Showing posts with label business. Show all posts
Showing posts with label business. Show all posts

Tuesday, 9 November 2010

Expert business coach shows how works on your people

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When it comes to successful business growth - one of the key differences that separates the successful business owners from the average ones...

Is what the business owner 'works' on - when they have employees.

I have noticed that the best business owners work on improving their employees...

Why? Well, so that the employees learn and then do certain tasks that the business owner used to do.

By doing this, the owner can remove themselves from the 'day-to-day' running of the business so that they can work on areas that can grow the business - and/or do the things they enjoy doing.

Like playing golf, going on holidays, spending time with their families.

On the other hand, the average business owner continues to work 'in' the business despite having employees. For a number of reasons the average business owner says that they don't have the 'time' to improve their employees.

As a result, the employees lack the skills and/or the freedom to do the tasks that would free up the business owner from the day-to-day running of the business.

So guess what happens? The business remains dependent on the Business owner.

So the Business owner has to continue working.

Despite having employees, the business owner is still working a million hours... but the business never seems to grow to the levels that the business owner is hoping for - even though they're working harder than they ever have.

Does this sound familiar?

Let's explore how this happens.

The average business owner that wants to grow their business - but find it very hard to grow successfully... tends to do the following.

They have a business - and it's growing. Early in the business it's just the owner and maybe a few others. The business is growing, and the owner is working a million hours.

The average business owner knows that they should employ staff, but they put it off and put it off, until they can't possibly cope with the workload anymore.

So they hire new staff at the last minute.

Usually the new person is employed in such a hurry that the business owner doesn't have the time to train them. Because the business is so busy.

After all, the business owner has been working a million hours, so they're probably feeling a bit stressed and overwhelmed.

They're typically not feeling in control and calm - that's for sure.

And the business owner usually doesn't have a system to hire appropriately skilled or passionate people.

Because they don't have a proven hiring system, the staff that are employed can often lie their way through interviews telling the owner that they do have skills - when they actually don't.

You know how the story goes...

Anyway, a new person is hired.

But because the business is busy, and the business has no real induction or training system to get the new employees up to speed - the business owner continues to focus on doing the work themselves.

When the owner checks to see how the new employee is performing, they get disappointed because the new person doesn't have the 'skills' or the initiative to do things properly.

So the business owner steps in to 'do it themselves' because they think that they can 'save time' by doing it themselves.

It's at this time the business owner starts proving to themselves that 'no-one can do it as good as me'.

And they are correct. Of course no-one can do it as good as them - because no one has taught the new employees properly.

So the average business owner continues to do the 'day-to-day' things, and take over from their staff when the staff aren't doing the right things...

By continuing to do the work that the employees are suppose to do, the staff very quickly realize that the business owner will always 'save the day'.

So they back off on their productivity, and their passion.

The staff quickly learn how to 'hide' in the business so that they just get by.

They become 'clock watches'. They turn up to work, to watch the clock and as soon as it turns 5pm - they're out of there.

And this hurts your customers. Because the customers of the business receive inconsistent levels of service.

The customers quickly begin to realize that if the business owner serves them - they may get extraordinary service.

And if the staff serves them - they'll get inadequate service.

If the service is poor and inconsistent the customers will start to get annoyed. They'll literally ask for the owner every time they come into the business. Because they know they'll get the service they want.

And that's a sign of a poorly trained team.

As a result the customers end up going somewhere else, the business suffers, the sales and profits dwindle - and the business owner blames it on the 'staff'.

The business owner may then go into "see I told you I can't find the right people'.

The average business owner has tried to grow the business, yet misses a few crucial things that makes them miss out on the rewards of a successful business.

The result is unhappy staff, unhappy customers, a business that barely makes any money - and an owner that works around the clock, stressed and overwhelmed for little or no return.

Well it doesn't have to be that way!

You can quickly and easily turn this around, if you're in this position, or even better you can completely avoid it by following my guidance.

Every great business owner that I know, that has successful business growth follow a number of specific steps to get them out of the situation I've just outlined.

And it's crucial for the growth of your business too.

It's wonderfully easy when you learn how to do it for your situation.

Let's look at what the best business owners achieve by following these specific steps - and what you could possibly achieve by following my guidance.

Firstly - your staff will have the right skill sets and attitude to work in your business. Plus they'll improve and grow rapidly (faster than you may think). This means that you can comfortably rely on them to get the 'job-done'.

By focusing on getting the team up to the standard you can be assured that in a few weeks or months they'll be at the point where you can depend on them.

They'll be doing a great job and delivering consistent levels of service.

As a result you can now forget about having to 'look over their shoulder', or forget about having to 'save the day' like other average business owners.

Because your staff are now producing - you have freed yourself up from the day to day running of the business - so you can focus on ways to grow and improve your business.

And you can even spoil yourself with reduced work hours, time off and even holidays.

Imagine that?

Now, back to your staff.

Because they're learning, growing and producing you'll be happy with them and they'll be happy with themselves - and of course they'll be happy working for you.

And it'll rub off on your customers.

Why?

Because your customers will get great consistent service from your entire business.

So what will this mean to your business?

For a start, your customers won't always be asking for you, because they know your staff are consistent - so you won't feel trapped.

Because of this consistency your customers will reward your business with their repeatable profitable custom, positive word of mouth and ongoing referrals to your business.

Now you'll have a business where the team are growing and happy, your customers are happy and raving about you, and your financials are healthy and very profitable.

That's right, your business will be profitable which means you'll be making great money - and remember, your staff will be doing most of the work... so you'll not only be making great money - you'll also have ample free time.

Can you see, hear and feel what's happening to your business?

Multi-millionaire business owners always tell me that the most important part of their growth - is good people. They'll always hire people that know more and perform better than them on the certains task they are employed for.

People are one of your greatest assets as a business owner. And like any asset you need to invest in it to get returns.

Invest your time and your focus on growing your people to do better than you. That way you'll have the time to grow your business.

On my one-on-one business coaching program I take my clients through this process step by step so that they can fast track their growth - with the safety and peace of mind knowing that they are following a process that has worked time and time again.

Copyright © 2007 by Casey Gollan. All Rights Reserved








Business Coach, Mentor And Growth Specialist
Casey Gollan, Business Coach, Mentor And Growth Specialist. Grows $1 Million p.a. Small Businesses Into $2 to $5 Million p.a. Businesses Over a 2 to 3 Year Period.


Tips for buying a small business

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INTRODUCTION

Going into business for yourself is a big step, one that can be full of apprehension and even fear. Almost 90 percent of all those who purchase a small business have never owned a business. Most of them bought a business that was different than what they had been looking for. These buyers had the opportunity to explore the marketplace and subsequently found a business more to their liking. In most cases, the seller financed the sale.

As you begin your search, keep in mind that running your own business is more than a job; it is a lifestyle change. In most cases, it is a very big lifestyle change. Usually, you will be working longer hours, making all of the decisions, and, as the expression goes, "you will be the chief cook and bottle washer." In other words, you will be doing all of the work from running the business to, in many cases, sweeping the floor and changing the light bulbs.

Most buyers are looking for many of the following in considering the purchase of a business:

o Pride in the service or the product

o Flexibility

o Income

o Control of your own destiny

o Recognition

o Security

o Privacy

o Status

o Customer and employee contact

WHAT TO LOOK FOR

1. How long the business has been in business.

A business with a long track record means there are good reasons to be operating. It will be well known in the area, and people will be used to patronizing the business or using its services. The longer it has been in operation, generally, the better the business.

2. How long the present owner has owned the business.

The longer the present owner has been in business, the more likely he or she has been successful. People don't stay in business if they are not making money.

