Posted on July 11, 2013August 12, 2013 by Kim Brown — Leave a comment

How to Stay Alert and Healthy When Selling your Business

How to stay alert and healthy when selling your business

Selling a business is a tiresome and stressful process regardless as to the reason for sale. Whether it’s a distressed sale – selling due to health or personal reasons, or if it’s time to retire or move onto another adventure, the process can take it’s toll. And the ironic thing is that a business owner needs to fire on all pistons during the process. Not only does the owner need to prepare and jump through hoops to make the sale happen, but they also have to make sure the business performs! How to stay alert and healthy when selling your business is a massive factor on achieving success.

By now, we all know that stress sucks. From a scientific point of view, stress stimulates your body to secrete more adrenaline. Once it enters your bloodstream, adrenaline increases your breathing rate and blood pressure. Inevitably a person experiences physical weaknesses. With prolonged stress the body breaks down and eventually becomes ill or worse, gets diseased.

Stress is a consequence of a slight alteration in the natural state of the body. So any technique to reduce stress is to help bring your body back to its normal functioning. Below are some ways that can help you to counter stress:

Sunny side up

Look on the positive side of things. The glass is always half full and half empty – it depends on which version you want to focus on. You have the choice to focus on either. Keep in mind that there are millions and probably billions that have it far worse than you do. Count your blessings and remind yourself of all the great stuff you have in your life. Gratitude is a massive stress-buster.

Rest your way out

Some people fight stress by working towards resolving it. The ancestry of stress is usually over exertion so this in turn increases your brain-strain. Experts argue that taking a nap or simply resting while on a stressful routine can ease you out. While sleeping, the lobe of your brain responsible for voluntary thinking relaxes, hence it relaxes you. When I exited my company, I took up the practice of meditation. I couldn’t just sit in dark room for a 1/2 hour focusing on nothing, so I opted for ‘guided meditations’. Guided meditations often have nice music and someone talking you through a relaxation. You can download these over the Internet – they have mediation for everything. Stress reduction, enjoying life more, business success and so forth. Taking a 1/2 to focus your mind in a positive direction can work wonders.

Take a break

Remember to add short breaks to your fore-planned schedule. Go out for a jog or follow an influential personality on twitter regularly. Grab a book of your favourite author or start taking special interest in gardening. These activities will clear your mind out. Cycling, swimming and taking a brisk walk are effective stress relief exercises. Yoga is known for restoring the natural spiritual and physical state of the body. It might feel counter intuitive to take a break when you have mountains of work to do, however it will help to keep you sane. What’s more important? Your health or your work load? And strangely, you might discover that the more regular you are with your breaks, the easier and more productive your workload becomes.

You are what you eat

Take a healthy diet throughout the day. Water should be an essential component of your diet as it acts as a stress relief agent. Curb the consumption of alcohol and caffeine. (On this point, I have to admit, I couldn’t do that! I would have never survived without my 7am Latte and 6pm glass of wine!) I did however, eat salads, as much non-processed foods as possible and opted for healthier choices when I went out to eat. Think of it this way – you’re body is already stressed…don’t give it more problems to deal with.

A shoulder to cry on

Articulate your feelings instead of hiding or bottling them up. Find a good friend, mentor or family member to talk to. By exchanging comments and suggestions, you will gain exposure to a variety of ideas. Try your best to surround yourself with jolly people who live life optimistically. And stay away from people who make you unhappy and spread negativity as it can further strain your already stressed out brain. Develop a sense of humour and laugh for no reason at all – never loose an opportunity to smile. There’s a form of laughter healing – I can’t remember what it’s called but on certain days at a certain time a bunch of people all join a teleconference call and laugh. (Yes – this happens in the UK believe it or not)!

Give nature a shot

Once in a while, take a small trip to a place with a lot of natural vegetation and less noise. Take a walk and breathe in the natural scenery. Take a nap under the open skies and feel the nature around you. Once you get back to your daily routine after breaking its monotony, you will certainly feel lighter. Every time I go for a walk in the woods I often thing, ‘why don’t I do this more often!’ Just surrounding yourself in nature has a calming effect.

Last resort

Selling a business is an exasperating process. Running a business while trying to get the fairest sale deal can make anyone anxious. Stress builds up in your mind and body and leads you to experience physical deficiencies. If it gets to be too much seek professional help! There’s nothing and no one more important than you. If you go down so do the people around you so remember to put your health above all else!

