Here are some tips to successfully sell your business.  Bear in mind that to sell your business successfully requires a lot of preparation, attention to detail and organization.  Most sellers badly underestimate both what they need to do and what to do if a qualified buyer comes along.

A good rule of thumb is that it takes about ten buyer inquiries to reach a potential buyer who has the qualification to buy the business.  There is not a shortage of buyers; there is a shortage of buyers who have the right industry and management experience, a good down payment and credit score and the most important ingredient of all, the motivation to move through the process to buy a business.  So if you find the right buyer, you need to have your “A” game ready so your business sells in the shortest time possible.

Here are 5 tips to help you prepare and be ready to sell your business.

1.  Assuming you know what the buyer wants

Buying a business is a unique experience; every transaction is unique.  If you meet a buyer with the right qualifications and assume you understand their needs, wants and motivations it is a bad practice as a smart buyer will not reveal their true motivations.

2.     Failing to understand the buyer’s objectives and needs

There is a big difference between assuming you know what the buyer wants and clearly understanding what the buyer wants to know from you.  The buyer has questions and needs and it will be their final decision as to whether or not this is the right business for them to buy.  If you can meet the criteria the buyer gives you…you are on your way even though the criteria may not ultimately be what the buyer says to you.  So listen and understand what the buyer wants to know and decide if it is the right time in the transaction to share it with them.

3.     Improper pre-sale planning and a lack of organization

There are so many steps to successfully sell a business.  Being organized and having all the right processes in place is a starting point to try and be successful.  This includes the legal forms and processes you want a buyer to sign such as a confidentiality agreement, buyer’s financial statement and buyer disclosure.

4.     Answering the question before the buyer asks

Be careful to understand the question and then provide the right answer.  You may be answering a different question than the buyer is asking…and that can be bad or very bad.  When you sell a business there can be great value in listening and answering as clearly and honestly as possible all the questions.  Too much information provides more questions, not enough information suggests something is being hidden.

5.     Allow the buyer to feel a sense of control

The standard practice is for all parties to try to control the process.  After all, if a deal does not eventuate each party feels they lost something even if it’s only their time.  Most deals collapse and the business does not sell because one party doesn’t understand what or why a question or process needs to happen at different points in the transaction.  Trust is one of the hardest components to create.

Selling a business requires a lot of patience, making sure it’s clear what you are selling, organization so you can respond to questions and requests for information while at the same time being alert to only answer questions at the appropriate time.

If you’d like more information on how to sell your business, you are welcome to sign up for my free monthly newsletter by clicking the following link Free monthly newsletter.  When you sign up you also get access to over 25 free documents to use when selling your business.

Do you want to sell your business and sell t quickly? According to the California Association of Business Brokers it is taking about 8 months to sell a business. That is the good news. The bad news is that only about 25% of businesses actually sell. If you want to sell your business and do it quickly consider the following suggestions.

1. Have a reasonable listing price.
2. Be prepared to negotiate.
3. Have a folder of information readily available for a qualified buyer.
4. Run the business as usual.
5. Make sure the business presents well; give it a “spit and polish.”
6. Get the business financial statements such as Profit and Loss up to date and keep them up-to-date.
7. Put together a current list of Fixtures, Furniture, and Equipment (FF&E).
8. Count all inventory so you know the value before you list the business for sale. This helps the buyer understand the final purchase price and reduces one of the many areas of negotiating a deal.

Motivation to sell a business

If your motivation is to sell your business quickly, be careful how you handle each buyer inquiry. If you disclose too much information too quickly it may result in a lower offer from the buyer. Additionally, the buyer may sense your urgency, also contributing to a lower offer or in some cases, frightening the buyer away as they may have a concern you are trying to hide something.

According to the California Association of Business Brokers, it takes about 7 1/2 months to sell a business; if it sells. Once you receive a written offer from the buyer and start the negotiation process, it will take anywhere from 6 to 8 weeks to close escrow if the sale includes inventory. It may take longer if a special license is necessary such as selling alcohol, selling firearms, a contractor’s license or some other specialty.

Selling a business comes with complexities

There are many complexities to sell a business. You have to deal with landlords, keep things confidential from customers and suppliers, franchisors, lenders, creditors, family, friends, attorneys, accountants and more. Using the services of a qualified business broker can protect you and your business and achieve your goal of successfully selling your business in the shortest time possible for the highest purchase price.

