The Today Show recently featured a segment on entrepreneurship -- specifically, how many individuals are beginning to start businesses in response to a fragile economy and job market. As unemployment rises (currently up to 5.5%), many driven individuals find themselves without jobs and are forced to find creative solutions to their economic pressures.

Presented in the clip below is the story of Tracy Huges, founder of The Rum Cake Fairy Dessert Company. Tracy started the venture after being laid off from her marketing job.

The segment provides much highly useful information to new entrepreneurs, including the importance of having a good credit history, building trusting relationships with potential investors and creditors, and most importantly, carefully constructing a formal business plan. Business plans are a crucial step in the funding process, and are required documentation before pursuing capital from an SBA affiliate or micro lending institutions. While the segment places less focus on angel investors or venture capitalists, it’s important to note that such documentation is also a prerequisite for seeking equity funding as well.

Special attention is given to the personal loan management company Virgin Money (www.virginmoneyus.com). Such companies allow their users to formally structure loans between friends and family, which can be a fantastic way to manage early stage debt.

 

As every entrepreneur knows, a great business plan is essential for effectively launching a business.  As the business grows, an effective strategic plan is required to successfully reach the business’s full potential.

But what about planning your exit strategy? 

Far too many business owners do not realize that careful strategic planning to sell your business is just as important as planning to launch and grow your business.

In addition to an independent lifestyle and personal fulfillment, a successful exit is the primary motivator for business ownership and entrepreneurship. 

(Not to mention that a successful exit tends to improve one’s lifestyle and personal fulfillment...)

Because acquisition is the most common exit for an entrepreneur / business owner, here are some tips to better prepare you to sell your business.

Don’t Wait Too Long To Sell

Many business owners wait until the last minute to try and sell their business. They wait until the business is stagnating, or they are exhausted with running the business. In fact, the best time to sell is when business is booming.

But Take Your Time – Don’t Be in Too Much of a Hurry

If you are in too much of a hurry to sell, you will probably leave a lot of money on the table. Buyers – especially sophisticated larger corporations – will likely sense your urgency and will take advantage of it in the negotiation period.

Start the Process Early

It’s a good idea to begin preparing 2-4 years BEFORE the sale. It’s much more expensive and time-consuming to rush and prepare all of the necessary financial and other information in a few months than it is to consistently record and compile records over a period of years. This record-keeping is also important for your business’s growth, since it provides more perspective on your company’s performance.

Get Your House in Order

Make sure that you have been keeping accurate financial records and that your assets are ready for sale.  This includes both tangible assets such as equipment and inventory, as well as intangible assets such as contracts, leases, patents, trademarks, etc.  Make sure that everything is assignable to the buyer and be prepared for extensive due diligence.

Try to See It From the Buyer’s Point of View

A buyer’s motivations are often different than the typical business owner’s. While the entrepreneurial business owner may get excited about innovation and creative strategies, the buyer cares much more about the potential for stable revenue streams and growth potential.  Take time to understand your potential buyer’s point of view, interests, and motivations.

Make Yourself Less Central to the Business’s Success

The buyer wants to buy a business – not you or your job.  From the buyer’s perspective, it’s better if the current owner is not important to the success of the business.  Therefore, in planning for the sale of your business, you should begin training your management team to take over critical business functions.  If all of the key decisions revolve around you (the owner), then the value of the company will be limited without the owner – and therefore, the business is less attractive to a buyer.

Meanwhile, Keep Focused on Running (and Growing) Your Business

When starting the sales process, you must keep a laser-sharp focus on your business’s operations.  It’s important that you do not get too wrapped up in either the sales process or in the romance of any particular sale offer.  As difficult as this is, it’s best to act as if any deal can fall through, even if you are in the final negotiation period, because any deal can come unraveled at the last moment.  Keep your focus on growing your business until the check has cleared and is in the bank. 

In addition, you should do your best to keep the sales process confidential so that you do not endanger relationships with any key clients, employees, or partners whose departure could threaten a transaction or the operations of your business.

Get Professional Assistance

If you are a business owner seeking to sell your business, you can benefit from outside advice and assistance.  As the old saying goes, “The attorney who represents himself has a fool for a client.”  The same applies for a business owner selling without an advisor.  Your advisor will provide you with guidance regarding valuation, due diligence, and the marketing of your business opportunity.  Without a competent advisor, you decrease your chances of selling your business at its maximum price.

Even if a Deal Comes, Be Prepared to Say No

If you have invested a lot of time and energy into the search, negotiation, and due diligence phases, you may be reluctant to reject any deal that comes across the table. However, just because you have a deal in front of you, you do not have to take it.  If the price is not attractive or if the deal is not right for another reason – and it cannot be mended – you may be wise to walk away and consider the next opportunity.

