19 Jun Around the Web: A Week in Summary
A recent article from Entrepreneur.com entitled “Cashing Out: What Every Entrepreneur Should Know Before Selling a Business” explains three practical strategies for finding the right business broker to work with.
Choosing whether or not to work with a business broker is a personal decision, just as deciding to sell your business is. Hiring a business broker doesn’t necessarily mean you will experience a faster sale, and you will traditionally pay your broker a success fee. However, it can also take a large amount of extra daily tasks off of your to-do list, provide you with guidance and increase your reach when finding the right buyer. All of these things are, of course, contingent on finding the right broker to work with. Use these tips to do so:
- Do your due diligence: Read online reviews, interview multiple brokers face to face, and search for a broker who does not have too large of a workload. You want to make sure they will be attentive and have the proper time to dedicate to your listing.
- Inquire about marketing practices: A good broker will have a multi-pronged approach to marketing. It is a huge red flag if their only approach is online listing sites.
- Network: Go to networking events in your industry, seek input from your CPA, lawyer and other business professionals and keep your eyes and ears open for the right connection.
A recent article from Axial entitled “3 Characteristics of a Compelling Business Offer (Other Than Price)” explains three commonly overlooked considerations that a buyer can use to improve their offer.
Many business owners take pride in their role as an entrepreneur. Their attachments to their company are just as much emotional as they are rational and financial. When constructing an offer, it’s important to keep all of these factors in mind. In fact, the key to creating a persuasive deal as a buyer is considering all of the seller’s basic human needs. The three characteristics to factor in to your next business offer are:
- Autonomy – As a business owner, the seller is accustomed to having a high level of autonomy. Consider how you can contribute to continuing this sense of freedom and flexibility to determine the future course of their own life.
- Mastery – It is important to give a current business owner respect and recognition for their level of mastery in their field. They have spent years building this mastery and a little recognition in the form of consulting them or giving them future advisory duties goes a long way.
- Purpose – Most entrepreneurs started their company because of their desire to do something with meaning. Selling your company can come with a fear of losing this purpose and an accompanying emotional roller coaster. Consider options like offering the owner a consulting role for a set length of time with great flexibility so that they can continue to pursue personal passions or business ideas that will begin to fill that sense of purpose.
The most important thing to remember when constructing a business deal is that while your monetary offer matters, it is not everything. The current owner is a human being, with very real human needs. If you can acknowledge these instead of throwing dollar signs at them you will greatly increase the appeal of your offer.
A recent article from Franchising.com entitled “Determining Value is More Than Operational Efficiency” identifies and explains the factors that are involved with succession planning that impact the value of a franchise.
Succession planning is a process that takes place over time to build the value of your business. As an owner, there are immeasurable benefits that you can receive from creating and carrying out a succession plan. In order to do so successfully, there are a range of subjects that you must focus on. These subjects include:
- The owner’s motivation and perspective – This shapes the culture of the company.
- Personal Financial Planning – It’s important to know how much the owner will need to maintain their lifestyle post-sale without interfering with the business operations.
- Business Structuring – Ownership structure, cash flow, liability protection, governance and management control need to be clearly defined and easily passed along to a new owner.
- Business Performance – The business needs to be able to maintain productivity and profitability during an ownership change.
- Strategic Planning – Detailed agenda regarding the actions, structure and people critical to fulfilling long term goals.
- Leadership and Management Continuity – Identify and motivate key employees.
- Management Synergy and Teamwork – How well do the management team and employees collaborate?
- Family/Partner Dynamics and Governance – How will the roles of family members and business partners be defined in a way that continues the success of the business?
- Successor ID and Preparation – Identifying a successor and preparing them for the successful operation of the business going forward. Mostly when passing the business down to a family member or partner.
Oftentimes, when a buyer is doing their due diligence, these are the topics they are going to address while determining if the business a good value and a good fit for them. Failing to address any of these areas could jeopardize the overall value of your business and its ability to be sold.