3. Why the present owner is selling.

If the owner has been in business for six months, is 37 years old, and wants to retire, you should be suspicious. The more valid the reason for sale, the more realistic the seller will be in considering your offer. However, keep in mind that after five or six years or more, people do get restless, "burn-out" sets in, and people look for new challenges. Why the seller is selling is an important question - get the answer.

4. Why books and records are important.

The financial records are a good indication of how well the business has been doing over the years. Keep in mind that tax records are not designed to show the business in the best light: no one likes to pay more taxes than they have to, and owners of businesses are no different. Generally, tax returns are a worst case scenario. You need to be able to look at the expenses and discover which ones are non-cash items, such as depreciation, and business use of home and vehicles. How important was the business trip to Las Vegas? A professional business broker can point these items out to you. When in doubt, however, seek outside assistance.

Keep in mind that financial records are only history. There are no guarantees that they will or can be duplicated or repeated. All of your profits are future. In the final analysis, the financial records of the business are an indicator of what the business has done; what you do with its future is up to you.

5. How to determine if the seller is reporting all income.

The simple answer is - that you can't! Not reporting income is against the law. You should consider only the income that the seller can show you. We all know, of course, especially in cash type businesses, that there is the possibility that the seller is not reporting all of his or her income for tax purposes. This "underground economy" has been well-documented and is in the billions of dollars. Many sellers will tell you about how much they are "skimming," but you should ignore their statements, since they have no way of proving these amounts. In determining whether a business is the right one for you, you should base the decision on the figures actually supplied to you by the seller.

The Bottom Line

Being in business for yourself can be a daunting prospect. There are no guarantees. At some point, after all of your investigation is completed, you will still have to make that "leap of faith" that is necessary to proceed with the purchase of the business. You will have to work hard, perhaps even "tighten your belt" a little and perform many different jobs to be successful in your own business. But, if running your own show, making your own decisions, not having to worry about job security (remember, no one can fire you from your own business), and just being on your own are important - then owning a business is for you. After taking this leap of faith, almost all business owners will tell you that they would never go back to being an employee.

LOOKING AT THE NUMBERS

What should you look for when considering a business to purchase?

Unfortunately, too many prospective buyers want to know the asking price first and then ask how much money they can make. These are the wrong questions to ask initially. You need to know how much cash the seller requires as a down payment. No matter how good the numbers are there is no point in looking at a business if the seller wants three times as much cash as you are willing to invest. Remember, the actual amount of money a business earns is usually much more than just the bottom line. A smart approach is to get more information on the business, and even make a visit, before ruling it out or getting too involved in the numbers. It's all part of the learning process.

THE BUYING PROCESS

One of the most common questions asked by those who have never purchased a business (which is incidentally about 90 percent of those looking to buy a business) is how do you actually buy a business. There is no right or wrong way to buy a business. However, it is important that you get answers to all of your questions and that you have all the information necessary to make an informed decision. Here are the steps to buying a business that over the years have become the most efficient and practical:

Get the Basic Facts

Get preliminary information on price, terms, income, cash flow, and general location. There is no point in continuing the buying process if the amount of cash necessary to buy the business is more than you are willing to invest. At this point, don't worry about the full price. It's important, but the key factor is the amount of cash that is necessary to buy the business. There is very little outside financing available such as banks, etc., for those who are purchasing businesses. The great majority of business purchases are financed by the seller. This is why the amount you are willing to invest is a key issue.

Also, the business has to be able to meet your basic financial needs. You always expect a business to improve under your ownership, but you have to be able to meet your living expenses as well as meet the debt service of the business. It is also important to remember that almost all purchase prices and down payments are negotiable. In fact, businesses generally sell for about 15 percent to 25 percent less than the original asking price. There is an old adage that says, "the more cash you are willing to invest in a business purchase, the lower the full price; the less cash you are able to invest the higher the full price.

Visit the Business

Visit the business to see if you like the location and the looks of the business itself - both inside and outside. This is a visual inspection. Pretend you are a customer. It's not time yet to talk to the owner. If the business is the type that does not lend itself to a visit, make an appointment with the seller to inspect the business, or have the seller's representative schedule a visit. There is no point in going any further if you don't like the physical location of the business or the appearance of it.

Get Questions Answered

If you like the business so far, it's time to get your questions answered. For example: What is the rent? How long is the lease? What have been the sales for the past few years? Can the seller support the figures you have been told? Now is not the time to have the seller's books and records completely checked. There will be plenty of time to do that and review other important issues during the due diligence phase. This is the time to get those questions answered that have a bearing on whether you may want to own and operate this particular business.It is also the time to visit with the seller to get your questions answered about the business itself.

Make an Offer

If you now have your basic questions answered and you want to proceed with purchasing this business, it is time to make an offer, subject, of course, to verification of all the information you have received. The main purpose in making an offer is to see if the seller will accept your terms, price, and structure of the sale itself. Remember, you will have the offer subject to your verification of the important information. It doesn't make sense to employ outside advisors and go through the time and expense of due diligence unless you can come to financial terms with the seller.

Due Diligence

At this point, you hopefully have arrived at a meeting of minds with the seller, and you are ready to begin removing the contingencies, performing what is commonly called due diligence.

*Insider Tip

Unless you are completely familiar with the type of business purchased, it is beneficial to include as part of the agreement that the seller will stay with you (30 days is fair, with perhaps another 30 to 60 days of telephone consultation) a sufficient length of time to teach you the business - at no charge. If you want the seller to stay longer, it may be best to offer to pay him or her a consulting fee of some type.

IS BUYING RIGHT FOR YOU

The next step to buying your own business is to make sure it is the right move for you and your family. Owning one's own business is still very much "the great American dream," but it's not for everybody. Here are some questions that you should ask yourself before taking the next step. How long have you been thinking about buying a business? Many people are interested in buying their own business, but are not willing to make the commitment necessary to move forward. They continue to look just like those who continue to look at new and expensive automobiles, but will never spend the money necessary to buy. One veteran observer has said that the longer you look the less likely you are to buy.

What is your time-frame to find a business?

If you're thinking of buying a business in two years, it's good to start your education. BizBuySell is a good place to start. Keep in mind that it really doesn't make much sense to start your search now, since any business you find now will have been sold by the time you are ready to buy. It's important, however, to arm yourself with all of the information and education available before you begin the search.

What is your primary reason for buying a business?

If you are not motivated to buy a business, you won't. You must go into business for yourself and for the right reasons. If you're tired of the corporate world, just have a "job-job," or perhaps even a dead-end job, then business ownership may be right for you. Certainly if you're unemployed or being transferred to a place where you don't want to go - buying your own business can be a viable solution.

Are you willing to invest a majority of your liquid assets in a business?

Buying your own business requires a serious financial investment. If you're the type who does not want risk, you might want to rethink owning your own business. It is not for the faint-hearted.

Are you independent enough to make your own decisions and be in control?

Operating a small business requires continual decision making. You're the boss, and you are in control. All of the decisions are yours - right or wrong. And, you will make a lot of wrong ones. The question is, can you recover and keep going forward? If you brood about poor decisions or they keep you awake at night, owning your own business may not be for you.

Is your family supportive of your owning a business?

If your family, especially a spouse, is not behind you 100 percent, then you should think twice about business ownership. It's very important that you have the support of your spouse. He or she has to understand that running a business can be time-consuming. On the plus side, however, many businesses do allow for flexibility so you can attend the afternoon little league game.

Are you open-minded about different opportunities, or are you looking for a specific type or business?

It's best if you are open-minded, especially if you are a first-time buyer. There are many types of businesses available, and you don't want to limit your choices. You should be looking for a business that will provide the income you need (or ability to do so), that you can afford,that has numbers that work, and, most importantly, that you can see yourself running.

