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Selling a Business From a Position of Strength

The economy continues to heal. Many business owners were holding off selling their business while the economy was performing poorly and finance hard to get as they had the belief they would not get the best price for the business.

Part of what I do includes getting calls from business buyers who are frustrated that they are motivated to buy a particular business but they cannot get the answers they need and wonder if I can help.

When I bring the two perspectives together and how I work best as a business broker with the seller and/or buyer is to allow both parties to do things from a position of strength. At the end of the day, the seller will only sell and the buyer will only buy if all parties have the information they need to make an informed decision and at the very minimum feel that what they are doing makes sense to them.

If you plan to sell your business and want to do things from a position of strength, here are the steps I use to make sure I assist you.

If you plan to sell your business you are making a major change to your life. By definition, owning and operating a business forces disciplines and this often includes doing things you would prefer not to do. If you therefore sell your business and incur this major change, what do you plan to do? Be clear with the new world and options that will open up to you so if and when your business sells, you can easily make the transition. It’s not unusual for a business owner to get to the close of escrow and change their mind as they are not sure what they would do if they now sell the business. It’s also not unusual for a business owner to sell the business and want to buy another business after a period of down time because they are bored. While you own and operate your current business, look after your health, play some golf or do things you want to do so it has balance and you do not burn out. Burn out is the number one reason owners sell their business.

If it’s time to sell the business the first place to start is with a business valuation. There is no need to spend thousands of dollars on a valuation as it does not need to be complex. If the business has partners and they are in a dispute, the owner is going through a divorce or some other complex legal matter then a certified appraisal may be necessary. I put together an opinion of value for around $750 that looks at the last three years tax returns and current profit and loss and balance sheet. All this information is then rolled into a 19 page report that includes comparable sales data from sales in the same industry to arrive at a price the business will sell. Looking at the tax returns and profit and loss statements are critical as too many sellers offer financial statements that are inaccurate or would not be accepted by a buyer or lender. Just recently I was asked by a buyer to appraise a small business from cash flow projections the seller had put together and convinced the buyer his business was worth. After finally getting meaningful documents and information my value was less than half of the sellers as there were errors in his projections.

Once the seller knows the value of his business and still wants to proceed, one of the steps I take is to see what third party finance is available. Most sellers don’t want to sell the business and carry any finance. At the moment, the main form of lending to buy a small business is SBA lenders. These banks will look at writing an SBA loan but they do not lend for all businesses in all industries. It’s not unusual for me to approach many banks before getting a business pre-qualified. Knowing finance is available though really helps the seller with their planning and speeds up the process should a qualified buyer come along.

With these details in place the next most important step is to put a comprehensive confidential report together on the business. The confidential report can be as long and detailed as necessary. A rule of thumb would be the higher the purchase price the longer the confidential report. Buyers have questions. If there are many buyers you can expect a lot of the questions to be the same. Why not have this information ready to go? It makes the seller, their business and me look very professional to request a buyer to complete a non disclosure agreement and then in my case, provide them with a username and password where I have this confidential report as well as supporting documents such as a copy of the lease, franchise agreement, sample marketing material, financial statements and other relevant information.

All the above items take time and planning. If you are selling a business and want qualified buyers to respond in a businesslike manner, take the time to do the work and get it right. A buyer has options. If they don’t feel your business is the right option because of the way their questions are asked or how the answers to their questions are given then they will look for alternatives and there are alternatives out there including doing nothing.

The Top 10 Mistakes You Can Make to Ensure You Fail in Your Network Marketing Business

This article uses a tongue in cheek approach to point out mistakes that people make in the direct selling industry every day that is detrimental to the success of their own business. Below are ten common mistakes made by people who decide they want to own their own direct selling business and they are not listed in any specific order of importance either.

1. Lie and disrespect everyone around you (Honesty and respect).

If my lips are moving, I’m lying. This product cures every disease on the planet and on Mars. Trust me.

Truth in “who” you are and “what” you do is the foundation of the direct selling industry. You become a personal brand and represent a company, and organization, and a product line. By lying and treating people poorly casts a shadow over you, your company and the industry and people will judge everyone else they come in contact with in this industry with disdain.

You have to be the shining light for all to see that this industry is a legitimate business. People will join you and work with you instead of running the other way. Your reputation and the company’s reputation must pass the TEST so that your business grows.

2. Do not Market your products.

Now that I won my own business people will flock to me and hand me all their money and I don’t even have to get up off my lazy boy chair.

Marketing, meeting with people, or telling others about your business is the only way people know you exist. You have to get the word out about what you do and what you offer. If you choose not to do this portion of your business then you are doomed. You are just as doomed if by chance you don’t know how and are unwilling to learn just the same.

Some key examples of marketing.