Only negotiate when selling or buying a business.  This may seem an unusual heading to an article but it now keeps happening too many times and I feel compelled to write about it.

There is no question that selling a business is difficult as there are so many items to consider.  Equally, buying a business is extremely difficult not the least because the buyer may not know the seller but more importantly to the buyer, because they are yet to fully understand how the business works and what has made it successful.

When you put these basic unknowns together and add the imprecise art of valuing a business, both the seller and the buyer understand there will be a negotiation on the final purchase price of the business.  What is intriguing from my perspective is that sellers and buyers can spend a lot of time and negotiating energy to purely focus on the purchase price, which is important as the seller does not want to take less than they think the business is worth and the buyer does not want to pay any more.

However, there are two things missing in this equation.  First, the terms of the deal are probably more important than the final purchase price.  Just as the final purchase price is emotional for both the seller and the buyer so too are the terms and conditions.  These emotions can go both ways.  For example, the seller may be willing to work for free for 4 weeks after the buyer owns the business and not get paid.  That is, the seller does not mind giving their time and emotionally does not feel they are giving up too much.  If you put a dollar value on it, it could be worth $2,000 to $20,000 depending on the equivalent salary the buyer would pay.  Additionally, having the seller work for four weeks and train the buyer instead of one or two weeks could be tremendous value as the buyer gets to absorb more knowledge from the owner.  There are many other examples such as the seller carrying a note as part of the purchase price for a lower rate of interest than a third party lender, the seller being willing to come back and work for three weeks in 6 months time so the buyer can take time off with their family, the seller stepping in to help the business if a key employee becomes sick.

The trend I am currently seeing is for the seller and the buyer to over negotiate every detail in the transaction.  The buyer feels they are doing the seller a favor by buying their company and as a result, should get every demand they make quickly and easily.  Conversely, the seller thinks the business is worth more than the buyer is offering and now that the recession is healing, the buyer is going to do so much better and therefore the seller wants to be paid for some of the success they think the buyer is going to enjoy.  The position of the buyer and the seller is not unreasonable however, if it gets to the point where it kills the deal, which is what I am seeing happen, then it makes no sense.

Another factor that effects the above is that the seller and buyer need to come to terms on the purchase price and terms of the deal.  Separate to this negotiation however, the buyer has to deal with negotiating with the landlord, the lender and if it involves a franchise, the franchisor.  The buyer may even have to negotiate with family and friends to borrow money to finance the initial purchase of the deal.

The bottom line in all this is that it is critical to understand what the word negotiation means.  According to one dictionary it says “a discussion set up or intended to produce a settlement or agreement.”  The key words are ‘settlement or agreement’ that is, both sides have to give and take or there will be no settlement or agreement.  To be clear, once one party demands too much the other party will quickly move to the same position and then neither party will get what they want.  Probably the most important component a buyer wants when they buy an existing business is goodwill.  In most business sales, the goodwill has the highest value.  For the buyer to maximize the goodwill they expect to receive from the seller, there is a need for both parties to negotiate in good faith and respectfully.  This also applies when the buyer has to negotiate with the other parties in the transaction, especially the landlord.

A landlord is completely separate from the business.  If the seller of the business has paid their rent on time and been a good tenant, the landlord does not want to see them go.  In most cases, there is nothing in it if the landlord approves or refuses to approve the buyer to take over the lease, that is, the landlord really does not care if the seller and buyer have agreed on the price and terms of the sale as it’s the landlords job to look after the landlords interests.  If they do not like the buyer they will not hesitate to deny the buyer a lease.

Negotiations can be tough.  Its fine to make negotiations tough.  If it gets to the point where the negotiations are no longer “a discussion set up or intended to produce a settlement or agreement” then neither the seller or buyer will end up with what they want.  Animal instincts such as the need to win, be right or pay a fair price can derail a successful business transaction.  Understand your personality and the strengths and weaknesses you bring to a negotiation and just as importantly, understand what is important to the other party.  The chances of success have just then improved.

