Starting & Growing Your Business: 5 Valuable Lessons Learned from Reality TV Pros

An Original Article from Small Business Administration (SBA.gov)

In the past few years ‘business turnaround’ and ‘entrepreneurial’ reality TV shows have become compelling viewing – opening our eyes to the successes and challenges inherent in being an entrepreneur or small business owner.

From UK imports, such as Shark Tank, Ramsay’s Kitchen Nightmares and BBC America’s excellent business transformation shows – Hotel Inspector and Mary Queen of Shops – to homegrown productions such as NBC’s ‘The Restaurant’ – reality-business TV offers a fascinating, albeit voyeuristic, insight into the highs and lows of starting a business, reinventing a business, and even making the decision to exit a business.

Whether you are a start-up seeking investment (think Shark Tank) or an established business in need of a re-launch to abate failure – these shows deliver what could be considered a 50 minute master class in how to succeed in business.

Here are some common and consistent learning moments gleaned from these shows that small business owners everywhere might consider.

When Seeking Funding – Don’t Over-Value Your Business’s

Current or Projected Worth

One of the more common mistakes start-ups make – as seen on Shark Tank – is misrepresenting or overvaluing the worth of their business to potential investors.

At the end of the day, deliberately or unwittingly over-valuing (or under-valuing) your business can quickly play against you as a potential investor picks apart your sales and profit projections.

So the takeaway from Shark Tank is that proper financial planning and research can go a long way towards delivering a polished and realistic sales pitch to banks or lenders.

This Business Loan Checklist from Business.gov is a useful resource for guiding you through the process of planning and preparing a successful loan application. These online Business Planning Videos, from expert Tim Berry, can also help you build a realistic sales forecast to out in front of investors.

Perfect Your Elevator Pitch and Presentation Skills

One of the most excruciating parts about Shark Tank is those few moments when budding entrepreneurs get to present their business elevator pitch to the line-up of potential investors – and, whether it’s through nerves or poor preparation, their presentation falls apart.

If you are looking to secure funds or presenting your product or services at a trade show, developing and practicing your elevator pitch is key. For a three step approach to developing your company’s elevator pitch, read my earlier post: Why Your Business Needs an Elevator Pitch (and Tips on How to Target it to your Audience).

Learn from the Competition

Another common scenario found on business turnaround shows like Ramsay’s Kitchen Nightmares, is that business owners faced with stiff competition often retreat from it rather than embrace it. Business is just as much as knowing about the competition as it is about knowing your customers.

Take a hard look at what it is that you think your business is doing wrong, in the light of what your competition across town is doing right. Next find a way to re-connect with your target market using those lessons learned – whether it’s re-branding your business; correcting your price points; or firing staff who don’t cut the mustard.

Take a look at this *online workshop from SCORE which show you how to gather competitive intelligence and help you be ready for the competition. The Small Business Administration also offers useful tips for understanding the competition and finding a niche for your business.

Diversify to Grow

Diversification strategies are often at the heart of reality TV business transformation shows. For example, would adding a kids menu or brunch dining experience help drive your business in new more profitable directions?

So whether it’s new offerings, new markets, new verticals, new distribution channels – whatever it is you need to do to diversify – explore all possible avenues, plan your approach and desired outcome, and test and review your findings.

Check Your Ego at the Door

Ego is a significant obstacle to business success, as encountered by countless reality TV business turnaround experts. Sometimes it’s a stubbornness to embrace a new business tactic simply because ‘we’ve always done it that way’, or it’s a case of an over-inflated business ego driven to succeed regardless of the cost and risk, and is failing fast.

So in addition to being willing to diversify, time and again reality TV shows teach us that, a little bit of ego-less objective business analysis and management can only improve your bottom line.

*Note: Hyperlink directs reader to non-government web site.

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Liquidating Assets

An Original Article from Small Business Administration (SBA.gov)

If you have decided to get out of business and are not able to pass your business on, merge it with another business, or sell it as a going concern, liquidating the assets could be the most appropriate exit strategy. However, before you terminate your lease, sell a key piece of equipment, or disconnect your utilities, make sure you have a well thought-out plan. If you determine that liquidating your assets is your best course of action, follow these key steps.

  1. Talk to your lawyer & accountant

    The information on this site is intended to provide you with a general overview of the liquidation process. It is not a substitute for case specific advice that only your lawyer and accountant can provide.

    Also remember that you will need the cooperation of your creditors. Once you have developed a plan, present it to them and get their permission before you act. As long as you are candid and have a formidable plan, they will most likely go along with it.

    For more information related to liquidation planning, you should review the FTC’s Internet Auction Guide. This document by the Federal Trade Commission (FTC) explains how Internet auctions work, and is essential reading if you’re considering this course of action. To help you find a professional auctioneer in your area to conduct your sale, go to the National Auctioneers’ Association.

