13 Dec Around the Web: A Week in Summary
A recent article posted on Forbes.com entitled “Business Value And Lottery Tickets” explains how you have to be realistic about your goals for your business especially in how they relate to your exit plan in the future. Take a look at how your business is doing and then quantify your goals for your business by asking yourself questions such as “How much money do I need to have when I leave my business?”
Next, you need to figure out a plan for your business to grow enough to reach those goals. The article states three common problems that owners have in this situation:
- Relying on assumptions instead of consulting with an exit-planning advisor
- Trying to do everything instead of delegating
- Remaining stagnant instead of taking on new roles to ignite change in the business
It is also important to have a good management team in place to help you achieve your goals. It’s not luck, and you have to look at the numbers and facts to get your business where you need it to be for a successful exit.
A recent article from The CBB Blog entitled “To Build, To Franchise, or to Buy an Existing Business……That is the Question” summarizes the pros and cons to these three main routes people take to owning their own business. Starting your own business from scratch involves having a new or unique product/service, but a lot of work and risk comes along with this. A lot of research is needed ahead of time, along with capital to get started financially, and statistics show that the majority of businesses fail within the first 5 years.
A franchise will already have a successfully proven concept with support from an already existing brand, but it can be much more costly at the beginning. It’s also important to do your own research on the company to see how their franchise success rate is.
Buying an existing business can be less risky and less expensive than starting from scratch or purchasing a franchise. You are not only purchasing a business, but also an established customer base & vendors, experienced employees, cash flow and more. If you do your due diligence, you can see how the business is doing so you know exactly what you’re buying.
No matter which route you take, make sure you do your research first.
A recent article from Divestopedia entitled “Make Your Business Valuable in the Marketplace” explains the importance of learning the strengths and weaknesses of your business from the perspective of a buyer in order to make your business more valuable.
Owners of small to medium-sized businesses should be aware that factors such as having fewer resources or having irregular sales and profits can be seen as negative. This means that it’s even more important to find the right time to sell, when your profitability is strong to help outweigh the higher risk factor for the buyer.
Hiring a good advisor is also very important if you’re selling your company. Not only will they be good at negotiating, but they will also help to show that you are serious and will reduce the buyer’s risk.