Around the Web: A Week in Summary

Around the Web: A Week in Summary

A recent article from Divestopedia entitled “When is the Best Time to Sell My Business” explains that a business owner who is looking to sell should begin preparing for the sale three years before they plan to list their business on the market.

The state of the market matters when listing your business, but what you can’t control this as a business owner. What you can control, however, is the state of your financial records, whether the business has any litigation outstanding, and the overall appearance and wellbeing of the business. In order to sell your business at the highest value possible, there are certain things that need to be taken care of before listing. By giving yourself about three years (the number of years of clean, verifiable financial statements you should have) to prepare your business for sale, you are giving yourself and your business the best chance on the market.

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A recent article from Sunbelt Business Brokers entitled “Passing the Torch: Successful Business Succession Planning” recommends a series of important questions for a business owner to ask themselves as they plan the sale of their business.

When it comes to succession planning, there are multiple potential options at each stage of planning and therefore there is no one-size-fits-all succession plan. In order to create the plan that best suits you and your business, ask yourself the following questions:

  • What has to be done in order for me to exit the business? – Identify potential problems that could arise from your absence, and resolve them.
  • Who will my successor be? – Consider the pros and cons of each option and determine which choice is most beneficial for you, your family, the employees and the successor.
  • What is my business worth? – To avoid the bias you likely carry from building your business over the years, it’s best to hire a professional to perform a valuation of your business.
  • How will I transfer ownership of my business? – Determine how long (if at all) you’re willing to stay on payroll at the company to ensure a smooth transition. If you do decide you’re going to stay, develop a strategy to train the new owner and transfer responsibilities.
  • What will my life look like post sale? – Consider how you will fill your time after the business, and what kind of financial resources you will need to do so.

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A recent article from Inc.com entitled “Small-Business Financing 102: The Latest Updates and Options Available for Funding a Business Venture” explains what each type of startup funding entails and how it’s affecting both buyers and sellers. Currently the ways to fund a new business or to purchase an existing one include:

  • SBA Acquisition loans
  • Peer-to-Peer lenders
  • 401(k) business financing
  • Crowdfunding and angel investors

Each option presents its own set of obstacles and requirements that need to be met by the buyer, just as they each provide their own benefits. The increasing number of ways in which an aspiring entrepreneur can acquire the capital to start or buy a business is great news for sellers because it means more buyers on the market.

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