Kim Brown, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is to help owners cut costs and increase profits prior to sale. To understand how you can sell your business quickly for the highest sales price, purchase the book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

Posted on July 9, 2013December 25, 2018 by Joanna Miller — Leave a comment

What’s in a business sale teaser letter

(Extracted from ‘How to Sell A Business‘ book)

Why write a business sale teaser letter?

The purpose of the teaser letter is to make the market aware that your business is ready to be acquired, should the right opportunity arise, and to identify potential interested buyers.

It is generally a two page document, which is written by your business broker (as one of their agreed deliverables for their fee) with your input, to showcase your business to potential interested parties who may or may not be actively acquiring businesses at this precise moment in time. The letter will most likely contain the following:

The broad type of business it is
Your headline financial figures (profit, revenue)
Reason for sale
Outline the opportunity without mentioning names
Specify what type of transaction you want, ie. full sale, investment, management buyout
Your broker’s contact details to request more information

The teaser letter should avoid stating an asking price or even a range. You don’t want to put someone off before it’s even begun. If you would like to see a teaser letter in all its glory, we have an example here.

Depending on the potential buyer’s organisational structure, your broker may make a call before sending out the letter. The letter is normally sent directly to the managing director/chief executive, to the financial director, or to the acquisitions manager/director.

What happens next?

After sending out the teaser letter, your broker will follow up with a call to find out if the potential party is curious and interested and what attracted them to your business. This allows your broker to discuss the opportunity in more detail and qualify the interest of the potential buyer some more. If your broker is not familiar with the interested party, they will check up on the company’s financials and work out if they have the means to pay-out, as well as see if there is strategic value in the potential acquisition. If the party is still interested, the broker will send the potential buyer a confidentiality agreement (a.k.a. a non-disclosure agreement) to sign before releasing further details.

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business. Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

Posted on July 5, 2013August 12, 2013 by Kim Brown — Leave a comment

Interview: Lessons Learned From Selling A UK Business

Lessons Learned in Selling a UK Business

Who better than to learn from one of the Sell Your Business co-owners, than Joanna! She can rightfully offer lessons learned from selling a UK business! I interviewed Joanna in the hopes that her experience will shed some light on various factors that might be able to help you or prevent you from making mistakes.

Lessons Learned From Selling A UK Business

Kim: What was your original business exit plan?

Joanna: The original business exit plan was actually not to exit! It was to focus on getting the company to a position where it remained very profitable and could run without me at the steering wheel. I was hoping for an arrangement that would allow me to go do something else while the business continued to generate income for me and my partner (who was also the majority shareholder).

Kim: Well, that being the case, what triggered your desire for a business exit?

Joanna: I was looking for options to reap the reward of the hard work that I had put into the business. I mean, of course, I wasn’t in the business for the sake of business, but I have some personal goals too. However, it was my business partner’s sudden need to cash in and de-risk for the sake of his family that was the main reason for our deciding to sell the business. I would class our business exit as a distress sale as we allowed circumstances to dictate the sale instead of choosing our window of opportunity.

Kim: So, are you saying you didn’t have enough time to plan?

Joanna: Yes. We sort of tried to rush into the sale and discovered many things as we went along. This wasted a considerable amount of time and energy. We were looking for the buyers, preparing documents, and doing our usual business all at the same time which included market entry into the US! I think if we had given more thought to the business sale, things could have been much easier.

Kim: How did you find the process emotionally?

Joana: Exhausting and emotionally draining to the point where I couldn’t function outside of work as I only had just enough energy to keep the business and sale process going. It was a long 22 months as only 3 people (including myself) in the business out of 40 knew we were selling it. I akin it to a never-ending boxing match with unlimited rounds and varying lengths of timed rounds, feeling the effects of punches and rarely being able to punch back and control the round. I was barely dragging myself around by the time we entered the negotiation stage. It can take a lot of time and energy. There’s just no way around the stress and the long hours, I guess. I tried to keep my focus and manage my schedule, but 22 months is a long time.

Kim: What was the final outcome?

Joanna: We made an endless number of presentations and held umpteen meetings, but were frustrated every time. After the last sale attempt fell through, I left the business as an employee. I felt I had nothing else to offer and hated the business and what it had done to me. I was running on empty in terms of energy levels. My business partner stayed behind and 2 months after I left the business, it was successfully sold for millions.

Kim: In hindsight, what are the top 5 things would you have done differently, if anything?

