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Casual Articles - Seven Things You Need to Know About Selling Your Business
Most companies fail in their network marketing businesses because of their lack of effective delegation. Delegation is not just telling your employee to answer a call or to fill out some paperwork for you. Delegation does not mean that you give an employee an easy task; rather, it is about assigning challenging jobs.The reason why most companies find it hard to delegate these types of tasks is due to lack of confidence in their employees. Delegation is very important for a business to prosper. Effective delegation allows you to trim down your tasks so that you can concentrate on the major areas of your business. You should have proper networks where you can delegate your tasks.There are some things that you should consider in delegating jobs to your network. The first thing that you should consider is to decide what responsibilities to delegate. To delegate some task, you should remember that the principle of delegation is meant to encourage initiative to get the job done and for your marketing network to be effective in the operation of the business even without your presence. The rule of delegating these tasks is for you to have more time to focus on the things that can help your business grow.Next is for you to decide to whom you should delegate a certain job. You should choose the person with the capacity to do your job even though you are not there to supervise. You should study your employees well
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and
Business success is dependent on a variety of factors –a realistic business idea, a well thought-out business plan, an appropriate marketing strategy and great customer service are amongst the top ones. While customer service is a part of marketing, it can be segregated as a separate field on its own. It’s important to define the term customer service before we proceed. Customer service includes all aspects of interaction with a customer and speaks to the organization’s image in the mind of a customer.A customer provides an organization with that most organic of all advertising tools –word of mouth advertising. A happy and satisfied customer is much more likely to send more customers your way. Further, there is the potential for repeat business, which is the backbone of many businesses. It is obvious that a customer who has been provided with a product or service that he or she desired in the ideal way, would build a relationship with the seller.Further customer relationship management teaches the business where there are flaws in the system and provides valuable customer feedback. When a business receives feedback, it is able to see the customer’s image of the organization and the impression of its services. This tool is invaluable in correcting systems as well as image management for the business. It is also an outsider’s perspective, which provides the business owner or management a unique insi
The IPO
If you business is large enough, you can consider an initial public offering (IPO) in which you will sell your company’s shares publicly on the open market. This can be a good alternative to selling the business, but IPO’s require the outlay of large sums of money that may be out of reach for your company. If you have money available to finance an IPO, research the IPOs of similar-size companies in your field and look at their track record and whether they experienced accelerated growth.
An IPO for your company will mean that you will lose a significant amount of control. You will be face outside investors, strict Securities and Exchange Commission regulations and record-keeping rules. Your company information will become a matter of public record.
Selling Corporate Assets
Sometimes it becomes difficult to cut back or restructure your business into a smaller business by selling some of your corporate assets, but this may be the best alternative to selling the business outright. If you consider selling off part of your business, hire an outside financial advisor to appraise your assets and determine a fair market price for the assets you are considering selling. Choose assets that are not directly tied to your core business. Choose assets for which there is a strong market. Obtain input from legal and accounting experts.
2. Ways to Determine The Value of Your Business
If you decide that you must sell your business, there are a number of ways to value your company and determine your selling price.
Informal and formal appraisals
Find out the selling prices of similar businesses in your area and compare their companies to yours. You can also contact the national trade association for your industry. You can also hire a professional business appraiser. This method is the most credible and your potential buyers will be more likely to accept the formal appraisal.
Market-based valuation
One commonly used method of valuation is based upon past experiences selling of similar businesses. A business broker may recommend an asking price based on the sale prices of similar businesses in your area and industry. This is similar to find comparable sales for residential real estate, and it is the least expensive. It is commonly used for the sale of small businesses.
Asset-based valuation
Your business assets may be considered at book value to determine the liquidation value of the business. The result is a fire-sale price that will be the bare minimums value.
Earnings-based valuation
Your company’s historical financial results will be considered and future income projections will be calculated and multiplied times a “Cap Rate,” the interest rate usually earned in the market.
Price Building
Price building is a valuation method that looks at the assets, leases, real estate, and goodwill of the business. It considers the value of the tangible assets on the balance sheet and the valuable intangibles that create the company’s value in determining the amount a buyer would be expected to pay for the business. The intangibles include location, unique product or service, profitability, favorable lease, goodwill, and good employees. The tangible assets will be real estate, equipment, and inventory.
After you inventory the tangible assets and calculate their value, you will estimate a value for the intangible assets. The rule of thumb for valuing these intangibles is that their combined value should be approximately one year's net income. Add together the value for the tangible assets, the intangible assets, the agent's commission, and other costs of sale to calculate your asking price.
Return on investment (ROI)
Consider your annual business net profit to calculate the buyer's return on investment. Divide your net profit by the buyer’s original cash investment, and the result is the return on investment. The typical ROI is 12 to 25 percent. The higher the ROI, the higher the sales price is likely to be.