If you are thinking about selling your business and would like to know its value, please email me at Andrew@RogersonBusinessServices.com and I can put together a Brokers Opinion of Value for you.  If you would like to see a sample document, click the following link:  http://www.rogersonbusinessservices.com/services/selling-a-business

Related articles

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Successfully sell your business

Have you thought of using a transition plan when selling your business?  The process to sell a business is not quick and easy.  At the moment it is taking about 8 months to sell a business, if it sells.  This means the business is available for about 6 months.  The buyer and seller then complete negotiations on the purchase price including the terms of the deal.  The next main step is to start the due diligence and if both buyer and seller are still in agreement, escrow opens and then hopefully about 3 to 4 weeks later, escrow closes and the business moves from the seller to the buyer.

Even if the business closes escrow, almost without exception the buyer wants the seller to continue in an active role in the business in some capacity for a period of time.  The buyer wants time to meet and get to know the employees, set up arrangements with suppliers, put basic items in place like bank accounts, and a myriad of other items.  At the end of the day, however, it all needs to make sense for both the seller and the buyer and the best way to do that is to build a transition plan.

What is a transition plan?  A transition plan is generally a window of time of say 4 to 8 weeks that makes sure all the important and often taken for granted details of owning and operating the business successfully move from the seller to the buyer as quickly and smoothly as possible.

What should you include in the transition plan?  On my website I have a free document called a 127 point Business Transition Checklist.  It is meant to be comprehensive but not exhaustive as unique items apply to each type of business.  If you would like a copy of this document please click on the following link: http://www.rogersonbusinessservices.com/sell-or-buy-a-business-free-documents

A transition plan can overlap with an Exit Plan.  An exit plan is essentially a process for the business seller to exit the ownership of their business to manage the protection and eventual transfer of assets or stock in a proactive, tax efficient manner.  Essentially a business owner can have 5 types of assets.  These are Personal Property, Real Estate, Business Interests, Insurance Plans and Employee Benefits.

Personal property includes savings, stocks, bonds and personal effects.  Real estate includes both residential and commercial property.  Business interests include the business legal entity such as a corporation, partnership or LLC.  Insurance plans include life, health and annuities.  Employee benefits include pension, 401(k), IRA and stock options.

A quality Transition Plan is all about success.  Its ultimate goal is to ensure that the business and the owner move from actively owning the business to handing it off to its new owner.  The best analogy I like when a business transitions from the seller to the buyer is that it’s like juggling two snowflakes.  Every snowflake is unique because of temperature, the absence or inclusion of a piece of dirt, the number of water molecules, spins of electrons, hydrogen and oxygen etc.  So too is a business and its owner.  To preserve and maintain the business and protect its uniqueness it must be treated carefully and properly.  The same applies to the owner.  The owner can live without the business and the business can live without the owner as long as proper care and attention are given to each so when the next owner comes along with their uniqueness, like another snowflake, it has to make sure it can mesh with the business and both be successful.

Related articles

• Will 2012 Be the Year to Sell Your Small Business? (smallbiztrends.com)
• Sell a business with an exit plan (RogersonBusinessServices.com)

To sell a business with an exit plan is simply good business.  A business is a ball of energy, never sitting still but reacting and moving in different directions as the economy changes, new tools and innovations come to market, the stress and strain from competition and the ever changing demands of customers.  The challenge to succeed, feed their family, help and create happy customers and other individual motivations are what gets a business owner out of bed every morning.  It also includes the chance to do something different, learn something new, to see the rewards of hard work, to plant new ideas and watch them grow or to help someone do something they thought they may not be able to do.

If the business owner loses the hunger to learn, be the vision and leader of the business, it’s time for a change.  Because a business is so dynamic, it requires leadership.  If this doesn’t happen it will shrivel and die.  Capital, time and energy must keep moving otherwise it will slowly die and fade away.

If the business owner leading the business recognizes it is good business to plan for a change of ownership and therefore handle the change of ownership in a positive and proactive way.  If this is done, the chances of the business continuing to succeed are much greater and so are the chances of the owner getting the highest price possible.  There is a very simple reason for this.  The buyer of a business looks at and includes many things in their decision making process.  However, there are basically two ingredients, the cash flow the business generates and its potential to generate more cash flow in the future.  If either one is missing or it is unclear, the buyer will require a discount on the purchase price of the business and it will take longer to sell, if it sells.  If both are missing, it will be a business extremely difficult to sell as buyers will simply have other choices.