  2. Scrutinize your assets: inventory, assess, & prepare each item for sale

    Begin by preparing a current inventory of your business assets. Try to include photographs, serial numbers, and a brief description of the condition of each item. Your inventory will save you considerable time and expense as you move through the sale process and will be invaluable if you are later asked to explain the sale to your creditors or the Internal Revenue Service (IRS).

    Next, start preparing your assets for sale. Don’t risk diminishing the appeal of your marketable items by keeping outdated or worn-out equipment, furniture or inventory. Their primary value is in the form of a tax deduction, so why not donate them to an appropriate charity?

    If necessary, wash, paint, or repair the items you intend to sell. Make sure your business premises are neat and clean if the sale will be held there.

    Be able to demonstrate your equipment. Have the warranties and repair records available for inspection.

    Don’t scare buyers away. If hazardous waste products, such as used chemicals and batteries, are stored on your business premises, contact your local Department of Ecology for a list of companies that purchase these items. If they can’t be sold, dispose of them properly.

    If you have items that are leased with an option to purchase, don’t just turn them back in. Find out how much is owed. You might be able to pay off an item, such as a forklift, for a few hundred dollars and sell it for a few thousand.

    If you have attractive items on consignment or with high residual lease balances, you might want to ask the owners to include their items in your sale. It will save them the hassle and expense of moving them, and you will have someone to share the costs of the sale with. Their big-ticket items may even help you attract more buyers.

    If your business premises are leased and you have trade fixtures or other items attached to the real estate, make sure they are worth more than the cost of repairing the damage done by removing them. Inquire about your landlord’s plans for the premises. The new tenant or your landlord may be interested in buying your items or including the items in your sale.

    Finally, don’t overlook your intangible assets. For example, is your lease assignable? Are the business licenses, permits, patents, or trademarks that you hold in demand? Can they be transferred? Is there a market for your customer list, contract rights, or accounts? You may wish to check with your attorney or accountant.

  3. Secure your merchandise

    If your customers or employees will be disgruntled when they learn that your business is closing, consider collecting the keys, changing the locks, or hiring a security guard. You won’t be able to recover any of your investment if the items you’ve invested in are no longer around.

  4. Establish the liquidation value of your assets

    Liquidation value refers to the amount you can expect to recover in a forced sale situation. Generally, this amount is at least 20 percent less than retail value. To establish the liquidation value of your assets, work with a qualified appraiser. Obtain a written liquidation value appraisal before you entertain any offers.

    Study the appraisal well before you make any significant decisions concerning your sale.

  5. Make certain that a sale is worthwhile

    Once you have your liquidation value appraisal, estimate your net sale proceeds. Remember to deduct all of the costs of the sale. These include items such as commissions, advertising expenses, moving and storage costs, labor expenses, credit card discounts, rent and utilities. Also deduct amounts that are secured by liens on your assets such as rent, delinquent personal property taxes, and loans owed to secured creditors.

    If a liquidation sale doesn’t look worthwhile after you’ve done your calculations, talk to your attorney. There may be more appropriate exit strategies for you to pursue.

  6. Choose the best type of sale for your merchandise

    If a liquidation sale looks worthwhile, the next step is to decide what type of sale to hold. One, or a combination of several, of the following types of sales may be appropriate.

    Negotiated sales in a distress situation are desirable but uncommon. Logical buyers include your competitors, customers, suppliers and landlord. For example, if you own a restaurant, your landlord may be interested in purchasing your equipment so that the premises can be rented to a new operator at a higher rate.

    Consignment sales are appropriate when time is not of the essence, your assets are easily movable, and there is a local dealer specializing in the type of items you want to sell. If you choose a consignment sale, you will need to turn your assets over to the dealer, who will sell them and pay you an agreed-upon amount following the sale.

    Internet sales are rapidly growing in popularity and importance. Before deciding whether to sell online, familiarize yourself with the rules and your legal obligations as a seller by reading the FTC’s Internet Auction Guide. You may also want to consult a traditional auction company, since many are now able to accommodate simultaneous in-person and online bidding.

    Sealed bid sales are appropriate when confidentiality is important. All the bids are submitted in sealed envelopes that are opened at the same predetermined time and place.

    Retail sales, also known as Going-Out-of-Business Sales, are appropriate for consumer items like small appliances, gifts and gadgets. They are also a good way to sell shoes and clothing, since people don’t like to buy these items unless they can try them on first.

    A retail sale followed by an auction works particularly well for some businesses. For example, if you are trying to close a grocery store, you can start with a retail sale to dispose of the food, and follow it up with an auction to dispose of the shelving, freezers, cash registers, shopping carts and other miscellaneous items.

