3 Steps to Sell Your Business Quickly and Efficiently
Before delving into the specific steps that benefit business owners who are looking to sell quickly, it’s crucial to understand the buyer’s viewpoint. For many buyers, purchasing a business is a once-in-a-lifetime event, often involving significant personal and financial risk. Therefore, sellers must take proactive steps to ensure their business is as appealing and risk-free as possible.
There are three key areas to focus on for a successful exit:
- Prioritizing Pre-Diligence
- Reducing Perceived Risk
- Engaging the Right Professionals
By focusing on these areas, you can instill buyer confidence while increasing the likelihood of a smooth transaction.
Step 1: Prioritizing Pre-Diligence
The first step to preparing a business for sale is to view the process from the buyer’s perspective. Buyers will conduct due diligence to assess the financial health, legal standing, and overall stability of the business. If you are able to anticipate and address potential issues beforehand, you can streamline the process.
Well in advance, business owners should work with qualified professionals to ensure that all documentation is in order, financials are accurate, and the business complies with all relevant regulations. This pre-diligence process will create fewer hurdles during the buyer’s due diligence and provide a smoother transition to closing the sale.
Step 2: Reducing Perceived Risk
One of the most effective ways to make a business more appealing to buyers is to minimize perceived risks. Buyers are naturally cautious about purchasing a business, and any factors that raise concerns can hinder a sale.
Here are a few areas where sellers can reduce risk before listing:
- Revenue Concentration: If the business is overly reliant on a few key clients or customers, consider diversifying the customer base or developing long-term contracts that mitigate this risk.
- Employee Contracts: Secure and well-structured employee agreements can provide stability and reassure buyers that the business has a reliable workforce.
- Clear Customer Contracts: Well-drafted and easy-to-understand customer agreements can reduce legal uncertainties and increase buyer confidence.
- Addressing Legal or Financial Liabilities: If there are outstanding legal issues, potential liabilities, or financial discrepancies, it’s wise to resolve these before listing the business.
By addressing these concerns in advance, sellers can significantly increase how attractive buyers will perceive their businesses to be.
Step 3: Engaging the Right Professionals
The right team of professionals can make all the difference when selling a business. Business brokers, M&A advisors, accountants, and legal experts help guide sellers through the complexities of the sale process. They can assist with everything from developing an exit strategy to ensuring that the sale adheres to all legal and financial standards.
Engaging professionals early in the process ensures that the seller has the right advice and support to navigate negotiations, minimize risk, and maximize the business’s value. These experts can also help identify and address potential red flags that might otherwise hinder the sale.
Copyright: Business Brokerage Press, Inc.
The post 3 Steps to Sell Your Business Quickly and Efficiently appeared first on Deal Studio.
How to Know You’re Charging Enough
Most business owners fret about whether they are asking too much or not enough for their goods or services. This dilemma keeps many prospective sellers up at night. Ask too much, and you may fail to attract enough customers; ask too little, and you’re cutting yourself short. In this article, we’ll examine how to determine if you are charging the right amount for your goods and services.
Many business owners begin working with an M&A advisor or business broker only to learn that a small increase in their pricing can lead to substantial increases in profit. Best of all, with the right pricing strategy, it is possible to raise your prices without your customers noticing. The fact is, you may be leaving a significant amount of money on the table right now. Having a coherent and well-thought-out pricing strategy is the first step to boosting your profits, and it can be done in surprisingly little time.
In Rafi Mohammed’s book “The Art of Pricing,” he observes that a key fallacy in business is that a product’s price should always be based on its manufacturing cost. Mohammed offers several interesting observations and suggestions. One suggestion, specifically aimed at restaurants, is that they should keep their entrée prices attractive and expect their profits to come from items like drinks, desserts, or other add-ons. He notes that McDonald’s profit margin on hamburgers is small, but they have a considerable profit margin on French fries and drinks. In short, profits and pricing should be viewed as part of a larger overarching strategy.
