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.

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

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

Everyone is familiar with the Christmas song, The 12 Days of Christmas.  Without going into every verse of the song, the carol works forward with the first day of Christmas being a partridge in a pear tree, the second day of Christmas two turtle doves and so on.  The song is full of optimism and hope that the giver and receivers of the gifts will be thankful for life, the opportunity to share and hope for the future.

From researching the origins of the song, I came across something interesting.   One of the articles I read suggests the 12 days of Christmas is not about the 12 days prior to Christmas but in fact, the 12 days from Christmas until the beginning of Epiphany which begins on January 06.  When I thought further about this, it naturally combined with another favorite thing we do during the Holiday Season and that is to make New Year’s Resolutions.

New Year’s Resolutions are a powerful opportunity as they allow us to do three separate things.  First, look back at our experiences of the last year and decide if it’s been a good year and what we could have done differently.  Because it puts us in the mood, we also tend to go back and look at more than just the last year but initially the last couple of years and decide whether or not it has been good.  Once we start doing that, we obviously look back at our life and decide what we like and what we wish we could do differently.

Our next reflection tends to move to the present where we look at our life and what we now have.  We reflect on our family and friends and how important they are to us.  We also look at whatever means we use to sustain ourselves and put a roof over our heads, the food on the table, the clothes we wear and the myriad of other things that allow us to live our life.

This then brings us to the final reflection and probably the most exciting and powerful opportunity of all and that is to look ahead and decide what changes we’d like to make to build and enhance our life and our immediate loved ones.  This reflection, for obvious reasons, takes us to both our job and what we are currently doing or, if we own a business, how that business is performing.  Regardless of whether we have or do not have a job or own a business, it is the time to ask some questions.  These questions include whether or not what I am doing is worthwhile and fulfilling, whether it produces the income I need to live the life that I want, what changes I want to make to achieve the personal, financial and emotional goals I’ve set for myself.

So the point of this article is a couple of things.  As you embrace the Holiday Season, enjoy it as it is a special time and I wish you nothing but peace and goodwill.  If your time allows, sit down and meaningfully decide on your New Year’s resolutions.    If your New Year’s resolutions are likely to include either buying or selling a business you may want to consider a thoughtful and logical approach.

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

If you would like more information then this link will allow you to buy and download a copy of my book Successfully Sell Your Business.  http://www.rogersonbusinessservices.com/book-successfully-sell-your-business

If buying a business is an option you are considering, this link will provide a simple summary of the steps.  http://www.rogersonbusinessservices.com/docs/TheManyStepsToBuyingABusiness.pdf

If you would like more information then this link will allow you to buy and download a copy of my book Successfully Buy Your Business.  http://www.rogersonbusinessservices.com/book-successfully-buy-your-business

If you are thinking of selling your small business, one of your first questions to answer is more than likely; where do I start?

One of your first starting points is to be clear exactly what you are selling.  This may seem obvious but many sellers think they will deal with it when they get an offer.  So let’s break this down and look a little more closely at it.

In simple terms, the two most important things to a buyer when looking to buy a business are current cash flow and potential.  From the buyer’s perspective, the cash flow is the fuel that feeds the business to pay the suppliers, employees, landlord, tax man, lenders and to keep the business going.  In addition, they need cash flow to feed their family, pay the mortgage, pay any loans and have something left over after all their work and capital investment in the business with a little in reserve in case something unexpected happens.

For the buyer to achieve the above, they need to purchase all the assets of the business, and, just as importantly, understand what each asset does and how it contributes to the cash flow and/or potential of the business.  As the seller of the business, it’s therefore important that you make it clear what those assets are and present them in the best possible light.  If this seems obvious, then I can tell you that it’s not.  It’s amazing to me how many business owners don’t truly understand what makes their business run and the need to keep it lean and mean so it operates at its full potential.  (Isn’t it funny how that word “potential” keeps popping up?)

So if you are thinking of selling your business, your immediate response to this question may have been “I am selling the business as a going concern on an ‘as is’ basis.”  This is perfectly fair.  But you need to do a little better than that.  And I’ll explain why later.