Do you have reasonable expectations?

Do you think that you can buy a business with lots of cash flow for $100? It's important that you have realistic expectations about what your money will buy. Many sellers are willing to assist in financing the sale of their business, but remember, they're not going to give it away. Keep in mind that many business owners have spent years building their business, and it may represent the biggest financial asset they have. They're not going to just hand it over to you.

Can you make the "leap of faith" necessary to buy a business?

Many prospective business owners do their homework, do everything necessary to begin the purchase process, and then back out of the transaction. They just don't have the courage to go forward. There is nothing wrong with that; not everyone should buy and own their own business. However, if you don't think you can part with your money and take over operating the business on your own, you may want to take a second look at business ownership.

Do you need a guarantee?

If you are looking for a guarantee or a sure thing, then business ownership is not for you. You can and should look at all of the financials, tax returns, and all of the books and records. Remember, however, that they all represent history. You can't buy anyone else's history. A new owner makes changes, no matter how subtle. Their management style is different, and times change. You have to look at the business with the attitude of how you can improve things. The financial history of the business is certainly important, but it does not guarantee the future of the business - you do.

COMMON BUYER QUESTIONS

Why should I buy a business rather than start one?

An existing business has a track record. The failure rate in small business is largely in the start-up phase. The existing business has demonstrated that there is a need for that product or service in a particular locale. Financial records are available along with other information on the business. Most sellers will stay and train a new owner and most will also supply financing. Finding someone who will teach you the intricacies of running a business and who is also willing to finance the sale can make all the difference.

What is the real reason people go into business for themselves?

There have been many surveys taken in an attempt to answer this question. Most surveys reveal the same responses, in almost the same identical order of priority. Here are the results of a typical survey, listed in order of importance:

To do my own thing, control my own destiny.

Don't want to work for someone else.

To better utilize my skills and abilities.

To make money.

*It is interesting to note that money is not at the top of the list, but comes in fourth.

How are businesses priced?

Generally, at the outset, a prospective seller will ask the business broker what he or she thinks the business will sell for. The business broker usually explains that a review of the financial information will be necessary before a price or a range of prices can be suggested for the business.

Most sellers have some idea about what they feel their business should sell for - and this is certainly taken into consideration. However, the business broker is familiar with market considerations and, by reviewing the financial records of the business, can make a recommendation of what he or she feels is what the market will dictate. A range is normally set with a low and high price. The more cash demanded by the seller, the lower the selling price; the smaller the cash requirements of the seller, the higher the price.

Since most business sales are seller-financed, the down payment and terms of the sale are very important. In many cases, how the sale of the business is structured is more important than the actual selling price of the business. Too many buyers make the mistake of being overly-concerned about the full price when the terms of the sale can make the difference between success and failure.

An oft-quoted anecdote may better illustrate this point: If you could buy a business that would provide you with more net profit than you thought possible even after subtracting the debt service to the seller, and you could purchase this business with a very small down payment, would you really care what the full price of the business was?

What should I iook for?

Obviously, you want to consider only those businesses that you would feel comfortable owning and operating. "Pride of Ownership" is an important ingredient for success. You also want to consider only those businesses that you can afford with the cash you have available. In addition the business you buy must be able to supply you with enough income - after making payments on it - to pay your bills. However, you should look at a business with an eye toward what you can do with it - how you can improve it and make it more productive and profitable. There is an old adage advising that you shouldn't buy a business unless you feel you can do better than the present owner. Everyone has seen examples of a business that needs improvement in order to thrive, and a new owner comes in and does just that. Conversely, there are also cases where a new owner takes over a very successful business and not soon after, it either closes or is sold. It all depends on you!








CEO of Africabrokers. Silvan a BSc & MBA graduate is a dynamic, results and systems driven business management professional with an outstanding track record of success in delivering critical leadership, strategic plans, and sustainable results in operating efficiency and productivity improvement, technology advancement, cost reduction, sales and revenue performance. Distinguished career focused on innovating new strategic directions, creating revenue opportunities, spearheading policy development, and driving organisational growth and success across broad disciplines. Key Expertise: Business & Strategic Planning, Financial Planning and Capital Raising, Managing Complex Mergers, Acquisitions, Management Buy-ins, Buy-outs and BEE transactions. Article by: www.africabrokers.com


Monday, 8 November 2010

A guide for buyers of Business now first

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Owning your own business can be very rewarding both financially and emotionally. Business ownership provides innumerable opportunities to put ideas into action and reap the rewards (and sometimes the pain).

Buying a business, rather than starting a business from scratch, has many advantages:

The business should have established customers who will provide revenues for the business almost immediately. Unlike a start-up business that needs to find customers and take them away from another business, the business buyer must retain it's existing customers. It's always easier and less expensive to retain customers than to try to find new customers.

The business you buy will have systems in place that you do not need to invent. Although it's rare for any business to have perfect systems, the business you buy will certainly have a certain way of doing things. Business buyers should always make certain they understand why the former business owner did things BEFORE changing it. The laws of unintended consequences are inescapable. Make sure you know exactly what effect changes will have before you make changes.

Financing the Purchase of the Business

Financing a business purchase is important and should be considered carefully. For businesses valued under $2,000,000 the primary financing options are the lenders who offer Small Business Administration (SBA) guaranteed loans or the business seller.

What are the advantages or disadvantages of each?

First let's look at Seller financing.

Many books on "How to buy a business" claim that a buyer should not buy a business if the seller isn't willing to finance the sale of the business. The books often say to offer the seller 25% - 40% as a down payment then pay the balance off over 5 -10 years. The theory is that the seller who finances the sale has confidence in the business and, since the buyer owes the seller money, the seller will "help" the buyer succeed.

Makes sense, right? Not so fast. Let's look at seller financing from the perspective of a business owner who wishes to sell a good business. A seller who sells the business and finances the sale takes HUGE risks. What are the risks? First, what if the buyer ignores the seller and runs the business into the ground? What if the buyer changes the whole business operation to a model that doesn't work? What if the buyer is terrible with employees and he loses some? The "experts" say so what, the seller gets the business back and still has the buyer's down payment. Sellers of good businesses don't want the business "back". If they wanted the business back they wouldn't be selling it.

Here is another reason why a business owner who wants to sell a good business shouldn't need to finance the sale and why a buyer shouldn't want the seller to finance the deal either. SBA lenders often receive a government guarantee on a business acquisition loan (7A) of about 75%. This means an SBA lender can't lose more than 25% even if the business fails and the loan goes bad. If the seller finances the deal the seller does NOT have a 75% guarantee so seller's who finance deals should charge a lot more for financing (or selling price) to account for the increased risk compared to an SBA loan. This increase in financing costs puts more leverage on the buyer and actually INCREASES the likelihood the business will fail. That's bad for the buyer and the seller.

Another common reason for seller financing is many "experts" say that small business records are so bad that only the seller knows if the business is making a profit so a seller who is willing to finance is defacto saying the business is profitable. As always, two sides to the story. Here's an example of why this is a fallacy. Let's say Mary owns a business that does carpet cleaning and some customers pay by credit card, some by check and some cash. Let's assume for whatever reason the cash income can't be identified in the company books. The books show the business is making a marginal profit but Mary says she gets about $1,000 per week in cash that needs to be considered when judging the selling price.

The books show the business is making about $20,000 per year, Mary says she's taking another $50,000 that can't be identified in the books. That's a total of $70,000 and Mary wants to sell the business for $140,000. She'll take $64,000 down and a note for 5 years at 8%. Good deal? 2 times earnings is a good deal, seller financing is good, right? Wrong. What if Mary is lying about the $50,000? You bought the business, she has your $64,000 (which is more than the books show she makes in 3 years). So you stop making payments and Mary gets the business back. Who got the better deal, Mary or the buyer?

