Business Directory


Sooner or later you are going to exit your business. The question isn’t whether or not you will be ready. The sixty four thousand dollar question is whether or not your business will be ready. It is estimated that seven out of ten privately held businesses have no succession plan to transfer the business to the next generation of owners. What does that mean to you? It means that if you do not currently have a plan in place to transfer your business to family members, existing partners, management or employees, someday you will think about selling your business.

That day might come sooner than you anticipate. Don’t make the mistake of thinking that just because you are not currently ready to retire that you have plenty of time to prepare your business for sale.

As a business broker, I have been involved in a number of transactions (and potential transactions) where the business owner wanted to sell, or in some instances, was forced to exit the business earlier than expected. In fact, retirement is NOT the number one reason why businesses sell.

Here is a list of the most common reasons why owners sell (or otherwise discontinue) their businesses: Burn-out (the number one reason for selling) Health issues Personal diversification Retirement/semi-retirement Death Divorce/partner disputes Business growing too fast Second generation not up to the task Loss of market share

TAKE GOOD CARE The sad truth is that many business owners do not take good care of their most valuable asset: the business. They don’t groom someone to continue the business in their absence, and do not keep the business in salable shape during the time they operate the business.

Business owners tend to get too bogged down in the day to day business operations to worry about–or plan for an event that they perceive won’t occur until sometime in the distant future; selling the business.

Unfortunately, fate sometimes dictates circumstances beyond your control, and tough decisions must be made. If your business isn’t ready to sell when the time comes, what are your alternatives?

1. Liquidation of business assets—may be a solution, but one that usually returns very little money to the business owner. If the business had been an operating business, the underlying assets (except for real estate) may be outdated and of little use to anyone. At auction, the assets will bring only what the attending bidders are willing to pay. In some instances, underlying assets are sold to liquidators (or scrap) for only pennies on the dollar. Liquidation of a going business often occurs where the owners have become ill or disabled, or need to retire and have not planned adequately for their exit from the business. 2. Closing the business—is even less attractive than liquidation. That is because many who find themselves in this situation have a tendency to “put off” liquidating the underlying assets in hope that maybe someone will come along to buy this business. This almost never happens. BUILD WEALTH NOW BY PLANNING FOR THE SALE OF YOUR BUSINESS Okay, so you think you have enough to do without throwing more onto the pile. Am I right? That is why I have written this article for you. It provides a “down and dirty” overview of things that you ought to begin thinking about and planning for right now. Doing so will provide you with an additional safety net that will help safeguard your valuable business asset.

Here are just a few of the benefits of planning now: A planned sale allows for your goals and objectives on your timetable You may begin to identify potential buyers You may be able to create an attractive acquisition candidate You can begin to understand why a buyer may want to buy You might learn why buyers would not want to buy—and be able to fix the problems You may begin to realize the worth of your business now, and learn how to increase the value as part of your retirement planning

BUSINESS VALUE HOUSEKEEPING CHECKLIST

Record All Sales Business owners often invent remarkable ways to beat the tax collector. But the taxman can be a business owner’s best friend when it comes to selling one’s business. Income taxes are a great investment in the years immediately preceding an anticipated sale of the business.

Paying income tax proves to the buyer AND the banker that your business operations have been profitable. Nobody wants to pay more income tax. But consider this example: Ronald Bunk systematically underreported business income by an average of $20,000 per year. Assuming a combined tax rate of 40%, Mr. Bunk saved $8,000 in taxes per year. But, the underreported income also reduced the company’s earnings base by $20,000 per year. If, for example, the business could be sold for a multiple of 5x the company’s reported earning base—the company would sell for $100,000 less ($20,000 average earning base not reported times the price multiple of 5) than it is really worth!

Without considering the time value of money, it would take in excess of twelve years of (illegal) tax savings to make up for the loss of $100,000 in business value. The lesson: In trying to screw the government, business owners often find themselves on the short end of the stick; often in more ways than one.

Eliminate co-mingling of business and non business assets A common practice among closely held companies is to co-mingle non business assets and expenses with business assets and expenses. I have seen businesses owning motor coaches, boats and airplanes; all reported as business assets. The costs of maintaining and operating the assets were expensed as regular business operating expenses.