Sometimes, during the process of preparing their business for sale, business owners will find themselves at the helm of a much more profitable, attractive business.  If you have a profitable business, keep in mind that you have other options at your disposable.  In addition to selling your business, you can continue to grow organically, raise growth capital, and/or explore strategic partnerships. 

It’s important to continually evaluate your options throughout all phases of business growth to ensure that you are making the best decisions for the long term.

 

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About Growthink

Founded in 1999, Growthink is a leading middle market investment bank.  Our professional investment bankers have assisted clients in raising more than $1 billion in growth financing, as well as advising on mergers and acquisitions transactions.

 

Need assistance with your business exit strategy? 

• Consult a professional business plan consultant.

 

Looking to sell your business?

• We have considerable experience advising middle market business owners on the sale of their businesses. Contact Growthink's investment bankers today.

 

The marketing plan describes your strategy for penetrating the market, delivering your product, and retaining your customers. This video explains how to create an effective marketing plan.

 

 

We are proud to highlight two exciting new clients at Growthink: iControl and Pop! Technology.

 

iControl

 

iControl is a periodical distribution and marketing company and division of The Current Companies.

iControl provides web-enabled newspaper billing consolidation services to newspaper vendors and retailers, including CVS and Barnes & Noble. With more than 8,000 active accounts, iControl is the largest provider of such services in North America by a ratio of more than 2-to-1.

Growthink will be consulting iControl on their strategic planning and business development initiatives.

For more information on our work with iControl, please view iControl's recent announcement here.

 

Pop! Technology

 

Pop! Technology is a Dallas-based creator of 'active' barcode information systems used by the food, beverage, pharmaceutical and health services sectors.

The company's technology transforms a standard barcode into an interactive barcode that provides real time information about the status and condition of their products at all points of the supply and distribution chain, from manufacture to end user.

Watch this video to learn more about how Pop's technology works.

This past May, Pop! Technology retained Growthink to assist with a $2M capital raise to expand their operations.

Here is a recent post on Pop! Technology from Texas Startup Blog.

 

 

Your business plan must not only define your competition, but demonstrate your venture's distinct competitive advantage. This video explains how to create an effective Competitive Analysis section for your business plan.

The Customer Analysis section must convey the needs of your customers, and demonstrate how your company satisfies those needs. This video teaches how to analyze your company's customers for the purpose of gaining credibility with investors.

Q: We just made $94 billion dollars this year. What should we do next?

A: Create a new business plan.

It's never too late to update your business plan.

Car manufacturer Nissan (NASDAQ: NSANY) demonstrated that fact this morning when they announced a new five-year business plan. With a projected mix of market expansion, cutting-edge technologies, and growing product lines, Nissan will strive to significantly increase per-share dividend, and achieve five percent revenue growth on average over the next five years.

The new strategy plan is called Nissan GT 2012, with "G" representing growth and "T" for trust. In addition to their product development goals, Nissan is also shining a light in-house, and will put effort into improving management, brand and service quality.

Typically, business plan creation is associated with up and coming ventures, or existing companies eager to expand into uncharted waters. Why then would Nissan, a company with clear expertise in the automobile arena, and which raked in over $94 billion last year, commit to such an intense overhaul?

Well, for starters, a business plan is a static document. There is no doubt that business plans are integral to the proper conceptualization of your business, the mapping of your desired financial trajectory, and the fabrication of the strategies you will implement and execute upon day in and day out. Much like your favorite jeans from high school, however, it is possible to outgrow your current business plan. In fact, it might be time for you to re-evaluate your current business strategy today.

While especially crucial for technology companies in industries like automotives or computer hardware, where revolutionary progress is made at a break-neck pace, even companies in more traditional areas might be in need of a refresher. For instance, a bank that did not create a strategy to institute secure online banking as an option for their customers may be in danger of losing customers to more tech-savvy competitors.

A new business plan can be just what's needed to refresh your approach and effectively restructure your business to gain competitive edge.

This video teaches you how to create a convincing Industry Analysis section for your business plan that demonstrates a real need for your new product or service.

 

 

 

This video teaches you how to create an effective company analysis section that will educate investors about your company’s history, past accomplishments, and unique qualifications.

 

 

Watch the first installation of our new Business Plan Video series.

This video, "How to Write an Executive Summary," provides advice on how to create a compelling executive summary for your business plan.

 

 

• Watch More Business Plan Videos

• Visit Growthink's Business Plan Help Center