Joanna: Very difficult to answer, as I was the minority shareholder and really had no decision making power, even though I was listened to from time-to-time. However, having seen the business sale process up close, I can say that if I was the majority shareholder, I would have:

i) Refused to enter the USA market while trying to sell at the same time as the US was a massive distraction and took a lot of my time. I would have focused on our core business and our core business only because we needed to prove that we were over-achieving our forecast numbers and I could focus my attention on the business sale process more.

ii) Chosen to have more time to prepare to sell. This would have saved me from trying to juggle two full-time roles at the same time and truly focus on aspects of the business that would have maximised its exit value more.

iii) Not been greedy and be more aware of deal fever – I would have looked at what the realistic multiple was before short-listing offers. I would have accepted offers as they were above walk-away price tag despite the offer being made by a competitor. I should have also been wary of the big 7 figures that were being thrown around but emotions were on a roller coaster ride and energy levels were on low. Conversely, I would have walked away when the offer was lower than the walk-away price because the business’ intrinsic value was worth more and would give us a better return than say investing that cash in a different instrument e.g. stocks, property, etc.

iv) Told my senior management team that the business was for sale because I trusted them. This would have taken the pressure off myself having to personally keep the data room updated, make up a number of cover stories as to why I wanted certain information from the rest of the business, and I wouldn’t have to have hold all the technical and operational meetings with prospective buyers by myself.

v) Loved to have kept a detailed diary during the sale process as events got a little blurry and as the offers came in it was difficult to remember what happened when and why. A diary would have also helped me have an outlet for my emotions and would have been useful remembering if certain meetings went well or not.

Well, well…You can see that business sale is treacherous territory. Joanna was frustrated by the market expansion side-by-side with the business sale, but the owner was probably trying to maximize the sale price. Patience is key, and preparedness necessary.

Posted on June 27, 2013April 2, 2016 by Kim Brown — Leave a comment

How to visualise your bountiful business exit

Visualise your bountiful business exit

Visualise your bountiful business exit, it’s worth it. Einstein considered imagination to be more important than intellect. Before doing an actual experiment, he would visualise the experiment in his mind, thinking about each and every detail and the whole sequence. As a result, he was prepared for the minor or major problems that he could encounter during the experiment. Establishing your business takes a lot of effort. It is only fair for you to consider a bountiful exit when selling your running business. However, like everything else, a business sale also requires a proper strategy. If you are well prepared, your business sale will conclude smoothly, with maximum returns for your hard work. The best way to be prepared for a business sale is to visualise successful business exit.

Visualising the Solicitor

A good advisor can make the difference between a successful or stalled business sale. Apart from looking at qualifications and experience, you should also visualise yourself to be working together with your solicitor —preparing a sales pitch, drafting a Memorandum, finalising Heads of Terms, and most importantly, negotiating. Try to imagine what working with your advisor will be like. This will help you in choosing the solicitor that you feel most comfortable working with.

The solicitor I chose was a word of mouth recommendation. When we first met, he spent quite some time with me outlining my options, explaining the process and cover potential costs. During our discussions I felt that he was genuine, straightforward and able to help me get what I wanted. As the sale process progressed I often visualised leaving my solicitors office with a big smile. And towards the end I pictured myself hugging my solicitor (and he’s not really the huggable type)! Looking back now, I remember the day clearly when I got up from the boardroom table, concluding the deal and wraping my arms around my solicitor. What a great day!

Visualising the Sales Pitch

The sale proposal is the first thing that you are going to need. It is also known as a Memorandum of Information. The memorandum should be prepared very professionally and should be a lucrative document for the buyers. It should emphasise the strengths of your business, and underplay the weaknesses. But, everything should be done artfully. You can improve the impact and quality of your document by adding graphs, charts and other data that looks credible. Try visualising that you’re that the buyer rather than the seller. Think about the points that you, as a buyer, would like to see in the Memorandum. Your solicitor will also give you valuable advice, but it’s you who should be calling the shots rather than just towing the line that your solicitor gives you.

Visualising Meetings

You’ll be required to attend many meetings with the buyer’s team, during which you’ll be asked to explain different parts of your business. Before the pre-completion day, there may be a number of negotiation sessions to finalise the prices, payment terms, and other terms and conditions of the sale. Visualising each such meeting beforehand will make you better prepared to handle them.

Never show that you are desperate to sell your business. In fact, you should give the impression that there are other buyers also interested in buying your business. Remember that a delayed sale is usually a declined sale; therefore, you must do everything to speed up the sale process. Do not be available for meetings too readily. It might make the buyer think that they are the only party interested in your company. Rather, schedule appointments for meetings and inquire about the agenda beforehand. Some companies launch a media campaign just before they send out a sale memorandum, so as to improve the image and the potential price of their business. Visualising a successful business exit is about visualising each one of the activities right until the pre-completion day point.

