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Casual Articles - Exit Strategies - How Business Owners Can Prepare For a Sale
Avoiding inert measures that anaesthetise your performance management.INTRODUCTIONYou sit before the monthly report, which might be an inch or so thick, and you contemplate whether it's the best use of your time to paw through the pages to check if there's anything useful in there for you. Past experience tells you that the report is full of many measures graphed in all their splendor, but virtually none of them pique your interest, help you make the decisions you barely have time to give enough thought to as it is...TYPICALLY, PERFORMANCE MEASU
Make sure your information systems are up to date
Owners
When knowledge is based on truth it is powerful!When it is critical knowledge, its presence can drive our success, while its absence may contribute to our failure. I will attempt to convey in this report some useful and practical knowledge about how to write awesome ads for the World Wide Web. It is my sincere belief that; if you act upon the suggestions that will be presented here, you may well be taking steps which will give your ad greater pulling power.Web advertising takes many forms; web pages, classified ads, e-mail responses, news group posting
Set goals for yourself
You may have put together a business plan when you started or acquired your business, but how often have you updated it? I’d recommend that you annually sit down and reevaluate your strategic plan for yourself and your business. Project the business three to five years into the future. Will you be entering new markets or introducing new products? Also, how do you see yourself transitioning out of the business? Will you sell to a third party or keep the business in the family? Do you plan to retire upon exit or will you be starting a new career or buying another business?
Assemble a solid team
There are numerous professionals involved in successful exit planning, many of whom are probably your current advisers. Your team should include: attorney; accountant; wealth adviser; mergers and acquisition adviser/business broker; insurance professional; and any other trusted advisers. Each of these professionals brings vital skills to the table.
Watch your expenditures
Be careful where you spend your cash. Clean up your income statement and eliminate unnecessary expenses. The most likely valuation of a profitable company involves the capitalization of a company’s cash flow; so every dollar saved on your P&L equates to two to four dollars of value in your company. Also, make sure that you earn a good return on investment on capital expenditures. Put yourself in the potential buyer’s shoes – what about your company is valuable? Make sure the capital and time you invest in the company enhances that value.
Make sure your information systems are up to date
Owners
I've become increasingly concerned about the ignorance of Americans - not those who have learned English as a second language, but native English speakers - regardless of race, income level, schooling or other determining factors. The number of people who read seems to be decreasing in direct proportion to the number of kids growing up with portable dvds, and ipods. Television has become the preferred babysitter for children and the most effective way for adults to anesthetize themselves after a day's work.These days I see egregious (horrible, outrageous, as
Set goals for yourself
You may have put together a business plan when you started or acquired your business, but how often have you updated it? I’d recommend that you annually sit down and reevaluate your strategic plan for yourself and your business. Project the business three to five years into the future. Will you be entering new markets or introducing new products? Also, how do you see yourself transitioning out of the business? Will you sell to a third party or keep the business in the family? Do you plan to retire upon exit or will you be starting a new career or buying another business?
Assemble a solid team
There are numerous professionals involved in successful exit planning, many of whom are probably your current advisers. Your team should include: attorney; accountant; wealth adviser; mergers and acquisition adviser/business broker; insurance professional; and any other trusted advisers. Each of these professionals brings vital skills to the table.
Watch your expenditures
Be careful where you spend your cash. Clean up your income statement and eliminate unnecessary expenses. The most likely valuation of a profitable company involves the capitalization of a company’s cash flow; so every dollar saved on your P&L equates to two to four dollars of value in your company. Also, make sure that you earn a good return on investment on capital expenditures. Put yourself in the potential buyer’s shoes – what about your company is valuable? Make sure the capital and time you invest in the company enhances that value.
Make sure your information systems are up to date
Owners
Who or what is to blame if you are not getting the promotion you want and think you deserve?Many factors, in various combinations can be the cause, but one thing is almost certain. Like it or not, you and you alone must take most of the blame if your career is stuck on "hold."There is valuable insight into all of this in Shakespeare's "Julius Caesar." Cassius is advising Brutus as they consider their ambitions for bigger and better things: "The fault, dear Brutus, is not in our stars but in ourselves, that we are underlings."Let's exami
Assemble a solid team
There are numerous professionals involved in successful exit planning, many of whom are probably your current advisers. Your team should include: attorney; accountant; wealth adviser; mergers and acquisition adviser/business broker; insurance professional; and any other trusted advisers. Each of these professionals brings vital skills to the table.
Watch your expenditures
Be careful where you spend your cash. Clean up your income statement and eliminate unnecessary expenses. The most likely valuation of a profitable company involves the capitalization of a company’s cash flow; so every dollar saved on your P&L equates to two to four dollars of value in your company. Also, make sure that you earn a good return on investment on capital expenditures. Put yourself in the potential buyer’s shoes – what about your company is valuable? Make sure the capital and time you invest in the company enhances that value.
Make sure your information systems are up to date
Owners
While you listen in to a consumer (or co-worker, spouse, significant other), your brain is regularly making hundreds of assumptions. Each word, modulation, and attitude of voice is interpreted, but not always as the orator planned. We can clearly see that 2/3rd of all employees feel management isn’t listening to them.We all believe we know how to listen, sure? The reality is that very few people know how to truly pay attention. In our seriousness to serve, we get pulled out of a discussion by preparing for the answer whereas the other person is still discus
Watch your expenditures
Be careful where you spend your cash. Clean up your income statement and eliminate unnecessary expenses. The most likely valuation of a profitable company involves the capitalization of a company’s cash flow; so every dollar saved on your P&L equates to two to four dollars of value in your company. Also, make sure that you earn a good return on investment on capital expenditures. Put yourself in the potential buyer’s shoes – what about your company is valuable? Make sure the capital and time you invest in the company enhances that value.
Make sure your information systems are up to date
Owners
You really want a leather office chair. You really would like to impress all of the other employees that you left behind when you moved up through that promotion. In fact, you really want to look like you are important. More importantly, you want that leather option because of just how soft it is. You know that when you sit in that chair that you are important and you know that it is of high quality and one of the most comfortable (and impressive) styles of chair on the market. But, you don’t want to go broke either. The good news is that you can have a choice
Make sure your information systems are up to date
Owners and managers should have systems in place so that information received is timely and accurate. These systems need to be transferable to the buyer. While a spreadsheet of financial data may work for the owner, would a new owner be able to understand it? Bookkeeping should be performed using standard accounting software such as QuickBooks. The same goes for any other system in the business – if the industry standard is to have certain software to handle inventory or project management, then the company should have that software in place.
Management and/or trained employees in place
A business is difficult to sell if the owner is too embedded in it. A buyer will want to be able to step into the business and take over from as close to Day 1 as possible. (Often sellers stay on for a finite transition period after the sale.) Talk to members of your exit planning team regarding creative ways to create incentives for key employees to stay.
Manage the relationships with customers and suppliers
Your goal in selling to an outside party is to minimize the perceived risk of buying your company. A key component to this is customer diversification. If any one customer comprises greater than half of your revenue, you’re at risk of that customer leaving and inflicting a potentially mortal blow to your business. The same risk exists if any one supplier of a key material or service has too much power.
Perform pre-transaction due diligence
Review with your advisers all of the items a potential buyer would want to review, including contracts, leases, equipment lists, etc. Additionally, you’ll want to ensure that you have up-to-date financial statements from the last three to
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