TIP: If a business has provable cash flow and a reasonable price AND a buyer whose financial circumstance is in order, there is an SBA lender who will provide financing. There are plenty of businesses available that have provable cash flow. Inexperienced buyers should be very, very cautious about purchasing a business where the earnings can not be ascertained with reasonable certainty.

Advantages of SBA financing

Understanding the steps in getting an SBA loan makes it clear why the buyer and seller are both generally better off if the seller does not finance a transaction.

Requirements of buyer to get an SBA loan: good credit, manageable debt relative to the ability of the buyer to service the debt, buyer income requirements BELOW that which can be provided by the buyer and business.

Requirements for business to be eligible to be purchased with SBA loan: provable earnings of business adequate to make debt payments and income to seller adequate to meet sellers's personal needs, business will likely be appraised by bank to make sure what the buyer is paying for the business is reasonable.

A buyer benefits using SBA for financing because the SBA will likely add discipline to the process for the buyer and reduce the likelihood that a buyer will make a critical mistake.

Due Diligence

Buyers - Before closing on the purchase of a business buyers should conduct adequate due diligence to ascertain if what they "think" they are buying is actually what they are buying. Due Diligence has 4 primary areas:

Industry - There is usually public information available for almost any industry. Buyers should do research to see if there are any industry issues that will positively or negatively impact the business.

Business Finances - Business buyers should retain an accountant to assist them in looking at the business books to confirm the business is earning what is claimed by the seller.

Business Operations - Before closing there is usually only so much that can be done. An important activity is to meet with the seller and discuss in detail what the seller does on a day-to-day basis so the buyer can get comfortable either filling that roll or bringing in people to fill that roll. If the seller is the guy who also repairs all the trucks then you either need to be able to repair the trucks or find someone who can!

Legal - Buyers should engage an attorney to review closing documents and make sure that the buyer understands their rights and obligations in any contracts. Good legal work BEFORE closing usually means smoother sailing after the business purchase.

Buying a business could be the best thing you ever do or maybe the worst thing. Many businesses are sold every year and the vast majority of those transactions turn out to be good for the buyer and the seller. Do your homework and you will likely be rewarded handsomely.








Copyright 2007 Daniel Elliott

Austin Business Broker

Austin Business For Sale

DAN ELLIOTT: Mr. Elliott is a Certified Business Intermediary as designated by the International Business Brokers Association. A member of the Institute of Business Appraisers,International Business Brokers Association and the M & A Source (a national organization of Merger and Acquisition specialists).Over 10 years experience in mergers, acquisitions and business sales. Experienced in representing companies with revenue up to $50,000,000. Extensive experience in Business Valuation services to determine Fair Market Values for businesses. Mr. Elliott has extensive expertise in distribution, service and manufacturing businesses.


Sunday, 7 November 2010

The secrets of launching A Flower Profitable business sales

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I have sold in the retail market, millions of fresh roses and fresh flower bouquets successfully for 32 years. I bought a retail nursery and florist across the street for one of Connecticut's largest cemeteries, on a busy route that had several thousand vehicles pass every day. I made deals with all the flower wholesalers at first and then I proceeded to undercut the price of all the flower shops in the state. My main objective was to create a customer base that would frequently buy flowers "just because". My customer service was created with an over friendly staff of a great combination of super personalities and knowledge of the business, which was simply liking people and helping them to satisfy a feeling. My motto to my staff was to let them know that we not only sell roses and flowers but mostly, We sell Love, we sell feelings! My obsession with quality and consumer service was so successful that it spread through out the community and the state.

Wow, I can remember Valentines week with a staff of over 50 wonderful employees wrapping and boxing roses through out the day and nights, get ready the rush of the year. I was so careful with every dozen to prepare each like it was for my mom or wife. We dethroned all the roses, cut them under water, to hydrate them according to the "Chain of Life" procedure. They re-hydrated them in solutions to further guarantee and extend their vase life. Our 4,800 Dozen roses that we sold that week were our best advertising for the rest of the year. Heck, they lasted over 10 days which pleased amazed our dedicated customer's recipients. What a great feeling to know how many people we made happy.

Selling flowers at strategic locations has become a highly profitable retail business for many enterprising individuals. These entrepreneurs are taking advantage of a market that is, for the most part, impulsive in nature. Many people buy flowers on the spur of the moment, and the presence of a flower vendor is usually their inspiration.

Very often, men on their way to a date will see a roadside flower vendor, and suddenly find the idea of taking flowers with him quite appealing. The same holds true for many men heading home from work. If they're married, these men will often purchase flowers from roadside vendors for their wives. The flowers are fresh, attractive, and package to sell, not as nearly as expensive as an arrangement from a florist, and the buyer doesn't even have to get out of his car. Women are also potential customers for flower vendors. A woman will buy flowers to add color and decoration to her house or apartment, or sometimes, just to cheer up a friend. In any case, the purchase is usually made on impulse, brought about by the availability of a flower vendor.

Starting a flower vending business is not difficult. No previous experience is necessary. There's only a minimal initial investment required, and you won't need a lot of equipment. What you will need is an adequate supply of fresh, attractive flowers, a good location for selling, and a cheerful disposition. After all, you will be dealing directly with people, so a good disposition is a necessity. You can begin as a home-based operation with an investment of as little as $300. If you live close enough to the market you want to reach, your own garage can serve as storage space as well as your preparation area. Your operating expenses will be minimal, and you'll have the opportunity to realize a high margin of profits.

Depending on the size of your investment (both time and money) and the size of your trade area, a flower vending business could net anywhere from $20,000 to $175,000 per year. It can be an extremely high profit business, if you choose your selling locations wisely, and offer only fresh, attractive flowers.

BUSINESS OVERVIEW

Successful operation of any small business depends on several key factors. Perhaps the most important is the ability to be a good business manager. Although no experience is necessary to start-up a flower vending business, some small business management training could give you the edge needed to insure success. Most community colleges offer night school courses in small business management and, if you are unsure about your business knowledge and or management skills, enrollment in such a course would be a good idea.

Here are other basic steps involved in the successful operation of a flower vending business:

(1) Know your market. Proper knowledge of your market will enable you to set-up at the best locations. You'll need to know the high-traffic areas as well as the time of day traffic is at its peak in order to take advantage of a roadside operation. You'll also need to investigate other potential locations such as restaurants, malls, local festivals and flea markets.

(2) Obtain a dependable source for fresh flowers. Your business depends on the quality of your merchandise. And since you are selling flowers, they must be fresh and attractive. You should locate a quality wholesaler and establish a sound working relationship. You should also have some knowledge of the types of flowers people are most likely to purchase from a vendor.

(3) Establish a workable preparation area. Ideally, your preparation area should be centrally located within your sales territory. The space needed should be adequate for storing flowers and materials used for the preparation of bouquets, as well as for the preparation itself.

(4) Hire the right help. Unless you plan a one person operation you'll need to hire some dependable helpers. The people you hire should be outgoing and trustworthy with the ability to deal with customers in a professional and courteous manner. If your flower vending business is to be successful and highly profitable, you'll probably need to have other people helping you. One example is a successful flower vendor in Washington State who employs young people, pays them minimum wages, and enjoys a brisk business at several key locations.

(5) Advertise and promote your business. Effective advertising and promotion can help generate sales and profits. Knowing how to advertise and promote your business, especially in the beginning, is a key step in the success of any business operation.