Visualising Negotiations

For negotiating the terms and the price, you should first sit together with your business sale team and your business broker. Brainstorm your priorities about the price, and know the limit to which you can show flexibility to. Identify the weaker aspects of your business and be ready to answer tough questions. Remember, that your buyer will focus on the weaknesses of your business in an effort to reduce the price. You should be prepared for the counterarguments. You can either focus on your strengths and show that they offset your weaknesses, or you can find ways to underplay your weaknesses and convince the buyer that the price that you are demanding is profitable for them. Visualise negotiations always ending on a positive note where both you and the buyer walk away satisfied.

Visualising Indemnities, Warranties and Representations

The most sensitive aspects of a business sale are the representations, warranties and indemnities that you provide in your documents. A representation is a statement about a certain fact or aspect of your business. By giving a representation, you are taking responsibility that the information that you are providing is true and authentic. Similarly, the warranties that you issue are assurances about some aspects or assets that they have been correctly stated. Any wrong information from your side for which you have provided a warranty, will put you in the breach of the sale agreement. Indemnities are also similar; however, while indemnifying your buyer, you are taking responsibility to compensate the losses that the buyer may suffer in case a particular term of the agreement is breached by you.

Before issuing indemnities, warranties or representations, you should visualise the ramifications of issuing these documents or including these clauses in the sale agreement. It is best to keep the warranties and indemnities to a minimum. And when you do have to issue them, make sure that they should not keep troubling you even after you have sold your business.

Finally, you can visualise having a vacation at your favourite destination after you have successfully exited from your business. Do this from the start!

If you’re approaching an imminent completion day, have a look at our Completion Day Checklist. It’s provides everything you need to know and do for the big day.

Posted on June 25, 2013December 25, 2018 by Joanna Miller — Leave a comment

The 10 Largest Business Sale Deal Breakers

Business Sale Deal Breakers

If you are on the verge of a business sale deal, be careful. There are many slips between the cup and your lips. You should make sure that you toast to a successful deal, and steer clear of the pits and traps that can ruin your hard work and make your business sale deal crash. Most of these business sale deal breakers appear benign and common sense, but you should remember that sometimes common sense can be uncommon. Being aware of these deal breakers will prepare you to better identify and avoid such threatening situations that could blow a business sale deal. So, what are these business sale deal breakers? Let’s take a look at 10 of them.

1. Wrong Data
If the data you furnished to your prospect buyer is bad due to any reason, the impact might hit you when you least expect it. Make sure that you check out all figures and think about the information that you’ve supplied. There might be a temptation to blow up sales figures or show less expenses, but bad data, whether intentional or not, can stall your business sale by making your whole business suspicious in the eyes of the buyer. To avoid this pitfall, be open and straightforward right from the beginning.

2. Claim against your business
If your business or any of its assets have a claim against them, it may sink your prospect of making a sale if you haven’t revealed it in your documents. Even if you have mentioned it in the data, a claim reflects poorly on your business. Try to get rid of the claim before going for a business sale, or have a good justification accompany it when you reveal it in your docs.

3. Cover Up
If you have been sweeping problems under the carpet, it’s time to clean up your act. Get your records straight and get rid of any existing and impending issues that might threaten the business sale. Some of the issues can be outstanding debts, employee turnover, or sales slowing down. Covering them up would do little good, while being honest about them will make you think of ways to resolve such issues.

4. Deal Fixation
This happens when a business owner is too focused on the business sale, which may take months to go through. They ignore normal business activities and revenues dip. When the buyer asks for current data, the deal may go into a nosedive. Always focus on strengthening your business even while you are under the sale process. Making jumps in sales or news headlines while negotiations are underway gives you the advantage. Don’t get fixated on the deal to the extent that you let your business suffer.

5. Lack of Preparedness
Being unable to answer a key question during one of the meetings reflects poorly on you as a business owner. If you don’t know the strengths and weakness of your business accurately, it might also affect your negotiations and selling price. Not being prepared with the information and documents required for the due diligence, and taking too long in preparing them is the best recipe for driving away your buyer.

6. Excitement and Depression
A business sale is a tedious process and has its emotional impacts. You may be excited one day, and depressed the next. Sometimes it might appear that you are about to win the sale on your terms. At others, it might seem like an impossible task. As we all feel stress and emotions, there’s a chance you might say or do something that jeopardises the sale prospects. Don’t let your mood swings take the better of you. Always make decisions with a cool mind.