As the business owner works through their decision to sell the business, a critical component to help them sell successfully is to start to put into place what the business owner will move to after they sell the business.  It can be intriguing to watch older business owners’ work through the process of selling a business, handling all the negotiations and questions from the buyer and just prior to signing the documents to transfer ownership to the buyer, decide not to sell.  The reason they decide not to sell is because the appeal of cruising the world or playing golf 5 days a week or looking after the grandchildren all of a sudden doesn’t have the same appeal as going to work each day.  So a good exit plan for a business owner as its first priority is to make a clear strategy about what the business owner will do once they sell their business or what they going to move.

The next ingredient is to make sure a good team is in place to advise, guide and protect the sale of the business.  The team can include an accountant, business attorney, financial planner, lender and a business broker to market and handle all buyer inquiries about the business.  The most important ingredient to the business owner is trust.  If the business owner does not have a trusting relationship with any of the people on their team, they need to replace them.

Each business owner will have a different risk tolerance to different aspects of the transaction.  Many transactions only close if the seller agrees to provide some of the finance to close the transaction.  Third party lenders can bridge the gap between the buyer down payment and the seller note, but the seller has to be willing to be in a second position on the loan.

Each exit plan will differ for each business owner.  My golden rule is that when selling your business, put your feet in the shoes of the other party and see things from their perspective.  This is especially true for the buyer who has no history of the business, put down a sum of money they may never see again, take the emotional risk of not only being good enough to own and operate the business as well as the current owner, but learn as much as possible as quickly as possible or suffer the embarrassment of it all crashing down on them.

Related articles

• Business Owners Need An Exit Strategy (lawprofessors.typepad.com)
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Successfully sell your business

Why would you bother when selling your business to include a sales and marketing plan?  After all, the sales and marketing plan is a document that most business owners don’t have time to get around to put together.  I’m not sure why that is as it’s more important than the business plan and indeed complement it but more importantly, when the business owner wants to sell their business it can be the difference in the business selling or closing its doors.

Why is it more important than the business plan?  The business plan outlines the vision, strategic direction and business and financial goals of the business.  The sales and marketing plan breaks down the business plan to show how you are going to get there and the tactics to be used to attract the customers it needs.  Or more importantly, the sales and marketing plan is about growing the business and how to maximize the use of precious and limited resources including money, knowledge, expertise and most important of all; time.

The sales and marketing plan can be as complex and with as much detail as you wish to make it.  It can include strategies and tactics or a combination of both.  It’s important, though, that you understand how to use each idea and importantly, the results each strategy and tactic will bring to the business.  There is an old adage in business management: If you cannot measure it you cannot manage it.  There is also a famous quote that says “I’m convinced that 50% of my marketing is effective, I just can’t tell which 50%.”

Some of the key items you want to see in your sales and marketing plan includes a profile of your typical current customer, what percentage of business they bring, where they come from and how they found you.  If you are planning on growing the business by either more of the same type of customer or a different customer demographic, this needs to be defined, measured and made sure it makes good business sense to target.

Sales and marketing should always be seen as an investment and just like all other aspects of your business, needs to bring a return that you measure or you need to go and try something else or adjust your sales and marketing plan.

If you are looking for different sales and marketing tactics there is simply no shortage of them.  Here are a few suggestions.  Each one needs proper consideration and research to make sure it’s the right strategy for your business.  These tactics include simple things like your business cards, office letterhead and stationery, email signature, coupons or flyers as well as things like your website, blog, monthly electronic newsletter, networking, taking someone out to lunch once a week, social networking media such as Facebook, LinkedIn and Twitter.  Other strategies could include TV advertising, seminars to educate customers about your service, trade shows, hiring a Public Relations expert, joining local associations such as the Chambers of Commerce or other local business or trade association groups.

Just like your business plan, the sales and marketing plan needs to be a living and breathing document.  It needs to include projections and just as importantly, the results from any activities undertaken so you can tweak and constantly improve.

If you do not have a sales and marketing plan, spend a little time and get one started.  It’s always a Work In Progress so adapt and make changes based on successes and failures.  Because it’s a planning document, write one for a 12 month period, implement and measure it and then review in detail when you update the plan for the next 12 months.

Reviewing the sales and marketing plan towards the end of its time frame is important.  It can be easy to discontinue a strategy or tactic in the belief it’s not working.  However, there may be value in understanding what something did not work and then make some tweaks to try it again.

A sales and marketing plan is all about planning and measuring results.  The approach does not need to complex.  Not all business owners are good at sales and marketing so bring in the right professional help so this critical business need generates the right success the business needs.