It is true that those businesses (not audited by the IRS) are saving a certain amount of income tax, and providing an extra “fringe” benefit for the owners of the company. Wise business owners should endeavor to separate non business assets from the business in the three to five years before a planned sale of the company. Doing so will make it much easier to accurately measure and reflect the true earning power of the business, as it will be unfettered by the capital investment in non business assets and the associated costs. Buyers of your business are generally purchasing future income and benefit streams that will be produced by your business. The leaner and more productive your business is—the more it is worth. It is never too early to begin segregating non business assets from your business, as it may take some planning and time. Do your own due diligence

Some executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their personal investments reviewed at least once a year, if not more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, regulations or some other necessary reason. Anyone interested in purchasing your business will perform “due diligence” procedures on your business before closing on the purchase. All too often, sellers are surprised at the skeletons purchasers can find in the closet. These skeletons can reduce the value of your company, and in some cases, kill any chance at closing a sale. What skeletons are your company’s closets?

Why not give your business a periodic physical? In essence, I am suggesting you would do well to treat your business as if someone else owned it—and you were the potential purchaser. What problems would you discover that could cause you and your advisors to reduce or withdraw your offer?

Spending the time and money to discover and fix your company’s problems now will pay huge dividends in the form of increased company value—which is exactly what you want when it’s time to sell.

Compliance with taxing and regulatory authorities Mountains of regulation often seem to impede a company’s growth and profitability. Some regulations might seem rather easy to “slight” or ignore.

Take for example one of my recent sellers who swore to me that the business had no regulatory violations of any type. I reminded the seller that anything “hidden in the closet” would most likely be discovered in a buyer’s due diligence (investigatory) process. “Nope—no problems of any kind” I was assured. Well, guess what the buyer’s due diligence turned up? Seems the seller had a couple of shipping/storage containers sitting behind the building—which the sellers KNEW were in violation of local zoning ordinances. How did they know? They had received four previous “reminders” from the trustees about the containers, and the need to remove them. “Why didn’t you mention that to me, or disclose that fact on your disclosure statement?” I asked. “Gee, nothing ever happened and the township never did anything—so we just figured it was no big deal.” Was the seller’s reasoning.

No big deal, except when the purchaser turned up the non compliance issue, it threw a few extra wrinkles into the mix. In that case, the issue was easily resolved (yet, much to the additional cost and chagrin of the sellers). But, sometimes known violations are not so easily remedied. In those instances, a seller runs the risk of blowing a good deal.

What’s the bottom line?

Clean up any tax, industry, OSHA, EPA or zoning issues with which your company does not comply.

Organize and keep records available. One never knows when opportunity might knock. If and when it does knock, will you be ready to strike while the iron is hot? How many times have you heard someone say something like, “I’d sell anything, including my business for the right price?”

Maybe you have even said it yourself. But would you know what paperwork and documents a serious buyer will immediately need in order to pursue the purchase? When a qualified buyer is ready to begin serious due diligence, they will need a variety of company documents.

Following is a partial list of things a buyer will ask for: • Three to five years income tax returns • Copies of one to three years quarterly payroll reports • Three to five years CPA prepared financial statements • Current year to date financial statements • Detailed depreciation schedules listing each fixed asset owned by your company • Corporate Minute Book with updated minutes • Recent aged accounts receivable trial balance • Recent aged accounts payable trial balance • Company organization chart • Copy of the Summary of Insurance Coverage (provided by your carrier) • Information about Employee Benefits provided by the company • Information about Employee Retirement Plans • Copies of labor contracts • Copies of other contracts to which the company is a party • Copies of licenses, registrations for patents, copyrights, trademarks, etc.

The foregoing list is an example of the types of records your company should have up to date and on hand at all times. These records are extremely important to speed the sales process along. Though this advice sounds basic, I often encounter companies whose records are not complete and up to date. This situation can dramatically affect a potential sale.

I suggest using a three ring binder to keep the basic updated records available at all times. This also makes other business needs for the documents much more manageable.