7. Competition
Although rare, competition can and does wreck business sales. This can happen when you have several other businesses like yours offering to sell. If you anticipate this kind of a situation, you should make sure that you offer the buyer some unique propositions or benefits in order to keep the buyer from getting interested in competing businesses.

8. Laws and Regulations
For overseas business sales, certain ownership or transfer laws may be applicable. There may be laws in your particular industry that spell out the requirements for a business sale. If you and your buyer are not aware of such laws and don’t fulfil the requirements, this may come as a roadblock to your business sale.

9. Scams and Scammers
Some companies may offer you a very lucrative deal for selling your business. Such companies, which may be posing as buyers or solicitors, would ask you for a deposit or upfront payment on any context. Make sure that you check all details about the person or firm that you are dealing with for your business sale. Don’t fall for a scam where you end up losing money or wasting time, or both.

10. Delays
Delays, regardless of their causes, will always have a negative effect on your business-sale proceedings. Don’t let delays happen. You can do this if you have planned your sale well.
Working with an experienced and competent business sale solicitor can save you from many of the pitfalls mentioned above.

Posted on June 20, 2013December 25, 2018 by Joanna Miller — Leave a comment

The business sale process in 6 steps

6 Steps in the business sale process

There can be many reasons behind your decision for a business sale in the UK. Selling your business might seem simple in theory, but is one of the trickiest feats to accomplish when it comes to formalities. Here’s the step-by-step process for a business sale, along with suggestions about how to make it all go smoothly and profitably.

Step 1: Your Human Resource

Human resource is the backbone of your business. It could be in the buyer’s interest to retain at least some of your human resource for the long term. A business sale gives you the opportunity to get rid of the non performers and make your business more profitable to the buyer. But you may feel that you have an obligation towards your good employees and should afford them every opportunity to continue their careers in or outside your business. Don’t forget the TUPE Regulations as it may also put you under some legal obligations when completing your business sale.

Step 2: Information Memorandum

Your business broker will prepare an “Information Memorandum” (MOI) on your behalf, outlining all relevant details about your business and your intent to sell your business. The Memorandum is like the blueprint of your business. It informs the potential buyers about all aspects of your business that might be of interest to them. We have a MOI sample table of contents on our Free Document Samples section of our website here.

Include a snapshot of your company’s finances along with projections for the coming years. The business’ financial health allows them to determine the fair price at which they should buy your business. Buyers will also like to know your key staff members and business processes —how you procure materials, how you process them, and how you sell them. They would like to know the number of people you employ, the number and locations of all the outlets or offices you have and the activities that they are used for.

A good Information Memorandum should project your business in a very good, desirable light and make it attractive for the buyer. And if a potential buyer is the competition, you may choose to provide a different MOI or provide it to them at a later date when you are sure that they are serious contenders for buying your business.

Step 3: Offers and Due Diligence

Once an indicative offer has been received and you accept, your prospective buyer will scrutinise your documents (via a data room) for a few weeks or months before making you an offer. Remember that an offer is just an offer unless it is supported by the other party’s ability to pay. You have the right to find out and confirm that the buyer can afford to pay, this is normally done by your business broker.
Don’t be desperate for a sale, and even if you are desperate, never ever show it to the buyer. Don’t take any offer seriously until you are satisfied that they have strong intent, have the means to pay and its a good offer.
The offer you receive should be comprehensive and detail what the consideration is and when payment will be made. The buyer may also include an earn out element that ties you and/or other key staff members for a defined period after the business has been sold.

Step 4: Negotiations

Before both parties finalise all the details, you must negotiate the terms and price of the sale with your buyer. This will take place over a number of days and weeks. Negotiation is an art form and you and your business sale team must be fully prepared at all times. This is where your business broker starts to earn their money. Make sure you agree on your negotiation strategy ahead of time. Know what you want, what you are willing to give up and what’s non-negotiable.

Step 5: The Sale Purchase Agreement

Your advisors and legal experts will sit together with your buyer’s acquisition team and draft a detailed Sale Purchase Agreement (SPA) which will include all the terms and conditions that you finalised during your negotiations with the buyer. Make sure you provide accurate information, because this is a legal document, and anything that is proven wrong after the sale has take n place will be held against you.