All of these steps can be taken with a relatively small initial investment, and your flower vending business can be in operation, and realizing a profit, in just a few weeks. However, prospective entrepreneurs should also be aware of, and comply with, any rules and regulations that apply to this particular business in their area.

Depending on the location(s) of your flower vending business, you may need a license to operate. If you plan to set- up a flower vending stand on a city street, or any roadside operation within city limits, you'll most likely need to get a permit. The best thing to do is consult a trusted attorney, or contact the business-license department in the city your market covers to find out what licensing requirements you must meet.

If you plan to sell flowers in restaurants and nightclubs, it is usually not necessary to have a license. Also, if your roadside operations fall outside the city limits, you probably won't need a license because most counties don't issue them. Again, you should check with your attorney, or the proper licensing authorities in your area before you start selling flowers.

Another consideration for a new business owner and employer is taxes. As an operator of a business you will be responsible for collecting and sending in various state and federal taxes, as well as certain taxes you will have to pay yourself. If you are not familiar with your tax responsibilities as a business owner, consult a qualified accountant or contact your local IRS office to get the information you need.

You should also consult with an accountant as to the type and arrangement of bookkeeping and record keeping best suited for your flower vending business. Records of your business operations are, of course, helpful in the successful management of the business. These records need to be as accurate and permanent as possible in order to ascertain any tax liabilities. They should include business income, deductions, credits, and any employee information. As well as any other information required by federal, state and local regulations.

EQUIPMENT AND INVENTORY

Since a flower vending business does not require an abundance of sophisticated equipment, start-up costs can be kept to a minimum. The basic equipment necessary should not cost more than $200 and can usually be found at a wholesale florist supply house. You can also get your supplies and equipment from several firms that cater to florists. You should be able to find a complete directory of such firms at your local library. You can also contact several florists (not necessarily in your market) and obtain this information.

For the preparation of your flowers and floral arrangements, you'll need stem cutters and a supply of cellophane or florist's tissue. You will also need several plastic buckets to keep the flowers in water and fresh while being transported as well as on your selling sites. To prepare the flowers for selling, you will need a preparation area. This area should be cool and shady to help keep your flowers as fresh as possible. As mentioned earlier, a location central to your area of sales is most desirable. If your own garage fits that description, you won't have the added expense of renting space.

Your preparation area will require several storage containers and a table. Some refrigerated coolers may be necessary, but since most flower vending businesses pick up their flowers on a daily basis, and sell them as quickly as possible, that sort of storage requirement should not be excessive. However, during the summer and winter months, you may need an air-conditioner and portable heater to keep your flowers in salable condition. If you don't already have these items, you can count them as a business expense and they are tax deductible.

Your inventory will consist of flowers. You can purchase these from wholesalers found in most major cities. You can find these suppliers by looking in the Yellow Pages of your area's metropolitan phone directory. Look under 'Florists, Wholesale.'

Since you will probably have some flowers left over after each day's sales, it is essential that your inventory be fresh when purchased from the wholesaler. You can check the freshness of your flowers by examining the heads of roses to see if they are tight to your touch. Also, if the blossom appears purple around the edges, the flower is probably too old. When buying carnations, look to see if they are firm and heavy-stemmed. If carnations are somewhat discolored, don't buy them, because they probably aren't fresh.

The largest part of your inventory will most likely be roses. Roses are the most desired flower, and they are expensive. Prices will vary with the season and area of purchase. Carnations will also make up a substantial portion of your inventory. These flowers, while very attractive and popular, are much less expensive than roses.

Other flowers you may want to add to your inventory are gardenias, tulips, daffodils, and orchids. Some of these flowers are expensive and usually appeal to an older set of customers, so don't go overboard when dealing with your supplier. Roses and carnations will be your best sellers. Your best sales months will be during the holidays so you will have to make sure you have an adequate supply of flowers. You'll also want to have a supply of appropriate flowers to match the specific holiday, lilies for Easter, poinsettias for Christmas and so on.

CHOOSING A LOCATION

Once you have a marketable inventory, you will need to set- up in a good location. If you choose the wrong location your business will not be successful. For flower vending, the two best selling locations are restaurants and roadsides/street corners.

Restaurants are good selling locations if they attract large lunch and dinner crowds. Especially good restaurant locations are those with specific themes. French, Italian and Mexican restaurants are usually profitable locations for flower vendors. You'll also find successful flower vendors in upscale lounges and taverns.

In general, restaurants and lounges with a quiet and romantic ambiance, are usually conducive to flower vending. Many restaurants are attracted to the idea of flower vending at their places of business because it offers an extra 'romantic' touch to their service. Usually, the management of a restaurant will charge the flower vendor only a nominal fee. In some cases, the fee may simply be a few flowers to arrange and display throughout the restaurant.

For street-selling locations, freeway exits and stoplights on main streets are preferred. These areas represent the highest amount of traffic therefore, the largest number of potential customers. Ideally, your locations should be along streets, highways and exits that feature a great deal of late afternoon and/or early evening rush hour traffic. These conditions are ideal if you can find an area where the traffic must come to a stop, or at least has to slow down. Your location must be plainly visible so that oncoming drivers will be able to see you in enough time to get out of traffic and pull off the road.

It is important that you stay away from roadside locations that could limit the ability, or desire, of your customers to reach you. Never set-up at dangerous intersections, along steep hills and other areas that could be hazardous. You could lose a lot of business if potential customers don't stop because they fear getting struck by other traffic.

When selling on city streets the most desirable locations are those that take advantage of both automobile traffic and pedestrians. You should try to find a spot in an area of heavy pedestrian traffic as well as vehicle traffic. Business will usually be better when people are on their way home. If you know which side of the street is the 'going-home' side, that's where you should set-up.

Operating a flower vending business allows you more flexibility than many other businesses have. You won't have to stay in one location, if it proves unprofitable. You can move around as often as it takes to find the locations that afford you the most success.

You may have to experiment in the beginning. Simply keep a record of the number of flowers sold at each location and the number of hours at each spot. From these records you'll be able to determine the most satisfactory locations for your business. You will also have a better idea as to the actual inventory you need so you can cut down on the amount of excess that results in spoilage.

HIRING PERSONNEL

In order to be successful in the flower vending business, it may be necessary to hire help. If that's the case, not just anybody will do. As the owner/manager of the business you will have to hire people who are right for the job of selling flowers. Although this may seem difficult, there are some guidelines that many flower vending businesses follow quite successfully.

Students and people seeking part-time jobs are the most likely candidates for employment in the flower vending business. Your interviews with such prospective help should be designed to ascertain if they are trustworthy and dependable. You also need salespeople who are outgoing, enjoy interacting with other people, and who are well-motivated.

In most cases, if you are selling flowers in restaurants, attractive young women are the best salespeople. Usually these women are dressed in a costume that serves to identify your business. The most basic sort of identifying costume, or dress, would be a white blouse and dark skirt. As the business 'blossoms' you may want to invest in more elaborate costumes depending on the image you want for your business as well as the particular restaurant theme.

Usually, an employer can find adequate part-time help simply by placing a catchy ad in the help-wanted section of the classifieds of the local newspaper. The ad should allude to making 'good money' for 'enjoyable' part-time work. Response to the ad should be such that you can be selective in hiring the help you need. You should also get excellent response with an ad in college newspapers. And you can try placing the ads on school bulletin boards to elicit even more response.

Once you begin interviewing prospective employees, it is imperative that you have them fill out an application form and supply you with at least three references. And don't just read the references -- check them out. You should know as much as you can about your help before you hire them.