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and p
Here are some helpful hints for making the most of the holiday selling season.Get organized!You cannot have a record-breaking season if you are not prepared. Set aside one hour today to order supplies, update your potential hostess list, get your show bag in order, clear your desk, and make those booking calls.Schedule early and schedule tight!Begin filling your calendar with more shows than you would ever dream of holding. Promote noon and four p.m. tea shows so you can hold two shows in one day!Have a family meeting.Share with your family the importance of the season ahead and together decide on a reward you will all enjoy when you meet your goal. Post a family calendar on the fridge that includes important family events as well as your shows. Create a plan for when mom is away on business and make sure they know that they are an important part of your career.Prepare meals in advance.Set aside one afternoon or evening each week to prepare healthy meals for the nights you won’t be home. This eliminates the stress of rushing a meal and running out the door. Your family will know that they are your top priority. (For cook-ahead meal ideas go to our Meal Planning section in the DSWA Learning Library.)Maintain an attitude of gratitude!The holidays are a busy time and are sometimes overwhelming; however give thanks for the abundance coming your way and celebra
2. Ways to Determine The Value of Your Business
If you decide that you must sell your business, there are a number of ways to value your company and determine your selling price.
Informal and formal appraisals
Find out the selling prices of similar businesses in your area and compare their companies to yours. You can also contact the national trade association for your industry. You can also hire a professional business appraiser. This method is the most credible and your potential buyers will be more likely to accept the formal appraisal.
Market-based valuation
One commonly used method of valuation is based upon past experiences selling of similar businesses. A business broker may recommend an asking price based on the sale prices of similar businesses in your area and industry. This is similar to find comparable sales for residential real estate, and it is the least expensive. It is commonly used for the sale of small businesses.
Asset-based valuation
Your business assets may be considered at book value to determine the liquidation value of the business. The result is a fire-sale price that will be the bare minimums value.
Earnings-based valuation
Your company’s historical financial results will be considered and future income projections will be calculated and multiplied times a “Cap Rate,” the interest rate usually earned in the market.
Price Building
Price building is a valuation method that looks at the assets, leases, real estate, and goodwill of the business. It considers the value of the tangible assets on the balance sheet and the valuable intangibles that create the company’s value in determining the amount a buyer would be expected to pay for the business. The intangibles include location, unique product or service, profitability, favorable lease, goodwill, and good employees. The tangible assets will be real estate, equipment, and inventory.
After you inventory the tangible assets and calculate their value, you will estimate a value for the intangible assets. The rule of thumb for valuing these intangibles is that their combined value should be approximately one year's net income. Add together the value for the tangible assets, the intangible assets, the agent's commission, and other costs of sale to calculate your asking price.
Return on investment (ROI)
Consider your annual business net profit to calculate the buyer's return on investment. Divide your net profit by the buyer’s original cash investment, and the result is the return on investment. The typical ROI is 12 to 25 percent. The higher the ROI, the higher the sales price is likely to be.
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and
When do you use the newspaper for publishing announcements for promotions or new partnerships?Adding an announcement to a newspaper will only bring further recognition to your business. You should always send items such as the hiring of a new employee, the announcement of a new contract, the change of location or any other item that you would like the world to know. Announcements are a way for you to communicate to the rest of the business community that you are a company on the move. You must find the right locations to place your announcements and you should have a list of the local, regional and national media that has a calendar, or section that places these announcements.You do not have to put your ego into the announcement; simply stick to the facts so that your potential and existing customers are aware of what you are doing. If they see you making regular announcements, they will perceive you as a company that is on the go. Announcements do not cost anything but time to put together, and time is also what you will need to make sure these announcements get to the right location. There is no point in doing a media blast to places that would not normally print such items. They will likely (if they recognize your company name) not regard anything else you send if you are spending too much time annoying them with things they are not interested in. The point here is that you need to make announcements “all t
Asset-based valuation
Your business assets may be considered at book value to determine the liquidation value of the business. The result is a fire-sale price that will be the bare minimums value.
Earnings-based valuation
Your company’s historical financial results will be considered and future income projections will be calculated and multiplied times a “Cap Rate,” the interest rate usually earned in the market.
Price Building
Price building is a valuation method that looks at the assets, leases, real estate, and goodwill of the business. It considers the value of the tangible assets on the balance sheet and the valuable intangibles that create the company’s value in determining the amount a buyer would be expected to pay for the business. The intangibles include location, unique product or service, profitability, favorable lease, goodwill, and good employees. The tangible assets will be real estate, equipment, and inventory.
After you inventory the tangible assets and calculate their value, you will estimate a value for the intangible assets. The rule of thumb for valuing these intangibles is that their combined value should be approximately one year's net income. Add together the value for the tangible assets, the intangible assets, the agent's commission, and other costs of sale to calculate your asking price.
Return on investment (ROI)
Consider your annual business net profit to calculate the buyer's return on investment. Divide your net profit by the buyer’s original cash investment, and the result is the return on investment. The typical ROI is 12 to 25 percent. The higher the ROI, the higher the sales price is likely to be.