Having a sales and marketing plan that shows the strategies and tactics of a business with their results can be a great selling tool to the business owner when they try to sell their business as this is one of the biggest challenges a buyer wants to know and manage and determine if they have the ability to buy and operate the business.

If you are considering selling your business, this link will provide a summary of the steps.  http://www.rogersonbusinessservices.com/docs/TheManyStepsToSellingABusiness.pdf

Owning and operating your own business is very much a part of the American Dream.  Not everyone is qualified to live this dream but to help qualified buyers, the US Congress through the Small Business Administration (SBA) has put together a third party lending program.  The SBA itself does not lend money direct to would be entrepreneurs, rather they allow qualified banks to manage and execute loan programs that meet criteria set by the SBA who will in return, underwrite a portion of the loan to lessen the risk of the banks.  The rules are complex and change in reaction to the economy.  However, a prospective borrower needs to put their best foot forward or their loan will not be successful.  Here are 10 reasons your request for an SBA loan more than likely will be declined.

1. The SBA requires a Personal Financial Statement from each loan applicant and this document needs to show how much and where the down payment will come from to buy the business.  The SBA program requires the buyer to make a capital injection to buy the business; they will not approve a zero down loan.
2. The SBA wants loans made to citizens with a clean criminal record.  If you’ve had a drink driving offense and it goes back a few years, they will require a full explanation of what happened so they can determine whether or not they will underwrite their portion of the loan.
3. SBA loans are for a business with a positive cash flow.  With the loan application there needs to be a business model that shows the cash flow projection of the business, the price and terms of the deals.
4. If the business the buyer wants to buy includes a lease from a landlord, the SBA loan application needs to show that the landlord has approved a lease for the buyer and the lease will need to correspond to at least the length of the SBA loan.  That is, if the SBA loan is for 10 years, the lease will need to be a minimum of 10 years.
5. One of the major reasons for an SBA loan not being approved at the moment is due to the buyer having insufficient industry management experience in the industry the business being acquired is in.  If the buyer has extensive management experience but it’s not the same industry then it’s almost certain the loan will be denied.
6. The business plan and financial cash flow models need to include working capital for the buyer.  If the business purchase price is $1,000,000 but the business needs $150,000 in working capital, make sure the loan application shows where the working capital will come from.
7. When a business is listed for sale it can often be 6 months or more before a buyer comes along and makes an offer.  The SBA requires financial statements of a business to be no older than 90 days so the decision to approve a loan is based on current information.  The seller therefore needs to keep financial statements up to date if an SBA loan is part of the purchase.
8. If the buyer’s offer requires the seller to remain as a consultant to the business, the maximum period of time they will accept for the seller to be a consultant is 12 months.
9. The SBA requires that the buyer have a minimum credit score for a loan to be approved.  At the moment the score is 700 but it’s much better if the score is 720 or higher.
10. There are many banks that offer loans.  In addition to banks, there are service providers that process and underwrite loans.  Many lenders manage a book of loans often based on a mix of industries they know and have researched to help reduce and manage their risk.  As a result, your loan may be declined with one lender as they already have too many loans exposed to a particular industry or in fact, they may not want to lend in that industry.

The Boys Scouts motto is “Be prepared.”  If you plan to apply for an SBA loan, this motto will serve you well as it is not a quick process and can be drawn out if you are not organized.

Hopefully you will make a New Year’s resolution which includes building a business plan and in it, your personal and business goals.  You will also do a budget to make sure you can afford to execute what is in your plans.  Hopefully you are rested and as they say, “all dressed up and ready to go.”  You are also saying “Bring it on.”  My question is therefore, you know WHAT you want to do but HOW are you going to do it?

Chances are you have a list of projects and tasks you want and need to do.  It probably does not include answering phones, sending and receiving emails, reading articles and newsletters, attending conferences, staying on top of compliance items that affect your industry but numerous day to day activities that lead most entrepreneurs at the end of the day to say “Where did the day go?”  That’s the point of a Productivity plan.

A Productivity plan is an attempt to put some system into each day, week and month.  Whether you are the President of the United States or the unemployed person looking for a job, we all have exactly the same amount of time in a day.  While we may not always be able to control who we spend our day with, we can control how we spend it.  For example, do you know how much time each day you spend on email?  Do you respond to each email as it arrives?  If so, you are not being productive.  An email is a non urgent means of communication.  If it was urgent you would be using a cell or telephone.