Once hired, make sure all employees know exactly what their duties and responsibilities are, as well as their salaries. You should also plan to review each employee's performance on a regular basis. These reviews, or evaluations, should be shared with your employees so they will know how they are doing and how they can improve, if warranted.

DAY-TO-DAY OPERATIONS

Operating a flower vending business does not require hours of strenuous physical labor. However, that does not mean flower vendors lead a life of leisure. With any business there are demands that require time and effort. The flower vending business is no exception. You and/or your employees will need to be well organized from the time of preparation until the day's selling is done.

Preparing flowers for sale is an essential part of a flower vendor's work day. In order to be salable, your flowers must appear fresh and colorful. Also, every bouquet you plan to sell must be arranged in an appealing fashion. Therefore, you should allow enough time for preparation so that the job is done right. But, don't overdo it. If you spend too much time on flower preparation, you could be cutting into valuable selling time.

The actual preparation phase should take as little time as possible without sacrificing quality of work. To be as efficient as possible with your preparation time you should organize the process. You can do this in a step-by-step manner.

First of all, you should plan to remove many of the thorns from each rose stem. About half of the thorns, beginning at the bottom of each stem, should be removed. Then, you will need to clip a small portion from the bottom of each stem. This will allow the flowers to absorb water and retain their freshness and color. You can do the clipping with a sharpened knife.

Once you have dethroned and clipped your roses, you will need to place them in relatively warm water. The water temperature should be about 105 degrees. You can leave them in the water for up to two hours and they will be refreshed and colorful when you are ready for the day's vending. All your other flowers must also be properly cared for and prepared so that your entire inventory is appealing to your customers.

Your preparation process should not involve much 'decoration.' People buying single flowers usually won't expect frills such as ribbons or bows. However, you should have such adornments on hand at your selling location in case some customers request them. It's also a good idea to supply your sales team with pins, if corsages and/or short-stemmed flowers are part of your inventory.

Any bouquets you sell should be wrapped in tissue or green cellophane. Not only do the flowers keep better wrapped, they also appear more attractive and are more appealing as gifts. Unwrapped bouquets do not have a particularly neat appearance, and they probably won't stay fresh and colorful as long as they would if wrapped.

How much time should all this preparation take? Well, most successful flower vending businesses spend no more than two to three hours a day buying and preparing flowers. It will probably take a new business a couple of months to become organized and experienced enough to cut buying and preparation time down to two hours per day. That will happen once you learn how to utilize the early morning hours, after the flowers have been purchased from the wholesaler, for preparation of the flowers and organizing your salespeople.

The best times to sell cut flowers, really depends on location. Street corner and roadside vending hours are most successful during the late afternoon and early evening hours when most workers are heading home. Most people are more apt to take the time to make such a purchase as flowers on their way from work than they are on their way to work. Weekends have also proven very successful for many flower vending businesses that operate all day on Saturdays and Sundays.

If you are selling in restaurants, the most profitable time will be during dinner hours. In some cases, lunch crowds will buy flowers, but usually the evening diners will be your best customers in a restaurant. Your salespeople should plan on up to three seating's of diners each evening in a popular restaurant.

Between seating's, your salespeople can canvass the immediate neighborhood for other potential customers, and then return for the next seating at the restaurant. This type of selling will take some practice and experience, but a good salesperson will soon learn how to make the most of his time and inventory.

It is important that you and your sales team be as poised and as professional as possible when selling at any location, especially in restaurants. In restaurants, a low-key approach is much better than an extremely aggressive sales pitch. Be polite and friendly, and utilize flattery as an effective tool. Approach the man in a couple and in a casual and friendly manner ask if he would like to compliment his lady companion with a beautiful flower. Most men will then buy a rose for their dining companions.

ADVERTISING

A flower vending business is unlike many small and part-time businesses in that the usual forms of advertising -- newspaper, radio, TV, and so on -- are not really effective. Since your selling locations may change from time to time, and since buying flowers from a flower vendor is usually done on impulse, you'll need a more immediate form of advertising. It should be something that draws attention to your business as your customers approach your selling location.

For street corner and roadside vending, signs are the best form of advertising. All that's needed is something to let potential customers know you are there, and that you are selling flowers. Seeing your sign, many people will act on impulse and stop to see what you have to offer.

The sign(s) should be hand-made rather than professionally painted. You don't want to appear like a big business. And a hand-made sign will give the impression of a small, family-type operation which usually means more reasonable prices.

In some cases, a new business can get publicity from a local newspaper. If you are selling flowers at a restaurant, you can try getting such publicity by alerting the local newspaper. Most local newspapers use information of this sort as fill, and it could prove valuable to your business.

If, as part of a special promotion -- a grand opening, or a special day such as Valentine's Day -- you will be selling flowers at a business location, send the information to the editor of your local newspaper. You may also want to include a picture of you and/or your sales people. The paper may not decide to run the story, but there's a good chance they will. Either way, you have nothing to lose, and a bit of publicity to gain.

SUCCESS ANALYSIS

Eight contributing factors are measured on a 1 to 10 basis (with 10 being excellent) based on analysis of this opportunity.

1. Time Investment 7 2. Start-up Costs 9 3. Gross Income Potential 8 4. Net Income Potential 8 5. Income in Relation to Investment 10 6. Stability 8 7. Overall Risk 9 8. Potential for Growth 10 Overall Potential for Success 8.63

POTENTIAL EARNINGS

The profit you can realize from a flower vending business depends on several factors:

(1) The size of your market. Obviously larger metropolitan areas supply the greatest source of potential customers, therefore profits. However, your expenses in these larger markets will probably be greater, because of larger inventory needed and a bigger sales team to cover the market adequately.

(2) Good selling locations. Even if your market has a large selection of potential customers your profits will be, at best, minimal if you are not selling in the best locations to take advantage of impulse buying. You have something that practically everyone likes, flowers. But most everyone who buys flowers from a vendor does so on impulse. To be successful, a flower vending business must locate in areas of high-traffic, increasing the possibility of impulse buying.

(3) Consistently marketable inventory. If you try to sell flowers that are too old, wilted and faded, don't expect to do much business. Make sure your entire inventory is always flower- garden fresh and attractive. Also, price your flowers at reasonable rates. That way, both you and your customers will be happy.

(4) A professional sales approach. Whether you are running a one-person flower business, with yourself as the only salesperson or have several salespeople, a friendly, low-key sales approach is essential. After all, you are selling flowers, not used cars. Most people who buy flowers from a vendor are buying them for a special person, and a friendly, non-aggressive salesperson has a good chance of making a sale.

(5) The size of your investment. This does not just apply to the amount of money you invest in the business. Your investment also includes the time and effort you expend on making it a success. As a weekend business, or operating on a daily basis, a flower vending business will require a certain amount of your time and effort above and beyond your monetary investment. The amount of success and profits you can realize depends, in large part, on how much you are willing to put into the business. Some flower vending businesses have reported netting as much as $175,000 a year. That kind of income usually requires a sales team of half-a-dozen or more people working in a large metropolitan area.

Smaller markets should expect a net profit of $10,000 to $20,000 per year. The thing to keep in mind is that there is always a large market for a flower vending business because flowers make personal gifts year-round. Obviously, some months featuring special days such as Valentine's Day, Easter and Christmas will be better than others, but this is not a seasonal business. You should be able to realize a healthy profit every month.

Your initial investment can be as low as $300, or as much as $1,500, depending on what you can afford and the size of your operation. It will most likely take several months until you get adequately organized, and until you discover all the best selling locations. But within a year you should be realizing a nice profit with an efficiently operated flower vending business.