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and
Questions about your present, or most recent, job can be tricky and if you aren't careful you can ruin your chances by making negative or undiplomatic comments. So make sure you are prepared.In an ideal world, we'd all get on brilliantly with the boss and our colleagues - and we'd love every minute of the job. If this were the case, it's very unlikely we'd ever look for another post. In the real world, the reason you want to leave a job may well be that you don't get on with the boss or your immediate supervisor, or that the routine has become mind-numbingly boring.However terrible your present job, the interview is not the time to discuss it. You must be professional and don’t forget, if you are offered the position, the people interviewing you will be your boss and colleagues and they don't want to work with someone who will complain about them at the first opportunity.What questions might you be asked about your recent work history? How do you get on with your boss? And how about your colleagues? Why do you want to leave? What do you dislike about your job?Let's start with the first two.How do you get on with your boss or your colleagues?Whatever the reality, you must give a positive answer. You could say, for example, that you have a good working relationship and that you have always found your boss helpful and supportive; there is a good team spirit and you get on well wi
After you inventory the tangible assets and calculate their value, you will estimate a value for the intangible assets. The rule of thumb for valuing these intangibles is that their combined value should be approximately one year's net income. Add together the value for the tangible assets, the intangible assets, the agent's commission, and other costs of sale to calculate your asking price.
Return on investment (ROI)
Consider your annual business net profit to calculate the buyer's return on investment. Divide your net profit by the buyer’s original cash investment, and the result is the return on investment. The typical ROI is 12 to 25 percent. The higher the ROI, the higher the sales price is likely to be.
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and
How many times have you wondered how effective your media relations were on behalf of a client? Don’t you wish you could easily explain your results? Here are simple thumbnail methods that you can use to check and compile your results on any ongoing media campaign.1. Track the Number of Professionals that Read Your Release: Do you use press distribution services that allow you to see the number of times professionals have read your release?2. Track the Number of Media Outlets that Picked up the Story: Does your press distribution service allow you to see how many media outlets picked up the story?3. Track a Custom Database of Media Contacts: Do you maintain a select list of media professionals that you know are interested in reading your news? Do you regularly send them news?4. Track the Number of Requests for Media Kits: Can you track how many magazines and other outlets requested media kits from you based on this story idea or release?5. Track the Number of Requests for Further Information: How many magazines or newspapers asked for additional information or for photographs?6. Track the Number of Stories Generated: How many stories were generated from this release and others that you have sent about this topic or firm?7. Track the Amount of Continued Interest: Has your media campaign generated continued interest on the part of the media?8. Track the number of times yo
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and procedures manual and consider employees
Create a procedures manual that documents the best way to run the business and deal with its employees. Remember the importance of keeping key employees during a sale and whether they will be crucial to the new owner's success. If they are, the new owner will want to know which employees will stay with the company after the sale. Have a company meeting to explain to employees that your are selling the business and tell them what effect the sale will have on their jobs.
Evaluate and update company assets
Do a complete inventory or all assets, equipment, and inventory. If your computer systems are obsolete, upgrading the system will make it easier to sell your business. If company assets include real estate, decide whether you should or sell the real estate before the company is listed for sale.
4. Legal Consequences of Selling a Business
Disclosure
You must make a complete disclosure to the buyer about all aspects of the business. Open up the books for inspection. Show them all leases and other relevant contracts. Do not withhold any information from a potential buyer. Your failure to disclose material information could be considered fraud.
Will the Bulk Sales Law Apply to your business?
"Bulk sales" laws were enacted to prevent business owners from defrauding creditors by transferring their assets to another individual or entity to keep their assets away from creditors. When one corporation receives the assets of another company, it is expected to assume its debts and accountable for the debts. If, however, one business transfers all of its assets to another business, but the receiving business does not assume all of the debts, you must consult an attorney to be sure you comply with the law.
5. Collect Outstanding Accounts Receivable
Create an aggressive collections plan
You should make collections a top priority and devise a systematic method for collections. Put your collections plan in writing and share it with the employees who are part of the collections team. Make sure everyone consistently carries out the plan. Contact your past-due account holders by email to remind them that their account is overdue. Tell them how many days they are late and the precise amount that they owe.Ask recipients to acknowledge your e-mail. If you do not receive a response on your first e-mail, send another email advising them that you will contact your attorney.
Hire a collections agency or attorney
Hiring a collections agency as a last resort may be the only way to recover your money. When you create your aggressive collections plan, collect some names of reputable firms and make some initial inquiries to know what to expect. Their fees will be between 25 and 40 percent of the amounts collected. If you have very large overdue accounts, you may want to hire a collections attorney with experiece in collecting outstanding accounts receivable.
6. Define your priorities
Sales price and terms
Decide exactly what you want from the sale. Do you have to have an all-cash deal or can you finance part of the sale price? Is it important to you that the buyer continue your business traditions? Decide on the minimum price that you will take. Do you have to have a lump sum at closing or can you accept payments over time?
Time your decision to sell
When the national economy is strong and your business is having its best year, you will receive the highest dollar value for your business. keep an eye on what the national economy is doing and be flexible about when you will sell. Sell early if you can avoid being caught up in a bad economic cycle.
Prepare to sell
The average time for a businesses to sell is approximately one year. Start planning two years in advance of the date you want to sell. Also, prepare your business for the sale by cleaning, painting, and doing whatever you can do to make your business premises mor
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