Step 6: Completion Day and beyond

On Completion Day, expect the ‘day’ to be quite long and you may very well still be negotiating as the day progresses. Make sure that you and your business sale team are focused on getting across the finish line which is marked by having signed all the paperwork and the solicitors agreeing on both sides that the business sale is indeed ‘completed’! Allow the moment to wash over you, it really is an amazing achievement. Then its time to get back to business and deal with how the news is going to be communicated and start earning that earn out if you’ve got one!

Posted on June 18, 2013August 12, 2013 by Kim Brown — Leave a comment

Top 5 tips when starting a new business all over again

Top 5 tips when starting a new business all over again

Starting a new business all over again? What about your existing business? There can be many reasons for selling a business. It may be that you have realised that you are in the wrong line of business, and would like to switch industries. Or, you might have realised that your business is not performing as expected, and you would rather sell your business while it’s still making some profits. After all, over 50% of business start ups go under in the first five years. And, if you are lucky, you have a business that’s roaringly successful, and you would like to cash in the good will and start up a new business.

Start-up business owners usually have little experience of managing their own business. After they have done it for some time, the level of their awareness about the market and the industry is improved. Two years down the line, their vision improves significantly and they can spot opportunities better. For instance, let’s say you have a website that’s also making money. However, by virtue of your experience, you know that another niche is driving more traffic and could deliver more profits. You can always dispose of your existing business without making a loss, and hopefully for a big profit, and start a new business that appears more lucrative to you.

Here are five tips from highly successful entrepreneurs to guide you through the business-switching process.

1. Do Not Jump the Boat

Switching between businesses is like switching between boats. If you jump off one onto other, there are chances that you might end up landing in the cold water. Do not try to start a new business while you are still running your old one. This will require you to be disciplined in your thinking and actions. Once you are focused on a new business, you may get distracted and your old business may suffer in the process. You might not be able to concentrate on the sale of your old business and may lose money selling it a in a hurry. Also, your new business might also suffer because you would not be devoting full time and attention to it. The key is to do one thing at a time. Once you are convinced that you should be going for a new business, concentrate on selling the old business first. This will free important time and financial resources that you can devote to building your new business start up.

2. Devote Time and Attention to Planning

Starting a business is a difficult decision to make. It’s not something that you do in haste. It’s better to devote proper time and attention at each and every stage of the planning process. If, and we don’t hope such is the case, you are regretting to be in a certain line of business, it might be because you did not make a great plan. Dreaming is okay, but your dream must translate into facts and figures through careful planning. How will you finance the start up business costs? What will be your marketing plan? How will you manage the workload? What are your goals in 1 year? 3 years? What is your vision of your business? These are all questions you must ask yourself, and do not move ahead until you have put down every little detail into your laptop.
The problem here is, for many people who are looking to sell their business and venture on a new start up business, there may not be enough time to plan. Urgency may exist because the old business might be consuming too much time or returning too little profit, or both. Under such situations, do the best you can to make the transition smooth.

3. Evaluate the Business you are looking to Start

You’ll need to be 100% sure that the new business that you are looking to start is not all glitter and no gold. Remember that the grass always seems greener on the other side. So, make sure that you talk to a few people in your new line of business. Gather facts and figures about your target market. Evaluate whether the market would be growing in future. You should be careful not to get caught in a fad and be left high and dry when the excitement of the fad runs out.

4. Keep Marketing in the Centre

SMEs are at the centre of the British economy, providing over fifty-nine per cent employments in the country. At the centre of any successful SME, though, is a robust marketing strategy. Marketing is around what your new business should be built. You should start by profiling your target market. Think about the need that your product satisfies; then, think about the people who have that need. Ask yourself: what do my customers do to satisfy their need at present? How can I make a difference? That’s where marketing starts. From there onwards, you should think about the media that your customers watch, the places that they go to, and the product attributes that matter to them. After you have achieved clarity about what you need to do, focus on “how”. Think about the skills and resources that you’d require in order to meet the needs of your target market.

5. Learn from Your Old Business

Apply the learning from your old business to your new business. As Einstein said, “insanity is doing the same things over and over again, expecting different results”. You should be doing everything right the second time. However, you’ll need proper monitoring and constant evaluation of your performance in order to be able to apply corrections to your business strategy. Make sure you have a system for monitoring and evaluation in place in your business plan.
Lastly, (but as a matter of fact, firstly), you need to sell your old business profitably. This should be your priority, because you want to capitalise on the time and the efforts that you have invested in your old business.

Business start up is not easy to set up but you’ve done it once before so it should be easier the second time around!