SUMMARY

A flower vending business is one of the best small businesses you can get into, if you are short on investment capital. Very little equipment is needed. You can use your own garage or utility room as a preparation area and for storage. And you can sell your inventory on location, from the back of your own car, van or pickup. You may want to invest in a business management course, if you are uncertain about your management knowledge. But no practical experience is necessary to get into this business.

The biggest expenses will be in inventory, which a good month's sales will recover, any extra personnel you decide to hire, and in any licensing fees you encounter. Advertising costs for a flower vending business are extremely low.

Since flowers have universal appeal, there will always be a sizable market for a flower vending business. If you operate professionally, offering fresh, appealing flowers, establish a good business relationship with dependable wholesalers, find the best selling locations, and hire dependable, competent help, there's every reason to be confident that a flower vending business can be highly profitable. Remember. You must "do what you love and love what you do!" I will let in to my other secret, my profitable "Rose-Express" drive up flower shops.








There will be much more written on this subject.
Charlie Farricielli

Articles all about roses as listed on Rosefarm.Com International site.Rose recipes, rose petal info, rose romance ideas, rose poems." Ancient Rose Lore and more romance history, DRYING AND PRESSING FRESH ROSES,Famous Quotes About Roses and Love, Everything Magical the worlds best Rose Oil! And so much more.

http://www.rosefarm.com/blog/


Saturday, 6 November 2010

Ground rules for successfully sell your business

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Sooner or later you are going to exit your business. The question isn't whether or not you will be ready. The sixty four thousand dollar question is whether or not your business will be ready.

It is estimated that seven out of ten privately held businesses have no succession plan to transfer the business to the next generation of owners. What does that mean to you? It means that if you do not currently have a plan in place to transfer your business to family members, existing partners, management or employees, someday you will think about selling your business.

That day might come sooner than you anticipate. Don't make the mistake of thinking that just because you are not currently ready to retire that you have plenty of time to prepare your business for sale.

As a business broker, I have been involved in a number of transactions (and potential transactions) where the business owner wanted to sell, or in some instances, was forced to exit the business earlier than expected. In fact, retirement is NOT the number one reason why businesses sell.

Here is a list of the most common reasons why owners sell (or otherwise discontinue) their businesses:

Burn-out (the number one reason for selling)

Health issues

Personal diversification

Retirement/semi-retirement

Death

Divorce/partner disputes

Business growing too fast

Second generation not up to the task

Loss of market share

TAKE GOOD CARE

The sad truth is that many business owners do not take good care of their most valuable asset: the business. They don't groom someone to continue the business in their absence, and do not keep the business in salable shape during the time they operate the business.

Business owners tend to get too bogged down in the day to day business operations to worry about--or plan for an event that they perceive won't occur until sometime in the distant future; selling the business.

Unfortunately, fate sometimes dictates circumstances beyond your control, and tough decisions must be made. If your business isn't ready to sell when the time comes, what are your alternatives?

1. Liquidation of business assets--may be a solution, but one that usually returns very little money to the business owner. If the business had been an operating business, the underlying assets (except for real estate) may be outdated and of little use to anyone. At auction, the assets will bring only what the attending bidders are willing to pay. In some instances, underlying assets are sold to liquidators (or scrap) for only pennies on the dollar. Liquidation of a going business often occurs where the owners have become ill or disabled, or need to retire and have not planned adequately for their exit from the business.

2. Closing the business--is even less attractive than liquidation. That is because many who find themselves in this situation have a tendency to "put off" liquidating the underlying assets in hope that maybe someone will come along to buy this business. This almost never happens.

BUILD WEALTH NOW BY PLANNING FOR THE SALE OF YOUR BUSINESS

Okay, so you think you have enough to do without throwing more onto the pile. Am I right? That is why I have written this article for you. It provides a "down and dirty" overview of things that you ought to begin thinking about and planning for right now. Doing so will provide you with an additional safety net that will help safeguard your valuable business asset.

Here are just a few of the benefits of planning now:

A planned sale allows for your goals and objectives on your timetable

You may begin to identify potential buyers

You may be able to create an attractive acquisition candidate

You can begin to understand why a buyer may want to buy

You might learn why buyers would not want to buy--and be able to fix the problems

You may begin to realize the worth of your business now, and learn how to increase the value as part of your retirement planning

BUSINESS VALUE HOUSEKEEPING CHECKLIST

Record All Sales

Business owners often invent remarkable ways to beat the tax collector. But the taxman can be a business owner's best friend when it comes to selling one's business. Income taxes are a great investment in the years immediately preceding an anticipated sale of the business.

Paying income tax proves to the buyer AND the banker that your business operations have been profitable.

Nobody wants to pay more income tax. But consider this example: Ronald Bunk systematically underreported business income by an average of $20,000 per year. Assuming a combined tax rate of 40%, Mr. Bunk saved $8,000 in taxes per year. But, the underreported income also reduced the company's earnings base by $20,000 per year. If, for example, the business could be sold for a multiple of 5x the company's reported earning base---the company would sell for $100,000 less ($20,000 average earning base not reported times the price multiple of 5) than it is really worth!

Without considering the time value of money, it would take in excess of twelve years of (illegal) tax savings to make up for the loss of $100,000 in business value. The lesson: In trying to screw the government, business owners often find themselves on the short end of the stick; often in more ways than one.

Eliminate co-mingling of business and non business assets

A common practice among closely held companies is to co-mingle non business assets and expenses with business assets and expenses. I have seen businesses owning motor coaches, boats and airplanes; all reported as business assets. The costs of maintaining and operating the assets were expensed as regular business operating expenses.

It is true that those businesses (not audited by the IRS) are saving a certain amount of income tax, and providing an extra "fringe" benefit for the owners of the company.

Wise business owners should endeavor to separate non business assets from the business in the three to five years before a planned sale of the company. Doing so will make it much easier to accurately measure and reflect the true earning power of the business, as it will be unfettered by the capital investment in non business assets and the associated costs.

Buyers of your business are generally purchasing future income and benefit streams that will be produced by your business. The leaner and more productive your business is--the more it is worth. It is never too early to begin segregating non business assets from your business, as it may take some planning and time.

Do your own due diligence

Some executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their personal investments reviewed at least once a year, if not more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, regulations or some other necessary reason.

Anyone interested in purchasing your business will perform "due diligence" procedures on your business before closing on the purchase. All too often, sellers are surprised at the skeletons purchasers can find in the closet. These skeletons can reduce the value of your company, and in some cases, kill any chance at closing a sale. What skeletons are your company's closets?

Why not give your business a periodic physical? In essence, I am suggesting you would do well to treat your business as if someone else owned it--and you were the potential purchaser. What problems would you discover that could cause you and your advisors to reduce or withdraw your offer?

Spending the time and money to discover and fix your company's problems now will pay huge dividends in the form of increased company value--which is exactly what you want when it's time to sell.

Compliance with taxing and regulatory authorities

Mountains of regulation often seem to impede a company's growth and profitability. Some regulations might seem rather easy to "slight" or ignore.

Take for example one of my recent sellers who swore to me that the business had no regulatory violations of any type. I reminded the seller that anything "hidden in the closet" would most likely be discovered in a buyer's due diligence (investigatory) process. "Nope--no problems of any kind" I was assured.

Well, guess what the buyer's due diligence turned up? Seems the seller had a couple of shipping/storage containers sitting behind the building--which the sellers KNEW were in violation of local zoning ordinances. How did they know? They had received four previous "reminders" from the trustees about the containers, and the need to remove them.

"Why didn't you mention that to me, or disclose that fact on your disclosure statement?" I asked. "Gee, nothing ever happened and the township never did anything--so we just figured it was no big deal." Was the seller's reasoning.

