26 Dec Around the Web: A Week in Summary
A recent article from G2 entitled “The Simple Guide to Buying a Business” details the entire business buying process from why to buy an existing business to how to close the sale.
Buying an existing business can provide advantages such as existing cash flow, intellectual property and employees. In comparison to building a startup, acquiring an existing company is less risky and still provides the benefits of being an entrepreneur. The main thing you need to buy a business is money. There are multiple ways to acquire the amount of cash needed to purchase a business. Once you understand why you want to buy a business, and your options for funding, there are 7 major steps to buying a business:
- Know Your Budget
- Find the Right Business
- Do Your Due Diligence
- Negotiate the Price
- Secure Funding
- Sign the Contract
- Handle the Transition or Integration
A recent article from Forbes entitled “Four Qualitative Factors To Consider In A Business Valuation” explains how to asses four major factors that impact the value of a business that cannot be expressed in a simple numerical value.
Unlike the business’s revenue and cash flow values, certain metrics within a company cannot be expressed and measured quantitatively. The following metrics fall within this category, and remain important in determining overall value of the business:
- Leadership – A company that is dependent upon the current owner and leadership is less valuable than one that can run without the presence of the owner.
- Personnel – Having well-trained staff that are loyal to the company and will remain after the sale is extremely valuable in a business sale.
- Customers – Who makes up the customer base greatly impacts the company’s value because it impacts how predictable the long term ability to generate revenue will be.
- Regulations – The potential threats and opportunities presented by the industry and local regulations provide valuable insight into the viability of the business and its future.
For the best results, electing the assistance of a business broker and other professional advisors when navigating a business sale is suggested.
A recent article from Forbes entitled “Planning To Retire Or Sell Your Business? Here’s How To Prepare For Your Departure” describes the key considerations a business owner should take as they plan for their exit.
While the ideal time to begin planning for your exit is when you begin building your business, that is not always how things play out. As a business owner whose company is already in the full swing of day to day operations, the sooner planning begins, the better the outcome will be when it’s time to leave. If you do fall into this second category, follow these four steps to work your way towards the ‘door’:
- Become replaceable – Many businesses become dependent on the owner in day to day operations. Obviously this is a bad thing if you intend to not be there someday. Begin to take whatever measures necessary to ensure that the company can run smoothly either without you or with someone else at the helm, as soon as possible.
- Identify and reward your key employees – If you haven’t already, get to know your employees (their needs, desires, fears, and dreams), determine who is most necessary for successful operations and implement incentives to keep them aboard after your departure.
- Improve operational effectiveness – Evaluate everything from employee productivity to product or service quality and the offers you currently have. Make tweaks to improve the bottom line of your company’s efficiency and profitability.
- Turn your Gremlins into Gurus – Work on the fears or beliefs that as a business owner are holding you back from your greatest potential. Eliminating these, shining a light on them and allowing yourself to make improvements in areas you’ve previously avoided out of fear will do wonders for your end result.