  • Prospecting
  • Networking
  • Referrals
  • Word of mouth

3. Closed (do not speak with anyone).

Go away, we’re closed. Come back tomorrow.

Your hours of operation are extremely important. Why would you own a business and not open your shop? How does this apply to me? If you are not speaking to people about your business, then your business is closed. If you are not selling what you offer, then your business is closed. Get the point?

Bottom line is: Closed mouth is a Closed Business. When your mouth is open your business is open.

Word of caution: Do not vomit on everyone about your business. Learn how to work your offerings into conversations without body slamming people right away with your sales pitch. Slapping someone with your pitch before you even know who they are or how you can help them is wrong. You have to build rapport and trust as people buy you before they buy your product or business.

4. Sell for a loss or give away the store- no profits.

Don’t worry I will give you a home boy discount. I will cut you a break and pay for your products myself so you can keep coming back and basking for more.

Undervaluing or devaluing your products is not a smart move. A lot of people will offer their products at wholesale cost or even at a loss in order to attract and keep customers. The problem is that you, more than likely, do not sell enough in volume to make a profit. Businesses that don’t make a profit don’t stay in business very long.

In addition, you tell your customers that your products are overvalued and you don’t believe they are worth the suggested retail cost, and if you don’t value the cost then your customers won’t value the cost either.

5. Do not Re-invest back into your business.

Why should you put money back into your business operation? Answer… Operating Costs.

When you sell your products and you spend the money that’s not a good thing. You should set aside the money so you can buy more products, attend trainings and events, and purchase development materials for your own personal growth. When you manage the money from your sales the right way you should never have to use money from your personal accounts after your initial investment. If by chance you are not doing so, start right now. Set up your business budget with a separate bank account as you do not want to co-mingle your business funds with your personal funds.

6. Hire a ton of people.

I need a personal assistant and a driver now that I’m a big hot shot business owner. I’m CEO of my own company!

When starting out you should have no or few employees to help you in your business. In fact, don’t consider hiring for your business until you hit certain levels of success and you have steady income from your business that supports the decision of having employee support.

One are you might consider outsourcing is your personal chores. Hire neighborhood kids to mow your lawn, or delegate that to your children if they are capable and teach them how to operate their own lawn care business.

7. Don’t pay your bills and taxes.

Pay your bills. Nuff said! Hmmmph!

No joke, make sure you pay your bills and on time so you eliminate late fees. This is an area that will help you reduce and eliminate your personal debt. Focus on building your business so that you can set aside some of the money to help pay those bills. Make sure you counsel with a successful leader in your success line so they can guide you and help you to not mistakes that will in turn hurt your business and slow down your business growth.

Taxes – pay your taxes: Self-employment tax, federal, state, and local. Where applicable pay your sales tax as well.

8. Stop learning (Closed mind).

I don’t need that stuff. I’m the smartest person I know. Just ask me, I’ll tell you I’m right.

You should schedule time daily for personal development. Improving your skills or understanding is a must if you want to lead others. No one wants to follow a dummy. Ignorance is a detriment and can only be cured by you spending time reading books and listening to tapes, cd’s, and web/pod casts. Attending your support organization’s or company’s events is very valuable and important for your growth and the growth of your entire team.

If you are the only one in your organization right now, you won’t be for long. At least that’s the goal of not to be the only one in your organization. You must be able to lead yourself if you are to lead the many. Personal development allows you to relate to as many people as you possibly can. Leaders are readers and help others to see the value in personal development.

9. Don’t schedule your time (I’ll work it when I work it).

Come and go as you please, ignore your family time and play video games all day. Wasting time is a primary enemy for this industry.

As an employee we are accustomed to a time structure we must follow. You are mandated when you are to arrive at work, when to take your breaks and lunches and when the work day ends. By the time we get home, most of us don’t want to follow a schedule unless we want to watch our favorite program on TV.

You must work a calendar into your life. Set aside all the time you cannot work your business. This includes work, church, family, volunteering, and any other time that you cannot absolutely use to dedicate to your own business. Then find the time in your weekly schedule when you can dedicate to working and building your business. Hint: You are going to have to give up some TV and video game time until you are making enough money to where you can buy back time from your job.

10. Break the law; don’t follow your company’s policies or code of conduct.

Who wakes up and says today I’m breaking the law?

Keep in mind that your company may offer products in other countries. Also keep in mind that ignorance of the law of another country is no excuse and do not assume what’s legal in your host country is legal in another country.

Make sure your company has authorization to operate in a specific country before you start selling your goods there. Packaging, compensation, marketing, and distribution are all examples of key areas where laws differ drastically from one country to another, and if your company does not have an official operation in place for a specific country than don’t focus on building your business there.

In addition, make sure you know what you can say versus what you cannot say during conversations and presentations. You cannot make or guarantee income claims or health claims. You cannot diagnose or offer cures for disease or health ailments unless you are a certified medical professional.