No big deal, except when the purchaser turned up the non compliance issue, it threw a few extra wrinkles into the mix. In that case, the issue was easily resolved (yet, much to the additional cost and chagrin of the sellers). But, sometimes known violations are not so easily remedied. In those instances, a seller runs the risk of blowing a good deal.

What's the bottom line?

Clean up any tax, industry, OSHA, EPA or zoning issues with which your company does not comply.

Organize and keep records available. One never knows when opportunity might knock. If and when it does knock, will you be ready to strike while the iron is hot? How many times have you heard someone say something like, "I'd sell anything, including my business for the right price?"

Maybe you have even said it yourself. But would you know what paperwork and documents a serious buyer will immediately need in order to pursue the purchase? When a qualified buyer is ready to begin serious due diligence, they will need a variety of company documents.

Following is a partial list of things a buyer will ask for:

o Three to five years income tax returns

o Copies of one to three years quarterly payroll reports

o Three to five years CPA prepared financial statements

o Current year to date financial statements

o Detailed depreciation schedules listing each fixed asset owned by your company

o Corporate Minute Book with updated minutes

o Recent aged accounts receivable trial balance

o Recent aged accounts payable trial balance

o Company organization chart

o Copy of the Summary of Insurance Coverage (provided by your carrier)

o Information about Employee Benefits provided by the company

o Information about Employee Retirement Plans

o Copies of labor contracts

o Copies of other contracts to which the company is a party

o Copies of licenses, registrations for patents, copyrights, trademarks, etc.

The foregoing list is an example of the types of records your company should have up to date and on hand at all times. These records are extremely important to speed the sales process along. Though this advice sounds basic, I often encounter companies whose records are not complete and up to date. This situation can dramatically affect a potential sale.

I suggest using a three ring binder to keep the basic updated records available at all times. This also makes other business needs for the documents much more manageable.

CONCLUSION

You can increase your wealth by knowing a few simple ground rules for successfully selling your business. Just like other owners of closely-held businesses, you know how to operate your business on a day to day, month to month and year to year basis. But your experience in running the business has not prepared you to know how to sell your business.

While the information I provided in this article is not all inclusive, it should help you get started in preparing your business for a successful sale--no mater when the business might be sold.








Grover Rutter has over 30 years' experience advising business owners. A sought after business broker and consultant, Grover is a CPA, Accredited Business Valuator, Certified Valuation Analyst, Business Valuator Accredited in Litigation and an Empire Certified Business Broker. http://www.gruttercpas.com


Corporate logos-your company at a glimpse

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If you are interested in starting your own business, a fitting business logo is mandatory. Business logos not only help you identify your business or products and services, but they also pre-sell your identity. That is, business logos build your brand. And as you are already aware, branding or image building is crucial for any business undertaking.

Your business logo should tell everything that your business stands for in an image, a tagline or a combination of both. Various companies adopt various techniques to achieve the perfect business logo. This is because a business logo is your first, and sometimes the last, impression of your business ideas.

Importance Of Logos

Logos are such an intrinsic part of our lives that we often fail to value their importance. A telephone logo on a signboard tells us there is a phone booth in the vicinity. Water flowing from a tap indicates presence of running water. The three stripe logo outside a shoe store tells you that Adidas shoes are available. The golden arches forming a yummy M outside an eatery tells you that you will get your favorite McDonalds snack inside. One look at the ‘one side bitten into’ apple on a signboard, and you know it is Apple Inc and that you can trust its quality without any hesitation.

Creating or designing business logos are neither child play nor a Herculean task. What you need is clarity of thought, precision in designing and a thorough knowledge of aesthetics. It is good to remember that no two logos depend on the same element of design. McDonalds uses color and shape (bright yellow M on a red background), Apple uses an image (a bitten into apple) and Coca Cola focuses on typeface. But all the three are equally recognizable and unique in their own ways.

Rules Of Business Logos

While deciding on your business logos, lay emphasis on only what your business is all about and what you want to tell the world. Although there are no strict guidelines to design the most effective business logos, yet there are some rules that have been followed down the years.

Business logos differ with industries. Though there is no strict rule, some conventions have been followed since they have worked from inception. Business logos appear in high tech, service oriented and business-to-business industries.

• High tech industries – generally use angular and multi-cornered business logos to convey innovativeness

• Service oriented industries – generally use smooth and rounded business logos to convey friendliness and approachability

Business-to-business industries – follow the middle path. Their business logos combine the chiseled and rounded look to convey stability and to build trust in the company

Depending on where your business stands on the spectrum, decide on the type of business logo that will work for you.

A Timely Reminder

Your business logos should reflect your business goals, your marketing strategies and your future business prospects.

Just like in the days of emperors and kingdoms, the ‘ring seal’ on letters said it all, your business logos appearing on every letterhead, business card, website, magazine, brochure, pamphlet and hoarding should tell the world of your services. Business logos are one of the prime sellers of your services. According to experts of the trade, there are 6 golden rules of designing business logos:

Business logos should be honest to the core – this means, you business logos should not look like “something that you came across in the magazine the other day”. It should reflect your personality, your vision and the quality of your services. Be creative by all means, but take care not to miss your target. Make your business logos abstract (any pointer with a swish to signify speed; a high power bulb in the darkness to signify innovation etc). Make sure that your business logos are clear in their intentions.

Business logos should remain simple – this means, your logo should avoid intricacies. Don’t try to say too much with your business logos. Let them be attention grabbers and bring you business. However, to achieve that, business logos will have to give away something of what your business stands for. Your business logos should represent the UPS of your business.

Business logos should look best in grand old black and white – if your business logo does not work in black and white, it will not work in any other color on earth. So, try out your business logos in B/W and then work on it to give other color tones.

Business logos should be aesthetically pleasing, irrespective of size – whether your business logos are seen on business cards or billboards, they should look appealing on both. That is the true test of a successful business logo.

Business logos should maintain artistic balance – this means, no particular part of your business logo should attract you more than the other. Use of color, line depth and shape should be such that your business logos should be one unified art form.

Business logos should be placed strategically – depending on who, where and how your product will be used, your business logo should be placed on your product. Pens and pencils have their logos at the rear end because the rear is exposed to the buyer. Automobiles have logos both in the front and the rear. This is because you see both from different positions. When you are walking past a parked car, you notice the logo on the bonnet. If you are behind a car, you get to see the logo at the rear. So, the position of the business logo depends on the position of the object and the amount of exposure it receives.

Why Do You Need Business Logos In The First Place?

You need business logos as much as a scientific experiment needs apparatus. You need business logos to make your business known to one and all. Experiments need apparatus to prove to the whole world what the scientist’s mind has in store for you. Similarly, business logos show what your company stands for.

Experts have identified several reasons for the need of business logos for your organization.

• Creating a brand image not only begins with business logos, it is dictated by them – everything your organization does to create a brand image, begins with your logo. All the tools used for sales and marketing bear your business logo. It is your business logo that reaches every corner of the world. Your brand sells or does it not? Who decides? Your business logos. A swish is one of the simplest business logos today. And it is the best brand creating tool. It is easily remembered as it can be easily reproduced. Simplicity of design, effectiveness of simplicity and ease in remembering make your business logos branded.

• Fastest visual cue to your brand in a time crunched world – in a world that is always running after time, it is not unusual to slow down only in the face of instant gratification and everything that hits your sight. Very few people have the time or the inclination to read your advertisement. But they will definitely have the time and the interest to look into your business logo. So, it is all that you have to capture the market. Give all, subtly and overtly, in your business logos.








Swati Banerjee is the owner of Writing Ink, a web content management firm based out of India, that services clients from across the globe. Please take a minute to visit http://www.writing-ink.com to experience how the bright young minds here make magic with words!