The goal of a Productivity plan is to plan and manage your day, first, so you enjoy it and second, so you get the important tasks done while the less important tasks wait.  Closing down your email after all the messages are read and answered in the morning and then again in the afternoon allows you to be more productive…which is what a Productivity plan is all about.

As a business owner you have been taught to mainly work in months as this coincides with a financial period and allows you to close and then open a new set of financial statements with your book-keeper or financial analyst so you can review the success or shortcomings in preparation for the next month.

What other areas can you address to remain as productive as possible?  The starting point is to make a plan at the end of each day for the following day and roll it up at the end of the week.  Deciding what tasks you need to do in your business vary greatly from one person to the next as we all work from personal habits.  This is because not only are we in different businesses but also because we are in different industries and just as importantly, at different stages of a life cycle of our business.

If you want some help with what productivity tasks to accept, look at your normal work habits and decide how they can be improved, the tasks that must get done that slows down others, and even consider what you avoid doing or spend too much time procrastinating over.  This is where you can improve your productivity.

The best option is to either write your plan in a word processing document or a spreadsheet.  Making a written record and spending the time to define what needs to be done is the first step towards success.  Another important task is to make sure you allocate a priority – A for urgent, B for needs completing within a reasonable time and finally C for non urgent.

Finally, a Productivity plan is not about measuring results.  A Productivity plan is about defining AND agreeing what needs to be done with what urgency.  Measuring the results of your Productivity plan is important as it is by doing this we can see if we are moving forward and get a positive sense of accomplishment.

Check out my You Tube channel with over 35 short videos if you would like information about selling or buying a business – http://www.youtube.com/user/andrewrogersonsac

The life blood of what we do as human beings and the glue that keeps us all together as a society whether at a local, regional, national or indeed international level is the ability to communicate with one another.  Many times that communication breaks down and many times this leads to negative consequences.  All entrepreneurs are familiar with a Business Plan and a Sales and Marketing Plan but not everyone has heard of a Communication plan.  So what is a Communication plan?

A Communication plan is an attempt to standardize the message that goes out from the business to its customers.  It complements and dovetails with a Business Plan and Sales and Marketing Plan.  In some instances there can be an overlap but essentially it includes all written, spoken and electronic communications.

Some of the ingredients of a good Communication plan include the brand of the business.  The brand, with no more than a graphic or a word defines the company.  Think of ‘Google’ and its colors.  I expect you would have trouble remembering what letter of the alphabet belongs to each color but there is no mistaking what the word ‘Google’ means.  Similarly, the word ‘Coke’.  As soon as you read the word ‘Coke’ the color red comes to mind.  So one of the first things to consider in your Communication plan is the brand and how you want it perceived by the market.

Many business owners choose to hire a graphic artist, brand or image consultant.  They look at things such as the business name, colors, logos, graphics and other items so that there is a consistent look and feel.  Large corporations spend a lot of money getting this right as it quickly represents the company.  Consider BP, Subway, Macy’s, United Airlines, FedEx, HP, AT&T and Edward Jones to name a few.

A good way to build a Communication plan is around objectives.  For example, it could include excellent customer service, customer retention or loyalty, how to touch each customer be it through a monthly newsletter, email or telephone call.  It obviously includes bringing the employees of the business together so they understand any objectives and understand their role of that communication.

Another suggestion includes identifying what tools you will use to communicate to your customers.  For example, it can be your website and blog as well as newspaper advertising, magazine ads, posters and even things such as report covers.  There is no shortage of ideas.

It’s also important to establish a timetable especially where it includes goals and objectives.  The current work environment is overwhelming and requires prioritization; especially if it involves employees or hiring outside help.

Finally, the Communication plan should include measurable results.  You can collect these results on a daily, weekly or monthly basis.  It is then important to review the results on a monthly basis and then communicate back to your employees or team so they know what they are doing is effective, or it is not effective, what needs to change to achieve the right results.  A final annual report then needs to be provided so it’s archived but available to review each year.

If you would like some free documents to help you sell, buy or operate your business, click the following link:  http://www.rogersonbusinessservices.com/sell-or-buy-a-business-free-documents

You can then get access to 25 free documents including templates to create a business plan, cash flow projection, break even analysis, competitive analysis, bank loan request forms and more.

