Archives for November 2019

Key Mistakes that Could Impact Your Sale

The old saying, “an ounce of prevention is worth a pound of cure,” most definitely applies to any business owner that believes he or she will someday want to sell his or her business.  The bottom line is that every business owner has to transition out of ownership at some point.  In a recent Inc. article, “Four Mistakes That Could Lower Your Business’s Value and Weaken Its Salability,” author Bob House explores 4 mistakes that could spell trouble for business owners looking to sell.

No doubt House explores some excellent points in his article, such as that you should always have what he calls, “a selling mindset.”  The reason this mindset is potentially invaluable for a business owner is that when operating in this way, sellers are essentially forced to stay on their toes. 

Or as House writes, “a selling mindset encourages continual innovation, growth, and investment, helping your business stay ahead of the competition and at the top of its potential.”  Having a “selling mindset” means that business owners have no choice but to perform periodic reality checks and access the strengths and weaknesses of their businesses.

Mistake #1 Poor Record Keeping

For House, poor record-keeping tops the list of big mistakes that business owners need to address.  As House points out, both potential buyers and brokers will want to examine your books for the last few years.  The odds are excellent that before anyone buys your business, they will look very closely at every aspect of your financials, ranging from your sales history to your operating costs. 

Mistake #2 Failure to Innovate

The next potential mistake that business owners need to avoid is a failure to innovate.  House notes that a lack of tech-savviness could make your business less attractive to prospective buyers.  The simple fact is that virtually every business is now impacted in some way by its online presence, whether it is the quality of that presence or lack of it altogether. 

For House, a failure to maintain an active online presence could be associated with a failure to innovate.  Even if your company is innovative, if you do not maintain a coherent and robust online presence, this could portray your company in a negative light.

Mistake #3 Unstable Workforce

House also feels that having an unstable workforce could spell trouble for your business’s value and negatively impact its salability.  Most prospective buyers will not be very eager to buy a business that they know has a lot of employee turnover.  In general, new business owners crave stability.  Attracting and keeping great employees could make all the difference when it comes time to sell your business.

Mistake #4 Delayed Investments

The final factor that House notes as a potential issue for those looking to sell their business is delaying investments and improvements.  House states that it is important for owners to continue to invest even if they know they are going to sell.  Investing in your business can help it expand, grow and showcase its potential future growth.

Another excellent way to prevent making mistakes that could interfere with your ability to sell your business is to begin working with a business broker.  A top-notch broker knows what mistakes you should avoid.  This experience will not only save you countless headaches but also help you preserve the value of your business.

Copyright: Business Brokerage Press, Inc.

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Exploring the Offering Memorandum

Are you a business owner who is interested in selling?  If so, there are some strategies you should undoubtedly use.  At the top of the list is the all-important offering memorandum.  The offering memorandum, often referred to as a selling memorandum, is a straightforward but highly effective way to help you obtain the highest possible selling price.

Shaping the Executive Summary

The offering memorandum must be factual.  However, at the same time, this memorandum allows for a bit of business promotion and selling, which can be included in the executive summary portion of the document.  After all, potential buyers will want to know more about your business and why buying it would be a savvy decision. 

In short, the executive summary section of the offering memorandum goes over the highlights of your company.  It should include an outline of several key factors.  Everything from an outline of the ownership and management structure, description of the business and financial highlights to a general review of your company’s products and/or services should all be covered.  Additional points to include would be variables, such as information about your market, and the reason that the business is for sale.

Your executive summary, simply stated, is extremely important.  A coherent and compelling executive summary will motivate prospective buyers to learn more.  In short, you want the executive summary of your offering memorandum to shine.  It should capture the attention and the imagination of anyone that reads it.

Other Essential Elements to Include

Some elements are absolutely a must to have in your offering memorandum.  An overview of your company and its history as well as its markets and products are all good places to begin your offering memorandum.  Other key elements ranging from distribution, customers or clients and the competition should also be included. 

Factors such as management, financials and growth strategies should not be overlooked, as many prospective investors may flip to those sections first.  Finally, be sure to include any competitive advantages you may have as well as a well-written conclusion and exhibits.  The more polished and professional your offering memorandum, the better off you’ll be.

An easy way to improve the overall quality of your offering memorandum is to work with a seasoned business broker.  A professional business broker knows what information should be included in your offering memorandum.  He or she will also know what not to include.  Remember that your offering memorandum may be the first point of contact between you and many prospective buyers.  You’ll only get one chance to make a first impression.

Copyright: Business Brokerage Press, Inc.

Rido81/BigStock.com

The post Exploring the Offering Memorandum appeared first on Deal Studio – Automate, accelerate and elevate your deal making.