In conclusion, evaluate your own business and your mental attitude you have relating to each are discussed and see what changes you can make to improve your likelihood of success. No one can guarantee your success and by following this article as a guideline does not guarantee it either. However, by ignoring the basic fundamentals that allow success you almost guarantee your failure. Who wants to improve their chances of failure?

The Home Based Business Phenomena: Is It Right for You?

If you’re one of the many people looking to find a business to work from home then you should consider if it’s right for you. No doubt if you are looking into this type of revenue generation, then you’re probably tired of working long hours for little pay, building someone else’s dreams. Have you ever heard that whoever owns the business owns the dream? Well I believe that’s true and if you spend most of your time working to build someone else’s dreams then I hope you understand that you don’t have a shot in the dark of making it big financially in this country! It will never happen! Most people are so busy making a living that they forget to live a life and before they know it they’re older, their kids are grown and they don’t have much to show for the “40/40″ plan, working 40 hours a week for forty years of their lives. We live in the richest country in the world, so why do so many people scrape by? If you want to be successful in life, find out where 98% of the people are going and go the other way. Almost all successful people have built assets rather than work for a paycheck. They’ve owned their own businesses and built pipelines. So the question isn’t whether a home based business is right for you, but rather can you build a successful home based business. The answer is an undoubted YES YOU CAN. But how, you may ask? First you need to decide what kind of business you’d like to operate. With so many different businesses to choose from, how do you know what’s right for you? To answer this question, you must see the difference between a traditional “brick and mortar” type small business, a franchise, and a non-traditional, e-commerce type business usually referred to as MLM (multi-level marketing or Network Marketing).

First off, with traditional small businesses, there are four factors to consider: time… money… knowledge… risk.

Time: To show a profit, you’d have to be open for business for long hours every day, including weekends. Usually, a 70-90 hour work week is very realistic in this type of business model. As the owner, you’d have to be there that long, or at least hire a manager that you could trust to run most of your day to day operations and pay that person enough to stay reliable.

Money: As an owner, your overhead in this business model is fairly substantial. You have leased space for your business, insurance, paid electric/utilities, heat and water. Then you have inventory and computer and software to manage it. Usually a cash register, and you must register with a bank as a merchant to process Visa, MC, Amex, and Discover Card payments. Not to mention any other equipment needed to maintain the business.

Knowledge: How to run a small business is not taught in college. If a person does not have a relative under whose tutelage he/she can learn, they must be self-taught… in the school of Hard Knocks. Most small business beginners are shocked to find that filling out paperwork takes the equivalent of one day per week. If they don’t know basic bookkeeping, they hire an Accountant. If they need advice on business structure, whether and how to use a Corporation, a Limited Partnership, or a Limited Liability Company (LLC), they hire an attorney.

In either case, they exchange money which they need for knowledge which they also need. This is a wise trade, since a small mistake made early can compound to a big problem later, but it is costly. Not to mention the sole proprietor cannot approach the competitor down the street for guidance on how best to organize his/her store. So like a person entering a dark room, they must feel their way carefully or they will trip over what they can’t see. Even with care, ignorance is not bliss and can cost the owner dearly… maybe cost the enterprise to fail. Take a look at this article ( http://www.usatoday.com/story/money/business/2013/02/01/retailers-close-stores-24-7/1873745/ ).

Risk: The new businessman has “tied up” in the venture several thousands of dollars which they cannot afford to lose. Also, hundreds or even thousands of hours of their lives invested as well… which in time can never be recaptured. Look at what happened to Hostess, maker of Twinkies and Wonder Bread.

As you can see, the traditional small business venture can run upwards of tens of thousands of dollars with more “work” involved than having a job. You simply bought yourself a job with the business.

Franchising, on the other hand, is that you plug into an already proven system. People think you are “buying a franchise”, but actually you invest your assets in a system to utilize the brand name operating system, and ongoing support. Think of one of the largest franchises of our time, McDonald’s. People who buy a McDonald’s franchise buy into the system already in place of producing Big Mac’s and Filet o Fish without having to “reinvent the wheel”. All you have to do is follow the “system” and your franchise will be successful, so they say. But the desire to “be my own boss” is not fully satisfied by a franchise. Franchisees cannot think of themselves as an independent owner. If they do they will be tempted to try to change the system. Does Mickey D’s sell hot dogs at all? Of course not! The home office does not permit anyone to “tinker” with their formula. The franchisee owns the assets of their own franchise, but is licensed only to run someone else’s business system. The desire to become a franchisee is grounded on belief that they can be more successful using someone else’s brand, and operating according to their methods, than they would be if they opened up their own independent business and competed against them. The problems with most franchises like McDonald’s, is that: it costs substantially more than a small business, there are royalty fees (usually 5-10% gross profit), loss of personal control… need to quit your full time job and be “locked in” to suppliers chosen by the franchisor, the inability to will your business to your family, a one-sided contract drafted by franchisor that may not fully protect your territory and interests. However, a franchise allows for: opening more quickly, developing a profitable customer base faster, has less risk, national advertising presence, built-in name recognition, strong support system that can be called upon for advice, readily identifiable trade name and goodwill associated with it, centralized, and collective buying power.

