Buying Or Selling A Business Is Unlike Anything Else

Not everyone will agree but I am sure it’s closer to the truth than one might think: buying or selling a business is unlike anything else of value. To support my argument there are a number of reasons. Let’s look at some of them.

The price of a business is determined by a valuation. The rules of a valuation come from the law and then legal cases as well as the Internal Revenue Code and custom. The price for most other items of value are determined by market comparables (for example, when valuing a house), looking up a book or some online site such as Kelly Blue Book (for cars) or results from eBay or some other online service (for any item you can think of). That is, there is no legal interference with the value of any these items except a business.

When advertising to find a buyer of these items, with the exception of a business there are no rules. To be clearer, when selling any other item the owner wants the world to know it’s for sale. Regular and established advertising channels are used including online web sites, newspaper or magazine advertising, family, friends and anything else to find a buyer. Conversely, with a business, advertising is done using less familiar methods and in most cases, the advertising is obscure so family, friends, customers, employees, suppliers, landlords, lenders and others are not aware the business is for sale.

When a buyer and a seller enter into negotiations for anything except the business, it’s generally very simplistic and does not need the involvement of third parties. In contrast, negotiating a business often involves complex negotiations with sophisticated parties. These parties can include lenders, landlords, attorneys, accountants, business intermediaries or business brokers as well as hidden support for buyers and sellers such as family and friends.

When selling a business, to get the maximum price possible, normally involves a lot of work for an extended period of time. The steps the seller takes includes trying to increase revenue, recasting the financial statements to arrive at an accurate and supportable discretionary earnings of the business and repairs and upgrades to make sure the business looks the best. Items being sold other than a business can similarly be polished but there is a limit on what can be done and the amount of time to do it.

When the buyer and seller reach an agreeable point in the negotiations of a business transaction, all items must be converted to paper. One of the first items it defines is whether the business is being sold as an asset or stock sale with this single decision has many tax and legal implications. Additionally, this one decision in itself, can set off a series of negotiations or at least, in-depth discussion and analysis by both parties.

In some business transactions, the negotiations can trigger a set of different valuations to support each parties position and whether or not the transaction ultimately closes. For example, if the purchase includes real estate or a large number of physical assets or intangibles such as trademarks or copyrights or the business itself then there could be four valuations. The first is a valuation of the commercial property, the second is a machinery and equipment appraisal, the third is an intellectual property appraisal and the fourth a business valuation.

Buying and selling a business is unquestionably complex. The complexity can include the business and its different assets but added to this is the complexity of the emotions each party brings to the transaction plus the fact that it can sometimes take many months to finalize the matter adding an additional layer of complexity due to life situations happening such as health, legal, family, finance and many other items affecting the process. For a willing buyer and willing seller to eventually close the transaction, it will require patience and clear communication and normally, the help of a good business broker.

What Is Preventing Growth for Small Businesses?

As a small business owner or manager you will be faced with a great number of things to do to grow your business! It is likely that you will neglect some while focusing on others that perhaps you may be more comfortable with performing.

Did you know that more often it is the things that you may not be doing that will have a much greater impact on your business growth than those that you do? What are these? – read on!

  • Understanding your Customer Market
  • Adequate Planning
  • Managing Cash Flow
  • Operating a Marketing and Sales Development Process
  • Targeted Marketing Campaigns and Programs

Understanding your Customer Market

Every business must make a priority effort to truly understand their customers and what drives them to purchase your products or services. Without an ‘intimate’ understanding of your target customers you will be undermining ALL your efforts to grow your business.

Dispose of any shot-gun approaches you may have to marketing and advertising and use your smarts to achieve Better Marketing Results. Get started by developing your own ideal customer profile.

Make sure your ideal customer profile includes a description of the attributes of your target customers and the buying criteria that your ideal customer will use in selecting your product or service. This is a very crucial point, it is not your criteria that you consider important – it is what your potential customers considers important.

Find out what is involved in their buying cycle, what risks if any are perceived in their buying cycle and where your potential customers go to research and engage within their buying cycle.

Adequate Planning

“Businesses that fails to plan, plans to fail” It is a simple truth – you need to know where you are going to get there!

Marketing planning is crucial for small business owners and managers to maximise their company’s ability to succeed in the marketplace. The marketing plan does not have to be a large voluminous document that gathers dusk after it was developed. Be practical and prepare a condensed version of between two to three pages that you can frequently refer to in a highly visible location within your work area. This way your marketing document becomes a useful plan and guide to growing your business.

Marketing planning has several key benefits for your business:

  • Gives real focus that drives ownership and motivation to achieve success
  • It provides a firm foundation to evaluate priorities
  • It defines your market and matches the communications needed for your prospective customers
  • It is a definition of your business success

Managing Cash Flow

Many a small business owner will neglect this critical aspect of managing their cash flow. Small businesses that do not have positive cash flows will encounter significant challenges with insufficient funds to pay creditors severely limiting their business growth potential. Lack of cash flow management in small business is evident in “feast and famine” situations.

You must make cash flow planning a central element of your management priorities. As a business owner you must be able to identify your cash flow status on a daily, weekly, monthly and yearly basis in order to make sound decisions for your business. Keeping your finances in order and your cash flow healthy is essential to growing your business.

Cash flow is the lifeblood of your business. Successful business owners always maintain a firm grasp on their cash flow and are able to describe and predict their cash flow situation for the week, month and year.

