Everything you need to know about Buying a Business, Selling your Business and Valuing a Business so you can avoid common pitfalls and save thousands of hard earned dollars in the process
Showing posts with label selling your own business. Show all posts
Showing posts with label selling your own business. Show all posts
Whether you are looking to buy a business or sell your own business, it is important to familiarise yourself with common business terms. As part of your education process in this area, understanding the meaning of a cover note may serve you well.
A Cover Note is a temporary certificate of insurance issued by an insurance company as an interim immediate insurance cover until a formal document is issued
What Is A Cover Note?
A cover note is issued usually for 14 or 30 days. During this time insurers may require additional information about you and the business or a detailed proposal form to be completed. Once this information is provided and the policy is paid for the temporary cover transfers to an annual insurance policy.
Selling your own business is as crucial a business decision as starting, operating, or expanding one.
Aside from investing your resources, time, and effort, it has become a big part of your life and leaving it may have some emotional repercussions if you don't carefully plan for such an eventuality.
On a happier note, if you do make a conscious effort to map out a desirable plan, you are sure to end up satisfied and fulfilled as you go through the next phase of your life, be it retirement or an entirely new business venture.
The process of selling your own business can be tedious and complex. There are questions you should ask yourself for which you should find answers.
It is critical that at this point you should give yourself sufficient time to ponder specific questions if you are to achieve your desired outcome.
Here are 7 questions to get you started…
#1 - Why Am I Selling My Business?
The reasons for selling are varied, such as:
New business undertaking
Change of career
Emigration
Retirement
Health concerns
Family issues
Business failure
Economic down trend and alike
It is essential that you examine the real reasons why you want to sell your business - because this will become part of the basis to determine the other processes necessary for the sale. For instance, if your reason is business failure or bad economy, you may not be able to command a good price and it would be best to postpone the sale.
#2 - How Prepared Am I To Sell My Small Business?
The preparation phase entails various processes.
After making a final decision to sell, the key areas and the entire work force of your business should be informed in a discreet and professional manner to avoid speculation and panic amongst the ranks.
Accurate and updated financial records of the business should thereafter be made ready – make an appointment with a Business Accountant.
A complete inventory of all the business' assets, especially the tangible ones, should be undertaken and a thorough review of existing systems and procedures completed.
Other documents that can be prepared at a later time are:
Letter of Intent embodying the buyers willingness to buy after agreeing with the terms of the sale
#3 – How Much Is My Business Worth?
While a business can be valued in different ways…
…YOU, as the owner, are in the best position to give an honest and true valuation of your business.
After examining your books of accounts, reviewing the systems and procedures in place, consider your intangible assets, and assess the overall economic environment to include industry performance and competition.
You are now ready to give yourself a tag price that will suit your purpose.
#4 – When Is The Right Time To Sell My Business?
Proper timing is paramount when selling your own business, but there is no hard-and-fast rule as to when timing is right.
Depending on your motives for selling, anytime may be the right time…
…For instance, if maximization of price is your aim, a period of economic recession or depression is definitely not the right time.
If you are seriously thinking of retirement due to age or health, now is probably the right time - And so on.
#5 – Who Can I Sell To?
As you may or may not have noticed, demand for Small Businesses has increased considerably due to recent economic times, so most well prepared business owners can afford to be picky when it comes to who they sell their business to.
Your own family members, friends, customers, suppliers, and employees can be your first prospective buyers. Even your colleagues and competitors in the industry may be interested given the right perspective.
The public at large is of course your biggest market, but you will need extra efforts and time to reach to them.
#6 – How Do I Sell My Business?
The process of selling has greatly evolved with the advent of the computer. Reaching out to people far beyond your local area has been made easy with the click of a button or mouse…
…Selling your business through the web is the first option - It allows you to be seen by millions of readers and can be FREE!
Print advertising in newspapers, magazines, bill boards, or posters are good to do in conjuction with the web for maximum exposure.
#7 – Will I Be Happy When I Sell My Business?
Given the right price at the right time at the right place to the right buyer…do you think you will be happy in the end?
Exit strategies are a crucial part of the planning process when selling your business. Even if you do not intend to sell your business, you need to have good exit strategies up your sleeve to avoid any complications later. Exit strategies can be your way of planning and managing your eventual departure from your business. Following are 4 key exit strategy tips for you to consider before selling your business: 1. Write down your business exit strategy plan in detail:
It is the foremost exit strategy you need to undertake. To realize your strategy! It is essential to first properly plan your exit strategy and stick to it.
Having a written plan will enable you to be in control of the process. You need to have a proper exit strategy plan to keep a track on your business proceedings. By making a plan and sticking to it, you will notice an immediate, positive impact on your business.
2. Know the right time to get out of your business:
It is a well-known fact that the best businesses to sell are the ones that are not time-dependent. Therefore, you need to have a sustainable, durable and predictable type of business to attract prospective buyers. You need to ask yourself certain questions such as ‘why exactly do I need to get out of my business?’ and ‘what do I need to get out of it?’.
3. Assemble and consult your advisory team: To get the best deal and returns from your business, it will be beneficial for you to take your final call only after consulting your advisory team, who will provide you with all the necessary information. Your advisory team should include your business lawyer, accountant and business broker. You can also consult a tax professional and hire a personal financial advisor.
4. Try increasing your business value:
This is perhaps the most important exit strategy. Your business has to be in good shape to attract the prospective buyers. Some of the factors that can have a major impact on your business' sale prospects are its profitability, durability, predictability and sustainability.
You need to work on improving these factors before deciding to sell your business. Not having an exit strategy plan may spell doom for your selling prospects. Therefore, it is advised that you consider the above-mentioned exit strategy tips before taking the final call.
For more information regarding exit strategy planning, deciding your business value and selling your own business, be fully prepared by using the BizSale Kit.
Welcome to the GBR Group Blog where you'll get highly informative tips, techniques and strategies for Buying a Business or Selling Your Own Business DIY.