Buying or selling a business is a complex matter.  There is no question about it.  The complexities start from the moment a buyer and seller start interacting.  These include, for example, the buyer not having any history or knowledge about the operation of the business and so have to rely entirely on the representations of the seller.  Conversely, the seller lives and breathes the business, knows its ups and downs as well as its strengths and weaknesses.  My Golden Rule when assisting with a business transaction is for each party to put their feet in the shoes of the other party.  In other words, the seller should see things from the buyer’s perspective and the buyer should see things from the seller’s perspective.

A key way this would help the business owner run the business would be if they use a Management plan.  What you may ask is a Management plan?

From my perspective, a Management plan is where all the critical areas of a business are summarized so if the owner of the business wins the lottery and never wants to work another day in their life in the business and not come to work tomorrow, the business will survive and grow.  This plan then becomes a critical document when the owner wants to sell as they can provide it to the buyer of the business.

What are some things to include in the Management plan?  At a minimum the Management plan needs to include a summary of key business information.  This includes the following:

1. A current and monthly updated summary of all the employees in the business.  The rule should be that if any employee needs to be contacted, their information should be available in less than one minute.  This information needs to include emergency contacts of each employee, if they are willing to provide it and your State government agency allows you to collect it.
2. A current and monthly updated summary of all suppliers.  All suppliers may be too much but at least the suppliers that supply any critical materials or provide more than 5% of the company materials.
3. A current and monthly updated summary of all business support services such as the CPA, attorney(s), financial planner(s), landlord, lenders, government agencies in case any are needed urgently.
4. A critical document that would help any buyer is seeing the business Training Manual.  Again this document should be kept up to date and break down each of the current positions of the business.  If the business doesn’t currently have this document, start creating it.  It’s very easy to do.  Have the current person encumbered with that job write down what they do.  This is then presented to another member of the business with the instruction to execute what’s provided.  If they can do it then the job is done.  If they can’t, it goes back to the person who wrote it for re-writing.  If some employees don’t want to write the document as they are concerned they will be let go because anyone now knows how to do their job, hire a student from a local college to come and write things up or hire a technical writer.
5. In addition to the Training manual, put together an Operations manual.  Michael Gerber is the master of written procedures.  He’s written numerous books including The E Myth and The E Myth Revisited.  Very simply, Michael Gerber believes that being a true entrepreneur is being able to take an idea and break it down and put it in writing to the point where each person in the business clearly knows what they need to do to collectively make the business successful.

This is the purpose of the Operations manual; to clearly state the business process to achieve an outcome.  Would you like an example?  Let’s go with the example of a fast food restaurant that sells hamburgers.  Let’s choose the person that makes the fries.  The Operations manual would break down each step of that process.  It starts with where to get the fries, what to do when the quantity of fries in the storage area gets to a critical point and what to do to order more; what temperature they should be stored.  The next steps would detail what temperature the oil needs to be to cook the fries, for how long and in what container.  Now detail what to do with the fries when they are ready, how much salt to add and in what container to place the cooked fries.  Now the next step is to record where the containers are stored and what to do when you reach a minimum threshold?  You can do this in more detail but the beauty is that once this is done, it only needs to be checked say monthly and now on a consistent basis you can cook and deliver the best fries in the world.

It may seem like a lot of work putting these things together.  These suggestions are the tip of the iceberg.  What else can you document to make your business easier to operate?  Using technology can make doing this so much easier.  And remember to make sure you have a backup so all your hard work is not lost.

The most important reason to do this is that by creating this Management plan, your business will be of more interest to the right business buyer.  In real estate, there is a rule called the principle of comparison.  In simple terms it says that when a buyer is looking to buy a house, they will buy the best option not only on price, but also comparing it to other houses for sale in that area.  If the buyer wants a 3 bedroom, 2 car garage, 2 bath house in a specific school district and they have 3 to choose from, they will not necessarily make their final decision on price.  For example, a specific feature such as whether it has a swimming pool.  The bottom line is that a strong and clearly laid out Management plan adds value to a business for sale and could be the difference between a buyer choosing your business they compare to another.

If you are thinking about selling your business and would like to know its value, please give me a call on 916 570-2674 or email me at Andrew@RogersonBusinessServices.com and I can put together a Brokers Opinion of Value for you.  If you would like to see a sample document, click the following link:  http://www.rogersonbusinessservices.com/services/selling-a-business