Posted on June 13, 2013August 12, 2013 by Kim Brown — Leave a comment

3 reasons why you want to retain key staff during business sale

The Benefits of Retaining Key Staff

A business can be only as good as the people it employs. When taking care of your business, it takes a lot of effort and time to establish it on firm ground and along the way you build up a number of assets. These assets can be tangible, like computers, furniture or stocks. But, it’s the intangible assets that are usually the most important. These intangible assets are your goodwill and your human resource. When you decide to exit your business and are planning to sell it, it is vital that you retain key staff right until the key moment.

The Importance of Key Staff

Unlike fixed and tangible assets that you can buy and sell on the market anytime, key staff is usually an irreplaceable asset. This is because you have invested a great deal of time and money in recruiting, hiring, training, and grooming the key staff in your organisation. Your business, like all other businesses, has a particular culture and environment. Your employees have developed into being productive assets of your business over a long period of time. The performance and productivity of your business depends upon your key staff. Therefore, it is vital that you retain key staff for as long as you want your business to keep performing at an optimum level.

Who Are Your Key Staff Members?

Before you decide to retain key staff prior to selling your business, you’ll need to determine who the key staff members actually are. Usually, the people occupying the top slots in sales, marketing, operations and finance are the employees that you should retain right until after your business has been sold. You may also have a couple of key people in other areas depending on the type of business. For example product designers, engineers or software programmers. There would be one or two people in sales and marketing who know everything about the product, the customers, and the selling process. Similarly, the people in finance know about your current financial standing, your liabilities, accounting methods, business revenue and cost models, and assets.

Reasons to Retain Key Staff

There are at least three reasons to retain key staff during a business sale:

Your business performance depends upon your key staffers. With key staff gone, your sales and profits may dwindle. Your business can even come to a complete halt. Such a situation would seriously jeopardise your business sale. In order to sell your business for profit, it is elementary that you maintain your level of sales and profits. Ideally speaking, your business should be doing “business as usual”. Any impression that your business is slowing down or losing money will make the sale difficult and bring down the expected sale price. Therefore, it is extremely important to retain key staff.
Retaining key staff is not only important for you, it may also be important for the people who will be buying your business. It could aid smooth transition of ownership and unaffected business performance during and after the sale.
Your employees have also invested their blood, sweat and tears in your business. Your key staff members are those people who, apart from being competent, are also motivated and loyal to your business. This loyalty should be rewarded.

To Tell or Not to Tell

Another important decision that you need to make while selling your business is whether or not you should inform your key staff members about your plans to sell the business. You may consider it morally wrong to keep your team in the dark and surprise them when the sale goes through. On the other hand, knowing that the business is going to be sold can make your employees lose interest and motivation. Naturally, they will be looking for another job and might even desert you before you’d like them to. There is no fixed answer, as every situation is different. The best course of action is to make arrangements where your key staff continues to perform the business functions right through to sale completion.
Your sale plan should give due consideration to your key staff. You could make provisions, subject to the buyer agreeing, in the Sale Purchase Agreement (SPA) to retain key staff —the people without whom the business profitability is likely to be affected. You can also motivate your key staff by offering a financial incentive from a successful business sale completion (even if you couch it in different terms if they are not to be privy to the sale process).

In all cases, be mindful that parting with your key staff at a critical time can cause unwanted problems and complications during the sale process. It is important to retain key staff if you want the sale to proceed smoothly and earn a good return on your investment.

Posted on June 4, 2013December 25, 2018 by Joanna Miller — Leave a comment

Sell your business equals entrepreneurship?

Sell your business = entrepreneurship, really?

The other day a business owner told me that he would only consider himself a successful entrepreneur only after he has successfully sold his business. Needless to say my response was one of amazement and I was a little incredulous because I disagree. You don’t have to sell your business to call yourself an entrepreneur. It’s only a label and given the challenges of starting a new business, surviving to break even and growing it to turn a profit, I would say that’s entrepreneurship in its own right and everyone who’s done that deserves to wear the badge of entrepreneur with pride. In fact, in my book, anyone who’s started a new business and had to wrap it up is also an entrepreneur, that includes Kim and myself.

Selling your business could be seen to many as icing on the cake that is ‘business’. Just another goal/achievement to be ticked off a long ‘to do’ list (‘Sold business? Check.). But to link entrepreneurship to selling a business seems to only be acknowledging part of the journey instead of the whole and certainly misses out the startup phase.