Now that you understand the differences between the two, what we need is a home based business that can adapt the best of both worlds: a way to generate full-time income with part-time work, a system that produces residual income that keeps coming in although one’s advancing age eventually prevents putting in much, if any, time.

More and more companies are entering forms of innovative cooperation with outside marketers. Reducing their own in house personnel has prompted them to enter strategic business alliances or joint ventures in which two or more business entities help each other. Since the 80′s, three powerful trends have converged.

First, threatened by corporate layoffs, highly capable men and women are looking for ways to diversify their income. Quite a few have asked themselves, “why go back to a corporation, even if I can find one to hire me, and risk being cut by the same layoff axe in a couple of years? Why not become an Independent Contractor?”

Second, not everyone laid off was “dead wood”. When companies cut their ranks by tens of thousands, they also cut thousands who were productive. They need to hang on to the productivity of the people they did not keep. So they started scrambling to find Independent Contractors to reach their market

Third, since the early 90′s, the introduction of the personal computer and soon after, the internet have allowed small, part-time businesses with few or no employees to compete on a level playing field with anyone in the world. Some of the smartest businessmen in the world have found a unique way to harness these trends to their advantage.

This is where MLM and e-commerce come in. Successful business models that harness the power of the internet and e-commerce along with the concept of independent contractors has made MLM companies a major power house in business today. Companies like Avon, Mary Kay, Herbalife, Amway, Melaleuca, Primerica, Pampered Chef, Ambit Energy, and many others have all realized the top 20 reasons for non-traditional business.

1) Low investment- usually less than $500 to start, depending on the Home Based Business opportunity..

2) No Boss-the independent contractor determines how much money to make and how hard they want to work.

3) Ability to work from home- daily commute consists of walking to your coffee pot on your kitchen counter. (That’s why it’s called Home Based Business!)

4) Fewer, more flexible hours- people are just too busy now a days!

5) Time-compounding through duplication- what you do and teach others to do the same adds to your business exponentially. Would you rather have 100% of your own efforts or 1% of 100 people’s efforts?

6) Minimal legal liability- no person in a “downline” can create vicarious liability for the sponsor.

7) No special licenses or training to join- unlike a realtor or insurance agent.

8) No discrimination-8) No discrimination-a Network Marketing type of Home Based Business rewards a person for movement of product and sponsoring others to do the same, regardless of sex, race, creed, or religion.

9) Tax Benefits- ability to claim home office deductions, utilities, gas and mileage, and business conferences, even while on vacation as deductions.

10) No employees- one works with, but not for the parent company.

11) No risk- startup costs are trivial compared to traditional small businesses and franchises.

12) No accounts receivable and collection headache- “cash and carry” type business.

13) Inexpensive, usually free training- upline mentor has vested interest in helping downline grow so the mentor will provide any and all training to help their downline. Like a good parent guiding their child teaching them what and what not to do.

14) Early Income-possibility to recoup initial investment in first month in business.

15) Unlimited income potential- Network Marketing has no floor. You could make nothing at all. It is because of no floor that it has no ceiling either. The sky’s the limit!

16) Inelastic Demand- a good Network Marketing company offers products or services that are top-quality, which people want, need and can afford, and have to buy again. Repeat business.

17) No regulatory Problems- the Parent Company takes care of all of the regulators and taxing authorities so the individual marketer is freed up to be creative.

18) Insulated against disaster- no single location; rather, it connects the country and the world with small individual participant-outlets.

19) Time flexibility of training/support system-time cost super small compared to medical school, business school, or even law school. You are in business for yourself but never by yourself.

20) Willable to one’s children- Network Marketing business can be transferred to one’s heirs usually estate-tax free. It’s the transfer of cash flow not assets that allows your heirs to keep the wealth.

Now that you see the many benefits of Network Marketing compared to traditional business, it is clear that this concept is by far the simplest and fastest form of generating extra income, regardless of what your mother-in-law, or brother-in-law think they know. So, again the question is, is this right for you? Only you can answer that, however, if it is right for you, how do you get exposure for your new MLM business? Very simply put, you need powerful training at little or no cost that will flood your inbox with potential customers and business partners in the easiest way possible. For a step-by step guide on developing this plan and maximizing your income from your MLM opportunity,

click here to access a free training series.

. “Small opportunities are often the beginning of great enterprises.” – Demosthenes