So we agree the business is up for sale.  When you have your first buyer meeting, the buyer will be absorbed in processing what they can see and assume they will buy with their purchase of your business.  The first thing to do is therefore remove any items that are not part of the purchase price.  If you have collectables such as paintings, antique cars or items that are personal to you and not needed to make the cash flow of the business, remove these now.

If the business has inventory, make sure the inventory is fresh and as useable as possible.  If a buyer sees a lot of old inventory with doubtful value, it will become a specific negotiating point in the transaction and may kill the deal.  If time is on your side, start selling the inventory to your customers even if it needs to be at a reduced price.  You are likely to get more from your customers than being forced to sell it as a discount as part of the purchase price to the buyer.

The next thing to do is make a list of all the Fixtures, Furniture and Equipment.  Hopefully this list is already in place as your accountant would be using this list as the depreciation schedule for your tax return.  If the list doesn’t exist, now’s the time to build it as when you are in escrow and are ready to sell the business, it is going to be necessary.  If the list is old, now is a good time to update it by making sure you still have everything and it is in good working order and condition.  If you can no longer find it, remove it from your list and talk to your accountant about writing it off for tax purposes.  If it’s still on the list but it no longer works, sell it or get rid of it to make the presentation of the business better and allow the items that are working and in good order stand out to the buyer.

If your business has Works In Progress, make sure you can easily arrive at a value for those items.  It will become a mandatory negotiating point in the transaction.

If you plan to sell your business, ask a family member, friend or neighbor you trust to look at your business and give their perspective.  When you are so close to owning and running your business it is not easy to see the wrinkles and warts that every business has.  My Golden Rule when either buying or selling a business is “See things from the other party’s perspective.”  This approach will keep you grounded and increase your chances of successfully selling.

If you have questions about selling your business send me an email to Andrew@RogersonBusinessServices.com

If you own a business and receive an unsolicited offer to buy your business please be careful. If your business is currently for sale be even more cautious. There are con artists that have developed a clever process of taking your business from you and leaving you not only with absolutely nothing, but totally destroying your business and leaving you in debt.

Here’s a basic breakdown of their process.

Their easiest target is to contact the owners of businesses for sale, usually via listings on the internet and identify themselves as acting for a private party or a small investment group. They are looking for businesses generally that have at least a $1,000,000 selling price.

If the business is for sale by a business broker or intermediary, they will try to build a strong relationship with the seller. If they feel the broker or intermediary is an impediment to what they are doing, they then try to get the broker or intermediary out of the way by saying to the seller that the broker or intermediary is a hurdle to closing a deal.

Once they have a good relationship with the seller, they then make a strong offer with the condition they finance the deal over a short buy out period (say 6 to 10 months.) The offer will include a small downpayment, say 10% down AND as a stock sale (not an asset sale.) Under this scenario, the seller holds all the stock of the corporation as collateral, and of course, the sale includes the cash, Accounts Receivable and other items on the Balance Sheet.

Once they pay the seller the 10% deposit, they then require signature rights to the business bank accounts, credit cards and other assets while the seller “trains” them in the day to day operation of the business for the agreed two to four week training period.

Once the training is complete, they then clean out the cash, run up the credit cards, factor the Accounts Receivable, may sell off some or get loans on the fixed assets (vehicles, etc.) and do not pay any payable/liabilities. They even sometimes fire employees, usually never paying any of the businesses (or employee’s) payroll taxes or other taxes. Then, they disappear in a month or so having cleaned out the company by taking everything as cash.

Bottom line: These scams really do exist. It’s another reason to make sure your business broker is part of a State Association such as the California Association of Business Brokers or association such as the International Business Brokers Association. If you are planning to sell your business, please give me a call so I can help you. If you want to know how to find a good real estate agent, the California Department of Real Estate has a very good document to read that you can see by clicking this link: http://www.dre.ca.gov/pdf_docs/re16.pdf