06 Mar Around the Web: A Week in Summary
A recent article from Inc.com entitled “The Hot Market for Businesses Is Likely to Cool, According to This New Survey” discusses how the results of a Pepperdine University survey indicate that brokers and sellers alike are concerned about the market.
While the market has been hot for over a year, economists are predicting a decline in the economy as soon as this year, which would negatively impact the business market. If the economy takes a downturn, then the profitability of many small businesses is likely to follow, decreasing their for-sale value. According to the survey, 83 percent of participants said that the strong M&A market will be over within the next two years.
A recent article from Exit Oasis entitled “Your Gear Can Sabotage Your Small Business Sale” explains the effect of clutter on the value of a business and why you should get rid of it if you want to sell.
Having equipment lying around that is not in use or is not usable can make your business seem old and ineffective and can keep it from being desirable for two reasons:
- Clutter disguises the real appeal of the business: Just like during the sale of a house, having clutter laying around can make the room look smaller, reduce the usability of the space and proved a poor visual that is off-putting to potential buyers.
- Clutter warps the owner’s sense of real business value: Having equipment around that is not in use takes value away from the business rather than adding to it. Some business owners may be tempted to include the value of the potential use of said equipment and the value of what was paid for it. However, a buyer is not going to be interested in equipment that is not currently generating any revenue for the business.
As a business owner, if you have equipment laying around that you feel as though could potentially increase the value of your business, the truth is that it’s probably doing the opposite. In this scenario you can either prove it by implementing services that use the equipment to expand the business, or receive the value that you believe the equipment has by selling it off separately. Whether you’re selling or not, it is always a good idea to make time for a ‘clutter walk through’ if you have not done one in a while.
A recent article from Divestopedia entitled “All Companies Need to Look at Succession Planning” explains the differences between exit planning and succession planning and how one affects the other.
Succession planning relates specifically to the development of your company over time. From the infancy stage to the maturity stage, what your business needs from you as the owner and each of your key employees differs. A good succession plan regularly assesses the skills that key employees possess and makes adjustments as necessary in preparation for the coming stages and company goals.
If done properly, over time, succession planning for small to medium sized private companies facilitates the ultimate exit plan. If it is ignored, however, or not done properly, it can have terrible side effects for your business when it comes time to exit.