CONCLUSION

You can increase your wealth by knowing a few simple ground rules for successfully selling your business. Just like other owners of closely-held businesses, you know how to operate your business on a day to day, month to month and year to year basis. But your experience in running the business has not prepared you to know how to sell your business.

While the information I provided in this article is not all inclusive, it should help you get started in preparing your business for a successful sale—no mater when the business might be sold.



RSS Feed Reader

Business Directory


I know it sounds strange, but say someone leases a business and come tax time, their income tax return is filed as an employee. Would it be possible to amend the tax return? Would a business owner via lease be considered an independent contractor? If so, what requirements are necessary to be an independent contractor?

Dolphin Hosting

Business Directory


Writing a business plan should be one of your number one priorities as a business owner, whether you have a new business or have one that has been in business for a number of years. A business plan will let you put a focus on your business and enable you to get financial backing if you should require it with a lot less headache. All businesses are different, and for that reason, no two business plans are the same. You can do hours of research and try to adapt an already-made business plan, but you have to be realistic in your hopes of finding one that will suit your needs is very slim.

When you decide to start a business, it is a good idea to start with a business plan. A business plan will let you make an outline that you can easily read and see where you want your business to go and how you will get there. As a business owner of a pre-existing business, a business plan can also be beneficial because you can re-evaluate where your business is and where you want it to go from this point forward.

A business plan should focus on four key points when you sit down to organize one for your business. One, it should allow the management or new business owner to illuminate, research and focus their business or projects and developments within the business and any prospects that you may have for the business. The second thing you need to do is to provide a clear and logical template for the way your business can grow and how it will pursue any business strategies in the next three or five years. Thirdly, the business plan should serve as the basis for providing information for third parties who are interested in your business, such as banks or shareholders. And last, the business plan should also serve as a point of reference on which your business’s actual performance can be measured and reviewed against.

There are many reasons why it is a good idea to write a business plan for your business. It is a beneficial document for both new and pre-existing businesses and can provide a way for the business owner to detail in an organized way the workings of the business. By researching the different types of business plans that are available, you can get an idea of what should go into a business plan. And if you are just starting a business, the business plan will be the first thing that financial officers will want to look at and if you can provide one to them that is explicit in its detail you can save a lot of time and stress in securing the loan that you need for your business venture.



Small Business Web Hosting

Business Directory


Do you have a home based business or want to start a home based business? Who wouldn’t want to have large amounts of cash pouring in to their bank account from their home office? Who wouldn’t want thousand of loyal customers, to sell products and services to, from the convenience of their home? Who wouldn’t want more time with their family?

This is the joy of having and operating a home based business. There are literally thousands and thousands of people who make money at home and have the quality of life you are looking for.  What does it take to be successful at your home based business? Are you the type of person who is ready for a home based business venture? If you are working a job right now and want to transition into having a home based business or if you want to improve your current home base business what does it take?

Answer these 7 questions and grade yourself on how you are doing right now. These questions are about how you can improve your business output. Grade yourself on a scale from 1 to 10 (10 being the highest) Be as honest as you can it will help you become more successful with your home based business aspirations. Get your paper and pen and let’s begin.

Do you have a big vision?

I have a big vision that drives and keeps me excited about my home based business. I am very excited all the time about my vision and my business. I have written my big vision on paper where I can see it. I know why I work my home based business and I know who it will benefit when I am as successful and produce my vision.  Grade yourself 1 to 10

Do you have a big business community network that you work with?

I understand that my network = my net worth. I have a lot of business colleagues that I work with on a daily basis. We utilize and share information so that we can, find untapped markets, open new territories, bring in new customers over night and generate website traffic and share profits. We do not need the help of a bank loan or line of credit to run our home based business. We utilize joint venture strategies to help us all succeed as entrepreneurs. I don’t feel as if I work alone, I am part of a community of entrepreneurs who work together. Grade yourself 1 to 10

Do you have strong self-command?

I do not let any news or challenges stop me from my home based business goals. No one has command over my feelings but me. I tell myself uplifting inspiring thoughts about my ability to run a business from my home everyday. I focus only on the out come I want for me and my family. I spend part of everyday visualizing my big vision and my end results. I follow through on what I say I am going to do that day. Grade yourself 1-10

Do you have a place you can go to get new customers or clients?

