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Plan Ahead When Selling Your Business to Get the Best Price

Small business owners generally fail to plan ahead when they think they might have an interest in selling their business and consequently fail to achieve the best price. When a person sells a house, they normally redo the kitchen or bathrooms, change the carpet, revamp the landscaping in order to achieve their top dollar for the eventual sale of the home. When selling a small business, the owner of the business rarely looks at the concerns that a buyer might have in determining the price that buyer might offer to buy the business.

Many small business owners do not think that they have anything to sell or only think to sell their business when they are in trouble financially, which is the worst time to sell. Others do not think that they will ever sell, but leave their families in the lurch when they die and no provision has been made to provide for an eventual sale or succession plan.

A business should always be run as if it is for sale. This means that the owner should be mindful of what a buyer in their industry would value and pay a higher price for at the time of any sale. While assets and liabilities are used to calculate a company’s fair market value, that is only the starting point for such valuation. A buyer will also look at cash flow of the business to determine what cash would be available to the buyer, especially if they are incurring debt to buy such a business. A potential buyer will also be interested in whether the business is growing in its industry or if the current owner is using the business as a “cash cow” that the owner is “milking” instead of reinvesting the profits into new technology or additional infrastructure.

If the business has a lease that is crucial to the success of the business, a buyer would be interested in the length of the existing lease and favorable terms contained in the lease, such as below market rent or options to renew. The current owner can look to negotiate better terms with their landlord, especially if their lease is coming up for potential renewal. If the company owns its own building, a potential buyer might show more interest if the building is well maintained and the work flow within the facility is laid out in a way that is cost effective. If there are environmental issues that need to be dealt with, it is important to deal with any such issues well in advance of placing the business on the market. If there are contracts with union workers or vendors which do not have favorable terms to the business, the small business owner should attempt to renegotiate such terms to be more favorable to the business.

Another issue often overlooked by a small business owner is whether they have too much of their sales from one big customer. Having one big customer may seem like a good idea at the time, but could result in financial ruin for the small business owner if that customer falls on financial hard times. A potential buyer will look at a business with only one big customer as more of a risky business even if the customer gives a good boost to the bottom line as reflected in the income statement.

A buyer is also interested in knowing that there are “people infrastructure” in the business that will handle the day to day once the small business owner is no longer running the business. If there is no one else, a potential buyer will assume that customers may leave or a lot of the knowledge about the customers and the business that the small business owner has will leave with them. This causes the business to be worth less to the potential buyer.

It may take six months to two years or longer to sell the business. Prior to that time, the small business owner may wish to hire a broker and seek financial advice from their tax attorney or CPA about the best way to structure the deal to obtain the best tax result for the small business owner. It is important for the small business owner to plan ahead to obtain top dollar for their company.

Business Guide

This paper presents a practical approach to starting and building a good business with tested and approved information.

This guide reviews the following;
Planning a business
Business Capital
Business Information
Internationalizing a Business

Business Planning is an essential and integral part of a good business. The life of any good business depends on its plan. To plan a good business, its very essential to know the more about the following factors which affects any given good business;
a. The Business Capital
b. Manpower (labor)
c. Machine (Technology)
d. Market
e. The Business Method of Operation.

Money is needed to run a successful business. This money can be generated from the following sources;
1. Your account, Family and Friends
2. Loans from Bank
3. Market Advantage
4. Business Partnership

You have become so conversant with points 1 and 2 but the points 3 and 4 are practical procedures I want to introduce to you.
Market Advantage:
To generate business capital from an existing market, you must possess the ability to find and analyse good market information and also you must be able to secure a good market connection.
This market information will give you a good business information as regards the need by a client for a supply of goods and or services which by your connection you are able to supply by linking the fellow to the source or standing as a business agent to do this job. This method deals with business mediation just as a consultant and hence earning yourself a business capital from this business deal.

Business Partnership;
This method of business capital generation has gained much fame in the African world where there is market but a great lack of goods and services exists due to poor manufacturing culture and lack of technology. So many Business giants and gurus in Africa started this way. This method of business capital generation involves a negotiation with a manufacturing company or a service producer in a developed world so as to represent them in your local business region as a distributor or a business outlet. If this business negotiation is successful, a contract is signed and this business is now empowered by the manufacturer hence creating a business link which generates satisfaction on the side of both parties. This method can yield a very big sales company on your local market and usually develops into a great business.
This usually works for those who have mastered their local market systems and forces.

I can suggest also the following ways as good business capital generation channels.

Network Marketing;
The 21st century market has given birth to a powerful business capital generation system called Network marketing. There exists a Multi- line Network marketing and also a Binary Network Market system.
It has been tested and certified that the Binary system of network marketing is better and generates more business capital lot faster than the multi- line.
I can also suggests some tested organisations who operate this binary system; an example is a USA based company called the freedom Rocks. (www(dot)freedomrocks(dot)com/urchgeneforex; www(dot)freedomrocks(dot)com; you can visit the first blog to register).

The Forex Trading Market;
Forex trading is a good business capital generation method. It is a high risk business but with more than average returns and benefits.
Freedom Rocks USA has an automated software for trading the forex market and hence will help you build and generate a good business capital. (contact: urchgene(at)yahoo(dot)com for more information).

Business information is the blood that runs through the system of any good business. This business information must be powered by market research. The cycle and trend of a business gives a good supply of information needed to run that business. The existence of a good technology also facilitates the generation of a good business information.
Business information which is synonymous with market research should include;
a. The needs of that local business environment which must be satisfied by either goods, technology or services.
b. The price system of the local market.
c. Business competition and products substitute information.
d. Desired market products or services information.
e. Market location.
You may get an expert market researcher to do this for you or you have to bend down in your area and conduct some meaningful business research so as to get a good business information.

Review the partnership session I earlier discussed in this paper for information on internationalizing a business.
You should try to gain access into the least developed and the developing world top further expand your business. You can do this by taking a trip outside your country or trying to monitor people form this region that come always to your country on business trips.
This will help you minimize competition and also put you on the track to being a multinational giant.
You may not be aware of how great your business can grow until you have tried this.
There is great demand of technology services in the African Business world and you may not be aware that this demand is hardly met because there are no technology giants to meet them.
Take a trip today especially in the African business world and you will find it rewarding.

Building your business can be great simple and this manual will aid you achieve this especially if you are planning to own an international business.