Another example can be found in the world of investment banks, which charge a relatively modest accomplishment fee as a percentage of total consideration. However, they then insert a substantial minimum fee.
Better pricing and better pricing strategies lead to more profits. Through better pricing, Mohammed argues that companies can increase their profits and achieve growth. He notes, “Smart pricing is like hidden profits.”
The more time you, as a business owner, invest in your pricing strategy, the greater the chances are that you’ll boost the value of your business. The facts are that small pricing increases can significantly enhance overall profits. Don’t be afraid to adopt a new pricing strategy. If your new pricing strategy fails, you can adjust your plan. The benefits of exploring new pricing options are simply too great to ignore.
Copyright: Business Brokerage Press, Inc.
The post How to Know You’re Charging Enough appeared first on Deal Studio.
Should You Leave Your Own Company Now?
Ask Yourself These 4 Questions to Find Out
By: Jay Steinfeld – Published in Inc. on Jan 24, 2022
It’s said that the two best days in a boat owner’s life are the day they buy the boat and the day they sell it. That might also be true for owning your own business.
If you’re a serial entrepreneur, it’s part of your makeup to buy and sell, the same way a day trader buys and sells stocks.
You’re not in it past a certain point.
Maybe you enjoy the conceptual ideation, creating, teams, and determining product-market fit, but after that, you get bored. Scaling and managing is not your thing.
For you, selling your business is just a matter of time, and you do it willingly and expectedly.
Or maybe you started a business and you feel you’ve done all you care to do and are ready to do something else… or nothing at all.
You might ask yourself the question, “How do I not get bored?” So you rethink your desire to sell and stay put.
Whatever the case, there is likely going to be a time in your business trajectory when you will want to step away from the company you founded or find yourself leading.
So how do you make that decision with no regrets? It’s something I had to do and, looking back, I think I have some solid advice that worked well for me.
Here are four questions you can ask yourself to help make that difficult decision.
1. Have you accomplished all you wanted? And if not, how much longer will it take?
Naval Ravikant has a great saying: “The reason to win the game is so that you can be free of it.”
Did you play the game to be free of it? Do you still want to be part of the game? Do you think, deep in your heart, that you beat the game?
What will it take for you to feel free of the game? Once you feel free, it’s time to go.
2. Do you have a successor that can continue your legacy?
A big part of not letting go is the fear that your successor will ruin your legacy. Maybe they’ll run it into the ground. Maybe they’ll go a different direction you aren’t comfortable being associated with.
After my company was acquired by Home Depot, I had confidence that the leadership team would continue the legacy.
But that’s not always the case.
Look at Michael Dell. In 2004, Dell stepped down as Chief Executive Officer of Dell Inc. while continuing to serve as Chairman of the Board. He built the company from his University of Texas dorm room.
But, the vacation didn’t last long!
In 2007, he ended up coming back as CEO per the request of his board. And he came back with a vengeance. In 2015, Dell acquired EMC Corporation for $67 billion, which is one of the highest-valued tech acquisitions in history.
If he had a successor that could continue his legacy, would he have come back? I’m not sure. And to make it even more interesting, it was his own board that asked him to come back!
3. Will your culture remain after you leave?
Are the values you believe crucial to your company’s long-term success when you are no longer there embedded into the culture?
Spoiler alert: If you ask yourself this question right before you’re thinking of leaving, it’s too late. Similar to asking yourself if you’ve done your job as a parent right before your child is going off to college.
Start your culture on day one! Not during your transition period.
4. Are you comfortable with what’s next?
What’s your next gig? In my case, it was teaching entrepreneurship in a business school and joining other company boards. So I started doing that before I left. This gave me confidence to leave. And my wife the comfort that I’d not be at home moping around, gumming up things there.
Let me be the first to congratulate you on a job well done. If you’ve made it this far in this article, it means you’re seriously considering what’s next.
Ask yourself these four questions, and I promise it will all work out.
Bye bye!
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