When I need new clients I utilize my business community network and am introduced to someone who has a big data base, full of thousands of customer, who is looking for a new product to market to that data base. We create a joint venture and I provide that new product. I receive new clients as well as splitting the profits between myself and my business colleague.  I joint venture twice a month so that I build my home base business quickly. Grade yourself 1 to 10

Are you a possibility thinker?

I do not spend time worrying, complaining or fearing about what to do with my home base business. I take action. I am a solution seeker. When I run up against an unknown problem I will explore options and implement those tools and solutions that will catalyze my home base business dreams. I do not indulge in limited negative thinking. I do not let other use lack, limited or negative thinking around me either. I am open to all possibilities and solutions. Grade yourself 1 to 10

Are you organized with your day?

I make a list of what I need to get done for the next day, the night before. I work a schedule just as I would if I were an employee, whether I work full time or part time at my home based business. I make my hourly schedule of when I will work and I stick to it. I know where all my files, papers and tools I will need are. I work effectively during the hours I set aside to work my home based business. I work at the things that will generate cash for me and my family.

Do you utilize marketing strategies that are low cost and effective?

I run my home based business lean and mean. I do not use my resources to buy unnecessary marketing or advertising products when I can joint venture instead. I keep my costs down and my profits high. I know how to get supper affiliates to sell my product at no cost. I know how to optimize the referral market. I do not pay for leads or buy lists hoping to find clients. Grade yourself 1 to 10

The lowest score is a 7 the highest is a 70. You can see by the score and number where you need to improve your home based business skill sets. If you are starting your home based business or scored in the 7 to 55 range you may want to improve your business by learning about what a joint venture is and how you can explode your home based business sales using that tool.  No one can teach you better than http://privatejvclub.info  

Here is my last challenge to you. Give this test to your spouse and ask them to grade you without any reprisal from you. Then together you are on the same page and can explode your home base business dreams together. Sometimes just finding better solutions can help your home based business thrive



Hide Folders

Business Directory


As with all businesses, big or small, every business owner requires multiple services associated with running the business smoothly. These business services are provided by multiple service providers and trying to find a proper service provider is like looking for a needle in a haystack.

Most of the business owner’s day is spent in handling day – to – day activities and some time in management, planning, meetings, etc. Almost all business owners require business services from financial advisors, consultants, etc, and are always looking for multiple services providers for many different tasks. Some business owners may not be satisfied with their current service provider and may look for another service provider who can provide better services. If someone is starting a new business, and it is the first time at starting a business, they will certainly require the services of many service providers like lawyers, financial advisors, business consultants, etc. In this scenario, it becomes crucial to find the right business services providers at the right cost.

Trying to find a good business service provider is a daunting task, unless you have contacts and friends who can recommend good business service providers. Trying to find a service provider from a phone book is tedious, as you will have to go through hundreds of listings. Trying to search for a service provider on the Internet is the same and you have to be lucky to find someone in your area. Many a times, even established and experienced business owners have found it difficult to find a good business services provider for some particular work like financial planning and advise. This is where some companies now provide services as business services finders. What does this mean?

These business service finder companies assist the business owners in finding service providers for the many types of business services required on a regular basis. Through these companies, a business owner can post a request for a particular business service, like a financial advisor, and it is sent to all registered business service providers – nationwide. The business owner does not need to register or become a member of the company to post a request, but can see the list of service providers the request has gone out to, call the service provider, and select a business services provider – for FREE. There are no fees to be paid, as there is no registration or membership required for the business owner.

As someone starting a new business for the first time, or even for an established business owner, these companies providing assistance in linking business owners with business service providers nationwide is an excellent opportunity to save time and hassles in looking for a good service provider. And the best deal is that the business owner is under no obligation to hire or contract the services of a service provider, even though many service providers may respond to the service-required request.

If you require a Business services or require assistance in finding a Business Strategist Leeds provider in your area, please do visit our site. Our service is FREE for business owners.



Small Business Web Hosting