coming year(s). Getting your company's financial house in order is very important in establishing the value of your business. The second key is to review the reputation, image, and marketing materials of your company. Certainly, the quality of your product or service is paramount, but how your business presents itself to customers, clients, suppliers are very important. The appearance of your facilities and customer services – beginning with how people are treated on the telephone or in the waiting/reception area – are the kind of first impressions that are critical in dealing with your customers or clients. A third key is to get rid of outdated inventory – sell off any extra assets such as unused or outmoded equipment, vehicles etc. Contracts, agreements, leases, franchise … [Read more...]

Sell Your Business and Start Your Retirement

When the day comes to sell your business, it is important that prospective buyers understand why you have made this decision. Having a valid reason why it is time for you to sell can make your business more attractive to prospective buyers. In fact, it is safe to state that buying a successful business from an owner that is retiring is just the kind of the situation that most buyers like. It is important that your departure does not disrupt the operation of your business and that prospective buyers understand that you have taken steps to ensure a smooth transition. A key aspect of streamlining, simplifying and organizing your business is to pick out, well in advance, your second in command. Once you have decided on which person would be the best candidate, it is important that you begin grooming that person so they can take over day-to-day operations. Having a capable person who is committed to staying is a very attractive commodity for prospective buyers. Copyright: Business … [Read more...]

Five Reasons Business Brokers Improve Closing Rates

It has long been a well-known fact that business brokers can help improve closing rates. In this article, we will take a closer look at the five top reasons why having a business broker on your side can make all the difference in the world. #1 – They Reach the Most Buyers What seller isn't looking to reach more buyers? When more candidates are reviewing your business, the odds of selling for your desired price only go up. The simple fact is that business brokers reach the most buyers. #2 – Business Brokers Know How to Navigate Negotiation Hurdles As the old saying states, “there is no replacement for experience,” and this definitely holds true for business brokers. Business brokers know what it takes to circumvent negotiation hurdles. Their years of hands on experience means they can spot problems long before they occur, and this dramatically helps them sell your business. #3 – They Know How to Present Your Business Once again, experience matters. Business brokers … [Read more...]

Advantages of Buying an Existing Business

1. Established. An existing business is a known entity. It has an established and historical track record. It has a customer or client base, established vendors, and suppliers. It has a physical location and has furniture, fixtures, and equipment all in place.  The term “turnkey operation” is overused, but an existing business is just that, plus everything else. New franchises may offer a so-called turnkey business, but it ends there. Start-ups are starting from scratch. 2. Business Relationships.  In addition to the existing relationships with customers or clients, vendors, and suppliers, most businesses also have experienced employees who are a valuable asset. Buyers may already have established relationships with banks, insurance companies, printers, advertisers, professional advisors, etc., but if not, the existing owner does have these relationships, and they can readily be transferred. 3. Not “A Pig in a Poke”.  Starting a new business is just that: “a pig in a poke.” No … [Read more...]

What can business brokers do – and, what can’t they do?

Business brokers are the professionals who will facilitate the successful sale of your business. It is important that you understand just what a professional business broker can do -- as well as what they can't. They can help you decide how to price your business and how to structure the sale so it makes sense for everyone -- you and the buyer. They can find the right buyer for your business, work with you and the buyer in negotiating and along every other step of the way until the transaction is successfully closed. They can also help the buyer in all the details of the business buying process. A business broker is not, however, a magician who can sell an overpriced business. Most businesses are saleable if priced and structured properly. You should understand that only the marketplace can determine what a business will sell for. The amount of the down payment you are willing to accept, along with the terms of the seller financing, can greatly influence not only the ultimate selling … [Read more...]