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

• Negotiating for Wimps (inc.com)

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)
• Exit Planning – Leaving Your Business When You Want, To Whom You Want, With The Cash You Want (azbusinessresource.com)

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

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.

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

The sales and marketing plan is a document that most entrepreneurs don’t have time to put together.  I’m not sure why that is as it’s just as important as the business plan and indeed complements it.

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 use to attract the right customers.

The sales and marketing plan can be as complex and as detailed as you wish to make it.  It can include a list of tactics you could deploy, it can list and detail only specific tactics you plan to use or a combination of both.  It’s important, though, that you understand how each idea is to be used but you have some idea of the expected results each tactic should 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%.”

There is also another saying that says “I can’t afford to advertise.”  If you cannot afford to advertise then you probably cannot afford to be in business.

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 obvious 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 what you are doing.  Don not forget your sales and marketing plan should include how each person in the business answers the phone right through to the book-keeper.  There is no reason your book-keeper and clerical staff cannot answer the phone and offer a monthly special to see if they can bring in new business.  It’s a little unconventional but sales and marketing is about getting results, not whether something is conventional or unconventional.

As always, if you have questions about seller finance or more general questions about buying a business, please give me a call on 916 570-2674 or send an email to me at Andrew@RogersonBusinessServices.com

One of the hardest aspects of being an entrepreneur is staying on top of some things you may not like to do because you either don’t enjoy them or simply aren’t good at them…or both.  Doing math back in school just wasn’t fun for me.  I enjoyed almost every other subject except anything to do with numbers as there seemed too many rules and exceptions to remember.

Most entrepreneurs do not enjoy numbers.  They are happy to delegate the task of debits and credits or journal entries or double entry book-keeping to someone who enjoys it.  Define your core competencies and what you do well and then delegate to other people who have the right skill set and aptitude to do the things they do well.  In simple business terms it is called ‘outsourcing.’

The problem with outsourcing your personal and business finances is that you can lose track of what all entrepreneurs call the bottom line or their net worth.  For different reasons the bottom line tends to move around a bit.  I’m not talking about the monthly bank statement bottom line, I’m talking about “taking money off the table” of your business and investing it and moving this into your personal finances such as your 401K, investing in property or some other form of long term investment.

One of the first items to review as part of your financial plan is the legal entity you are using to operate your business.  If you operate as a sole proprietor all your personal assets are exposed should you do something wrong.  Changing your legal entity to a Corporation or LLC may offer legal protection but get the right advice from an attorney.

In addition to the legal entity, getting an annual review of your insurance products is a wise and fairly cheap investment.  Your insurance agent should be willing to reassess your personal and business needs to make sure you have enough life, death, vehicle, health, business interruption and other insurance policies.

Another aspect of your Financial Plan is the performance of your business and if you are transferring profit from the business to fund and maintain your retirement.  To get the best advice for your situation, talk to a Personal Financial Planner as that is their area of expertise and they track trends and performance and can advise whether it’s best to put money into the stock market or other classes of asset allocation.  They too have access to a full range of financial products that not only cover investing for your retirement but insurance products, short and long term investment strategies.

The above are all personal or external reviews of your finance.  An equally important aspect though is the business.  A lot of business owners do an annual check-up just prior to handing over all their documents to their accountant to prepare and report their tax returns.  What, however, is a good strategy is doing at least a monthly review of the performance of the business and there are a number of reasons for this.  This especially applies if the owner of the business has another member of the family or an employee look after the books.  Whether we like it or not, this recession has seen an increase in theft from businesses from those entrusted with handling the books.  Money can quickly disappear if frequent and reviews are not in place.  A simple strategy of getting a copy of the monthly Profit and Loss Statement, check stubs and bank statements can allow a series of questions and answers to quickly reveal whether or not things are in order.  This is because you allocated expenses to a category on the Profit and Loss Statement.  Doing a test each month on some of the larger categories to make sure there is nothing unknown reveals if you need to do any further checking.  These tests need to be random and sometimes with little notice.

Finally, if you are looking to buy your business, it will be important to have your financial plan in order.  For buying a business this includes knowing what cash you have available to use as a down payment to buy a business.  If you plan to borrow money from your inheritance or a family member, get a letter in writing so you can show it to a seller and the bank lending you money.

You can also borrow money against your 401k plan.  This takes time to put together, so make sure you allow the lead time of about 30 days to make this happen.  Other parts of your financial plan to get in order are your credit score and credit report.  Most third party lenders are looking for a credit score of at least 700.  It’s also critical to check your credit report to make sure there are no errors on it.  Do this as soon as you can as errors take time to correct.  Although not related to your financial plan, it’s also important to have an up to date resume to show lenders and possibly a business seller if you are asking them to carry a note on the purchase price.

One of the main reasons for being an entrepreneur is so you can enjoy the fruits of your labor.  Being an entrepreneur allows you to follow your own dream instead of working for someone else and building their dream.  Having a quality and creditable financial plan should be part of your success strategy.  And remember, just as our personal fitness changes as we journey through life, so does our financial situation.  We recognize that going to a doctor or dentist is good for our personal health, equally good is talking with different financial professionals including estate attorneys to make sure our financial plan is in order is just as important.

If you would like to know the value of your business, give me a call on 916 570-2674 or email me at Andrew@RogersonBusinessServices.com  If you click the following link it will allow you to see a sample Brokers Opinion of Value.