Not everyone wants to sell their business, especially if they’ve used our ‘Calculate Your Walkaway Price Pack‘ and discovered that they are better off keeping the business to suit their lifestyle (whether that’s desired or current!) and indeed some have deliberate plans not to. And that’s perfectly alright even though this website is targeted at those that do want to sell their business! I wouldn’t exclude them from being entrepreneurs because of that decision that they’ve made.

But as we know everyone has their own definition of entrepreneurship. Some define is as having more than one business startup (which may lead to a successful business sale), others say its depends on the size of the company (be it number of employees, revenue, profits, number of offices, international presence?). Would you give yourself the ‘entrepreneurship’ label only after you have successfully sold your business?

Posted on May 20, 2013December 25, 2018 by Joanna Miller — Leave a comment

How to find the best broker to sell your business

The best broker to sell your business

A lot of work goes into making a business successful. But nothing lasts forever, even if your business is something you love and watched grow from a tiny baby start up into a fully grown adult money making machine. There comes a time when you want to sell that business.

It may be that you want to work in another sector or want to retire. Whatever the reason you need to ensure the process runs as smoothly as possible and the most effective way of making sure this happens is by finding the right broker company.

Consider your Exit Strategy

A lot of people who run seminars or give talks on running a business will talk about having an “exit strategy.” This is when people decide when they want to leave a company and how they intend to do it. However people are only human and the odds are when you work every day on your business you may not have thought of the practical steps needed when you need to sell up with a vague “some time in the future” in your head.

The temptation then is that when you finally do decide enough is enough you may decide to go it alone. After all you’ve set it up and made money for yourself why can’t you sell it yourself?

The reason this approach is not as effective is quite simply the law of averages! If you try and sell a company on your own then it is likely you will only be able to deal with one potential buyer at a time. The danger of this is that if a deal falls through it can mean going back to square one all over again each time, adding further stress and work that you don’t need when someone else can handle it for you!

A broker can deal with a number of clients at once because…well it’s their job. Even if you are robot level efficient there’s only so many meetings you can go to. Depending on who you go with they can also assist on the marketing and finance side as well, all things that could potentially screw up a sale.

Hold A Talent Contest or Beauty Parade

All of these aspects need to be considered when comparing the various types of company broker available to you. In some respects it is like a talent contest and you are the judge- therefore it is up to you to ask the right questions!

The most important question of all is- can you give us references? They ought to be willing to give proof of any claim and be able to supply you with convincing evidence that they can do what they claim to do. Trust your instincts- if the reference seems dodgy, look elsewhere!

Another aspect is the valuation- if they offer a figure that is too high or low then it is best to avoid them. In both cases there is a danger that they have an ulterior motive so it is best to do a little detective work to see the facts behind the figures.

Also get them competing! Don’t be afraid to get ruthless – get a couple of quotes and then call them back saying what the other one offered.

(Note: In the Sell Your Business Store, we offer a beauty parade pack to help you ask the right questions to obtain the best broker, solicitor and financial people!)

The Small Print

ALWAYS READ THE SMALL PRINT!

The odds are they will have various fees that they charge for their work. Do not take what they say at face value.

Part of the problem is finding people you know are reliable, rather than hoping that the people you are contacting are real. Anyone can create an official looking website and anyone can dress up their service with fancy sounding jargon.

Business networking groups are ideal places to go for this- someone usually knows someone else and if they genuinely like the service they offer then they will tell you!

Stay in touch

Even the surest of deals can go down due to unnecessary delays. One of the most frustrating things is to find your perfect deal went wrong because someone didn’t check their email or didn’t respond quickly enough to a phone call.

If the broker is in your local area, pop into their office unannounced before you do the deal. See how they handle the day to day running of a business. Look at the way they arrange their desks, the way they talk with each other. If your business sense starts tingling the odds are something is amiss- in some respects it’s like courting and it is up to you to read the signals to see whether your potential broker is the perfect date or the perfect dud!

Checklist for choosing a broker

In short there are a few things to check over before you choose a broker-

Know your exit strategy
Set a time frame
Do your research
Is their approach appropriate for your business?
Can they offer assistance with marketing and financing?
Ask for testimonials
Ask about fees upfront
Is their valuation realistic?
Compare at least three different company brokers.
Ask around at local business networking groups.
Make sure they stay in touch with you and keep in contact during the selling process.

Another thing to remember is that there are no guarantees and no broker can promise you definite sales. But like any investment in your business doing your homework and comparing all your options will give you the best possible chance. While it may be hard waving goodbye to your grown up company you can do so knowing it’ll find a good home!