Operating a Marketing and Sales Development Process

Better marketing results are qualified potential customers or sales leads for your business. Sales development takes those qualified leads and works to convert them into paying customers.

Unfortunately, many small businesses do not have a structured process or procedure to manage these sales leads into customers. There is nothing more painful for an interested customer to be ignored because of a lack of prompt and professional follow through. All ‘hot’ prospects need your immediate attention before they grow ‘cold’ or purchase from your competitors. It is absolutely essential to formulate a process for follow-up and conversion of your sales leads into customers. For example, you could set-up a defined day of the week for all your sales development activities. For those prospects that are not yet ready to buy you must make them become part of your on-going nurturing engagement marketing until they are ready to buy.

Unlike traditional approaches to marketing where you specifically target prospects with direct response offers, engagement marketing allows your audience and potential customers to interact with you and shape how they would like to communicate with you.

Targeted Marketing Campaigns and Programs

In today’s business environment the customer will control when and how they would like to receive your marketing messages. Your marketing message must be highly relevant and compelling for your target audience. Your message must resonate with the ‘conversation’ that is happening in the minds of your potential customers.

Marketing is business development and must take place for your business to grow! Integrated marketing that makes use of the Internet with your web presence and social media is the approach that small business must implement for your marketing campaigns and programs.

Essentially, an integrated multimedia campaign allows a one to one personalised engagement with the recipient. It has the ability for the recipient to immediately accept the offer or secure additional information with readily available technology such as their mobile phone or access to the Internet.

If any of these issues are holding back on your business growth you must immediately take the appropriate action to remedy your situation. There are many sources of external expert assistance in the form of business consultancy firms like as PMZ Marketing that will be able to assist you overcome these issues.

Related Articles:

  • Conquer the Top 6 Small Business Marketing Challenges
  • What is the Profile of a Successful Small Business Owner?

Why Start Your Own Business At Home

These days with some corporations sending their products overseas for manufacturing, or just being forced to downsize their workforce, many people are becoming unexpectedly unemployed and finding it difficult to regain the security they once felt in a new job. Some of these people who have been laid off are choosing to take control of their future rather than counting on another employer again. Many are asking themselves whether or not they should start their own business. So why start your own business? When working for an employer, the employer is responsible for paying you a constant salary as long as you perform your daily duties. On the other hand, with your own business, this responsibility becomes your own and with the added responsibility also comes an increase in some nice benefits.

Why start your own business? Well, having your own business from home is an exciting prospect. You have the freedom to decide on the hours you want to work. The more time that gets invested productively in building and maintaining the business will ultimately translate into a greater financial turn-over for the business and increased personal profits for you.

Why start your own business; to take better care of your children. Many parents have also begun considering the work from home option. This is especially advantageous when there are still small children to be cared for. Parents have a dual role, one of caring for their family, and the other to ensure a secure income to their homes. By working from home and having the ability to manage time effectively, both roles can be managed without any lack of attention to their children. Parents that work from home not only save money from the high cost of day care but also have the peace of mind knowing their children are being cared for in the best way they know how to. So, this option to work from home is a winning scenario for both parents and their children.

Why start your own business from home? Well, because the internet has changed the business world in an immense way. Traditional successful business is associated with huge overhead costs; employee payroll and benefits, inventory, rent on the building, your time and energy 24/7. With an internet or online business all that is required is a small office space, a computer with an internet connection and a phone. With this innovation a home business does not need to invade the living space of your home, but can be maintained in a small area which can easily be separated from the rest of your home. You can run your business and still be a part of your family’s activities rather than being away at the office all day.

Having a marketing education and skills are attributes your home business will use for online marketing. Traditionally marketing and getting a marketing education can be expensive. However there are ways to affordably learn from others that have already been through the learning curve of running successful marketing campaigns. Successful marketing is a learned skill and the best way to learn is from business owners that already know how to run and manage successful businesses and have a great product for your marketing adventure. If you think that you could never possibly run your own online business successfully, think again. It’s simpler than you think when you find the teachers willing to show you how. Online marketing campaigns may be run without leaving the comfort of your home or spending years completing a bachelor’s degree in marketing.

Any legitimate home based business can also have the dual role of potentially saving your household some money in the form of tax benefits. Many of the household business associated expenses can be paid for from the business. This is usually based on the percentage of your home’s square footage used for business purposes. Whatever that percentage is, gets paid for by the business and does not affect the general household budget. These deductions are useful for your home’s utility services and even the internet connection and phone services in cases where they are used for general household use as well. Ask your tax consultant about other potential benefits that can be taken care of through your business.

So I ask you once again, why start your own business from home? Another great reason is to save money. Most traditional jobs require commuting to and from work. It doesn’t matter if you use your own vehicle or utilize public transportation, at the end of the day it’s another expense that gets added to your daily life. This is eliminated entirely in some cases by running a home based business. Not to mention the money you could save on office casual clothing and lunch money or that daily stop for a vente latte every morning.

Home based business does have a learning curve. But be trainable, coachable and have a desire to take control of your life and you can do it. It also comes with associated risks the business owner must become acquainted with. Just like any business venture would. However a home based business will save you money you won’t have to spend in overhead and headaches. Complete your research, get your questions answered, find a successful group of entrepreneurs willing to show you how to get started and go for it. With the necessary perseverance, this can be the rewarding solution you’ve been looking for.