    To protect consumers from unscrupulous retailers who falsely claim to be going out of business week after week and year after year, many states now regulate Going-Out-of-Business Sales. If you want to conduct such a sale, be sure to research the law in your area.

    Public auctions are appropriate for most business assets. Typically, your property is sold item by item to the highest bidder. You may, however, also be able to take advantage of the aggregate bid process, which can result in a considerably higher sales price. This works particularly well if your landlord is willing to prequalify the bidders as tenants. For example, suppose you want to sell a laundromat. Each washer and dryer can be auctioned separately, the individual bid prices totaled, and the bidding reopened on all of the items for an amount that is higher than the aggregate amount of the individual bid prices.

    The aggregate bidding process also works on a smaller scale. For example, a bulldozer can be auctioned separately from its ripper. The bids can then be totaled and the machine and its attachment offered as a package subject to a minimum bid higher than the aggregate amount of the individual bid prices.

  7. Select the best time for your sale

    Begin with the season, then select the best day and time to hold your sale.The season should be appropriate for the type of merchandise you want to sell. Snow-blowing equipment, for example, will sell better in December than it will in July.

    The day of the week and time should be convenient for the customers you’re hoping to attract. For example, few contractors will leave a job site in the middle of the day during their workweek to attend a liquidation sale, but if you schedule it for a Saturday morning, they’ll be there. Similarly, hair salons and restaurants are typically open on Saturdays, but closed on Mondays. Make it easy for the owners of these businesses to attend your sale by scheduling it on a Monday.

    Of course, you also need to take your marketing plans into account. Find out when the trade journals you want to advertise in are published and how much lead time they’ll need to include your ad.

  8. Arrange to hold your sale at the most appropriate location

    The location of your sale can have a significant impact on your net proceeds. Choose it carefully, based on what you’re trying to sell. While construction equipment, cars, trucks, snowmobiles, and lawnmowers can be moved and sold just about anywhere, other items should be sold in place. Restaurant equipment, for example, can drop as much as 50 percent in value if moved.

    As a general rule, it is best to hold your sale on your business premises. From a marketing perspective, most items look best in the surroundings where they are used. Some, such as you’d find in a machine shop or a sawmill, have special voltage requirements. Your business site is wired to accommodate them; most storage warehouses aren’t. Keep in mind that prospective buyers are unlikely to buy equipment they can’t test unless they get a large discount, and moving and storage costs will reduce your net recovery.

    Sometimes, a poor landlord-tenant relationship can prevent a business owner from obtaining permission to hold an on-site sale. If you find yourself in this situation, don’t give up. Your auctioneer or attorney may be able to obtain your landlord’s cooperation.

    Finally, in exceptional circumstances, the best place for your sale may be somewhere other than where your assets are located. This is particularly true when they are impractical or impossible to move, such as a cruise ship or a mountaintop resort, and interest in purchasing them extends to other areas of the country. In these cases, you may be able to recover more by selling them in absentia. For example, a fish cannery located on a small island in the Aleutians could be sold in Seattle by utilizing a video presentation. Bids could be taken in person in Seattle, at the cannery, over the telephone, and via the Internet.

  9. Hire an expert to conduct your sale

    The right expert can ensure that you get the highest possible dollar return. To choose the right expert, analyze your assets. Then, determine who–an auctioneer, a dealer, a broker, etc.–has expertise in each category of assets you want to sell. If you are not sure where to start, ask your banker, lawyer, and business associates for recommendations.

  10. Use a non-recourse bill of sale

    The professionals you’ve hired should take care of the paperwork required to transfer title to your assets. Nevertheless, double-check to make certain that each bill of sale states that the item was sold “As is, Where is.” You are probably looking forward to retirement or starting a new business. Why risk entanglement in long, drawn-out disputes over implied warranties of merchantability or fitness?

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Selling Your Business

An Original Article from Small Business Administration (SBA.gov)

If you decide that selling your business is the right exit strategy for you, be sure that you cover all your bases. In order to sell your business officially, you will need to prepare a sales agreement. This is the key document in buying the business assets or stock of a corporation. It is important to make sure the agreement is accurate and contains all the terms of the purchase. It would be a good idea to have an attorney review this document. It is in this agreement that you should define everything that you intend to purchase of the business, assets, customer lists, intellectual property and goodwill.

The following is a checklist of items that should be addressed in the agreement:

  • Names of seller, buyer, and business
  • Background information
  • Assets being sold
  • Purchase price and Allocation of Assets
  • Covenant Not to Compete
  • Any adjustments to be made
  • The Terms of the Agreement and payment terms
  • List of inventory included in the sale
  • Any representation and warranties of the seller and buyer
  • Determination as to the access to any business information
  • Determination as to the running of the business prior to closing
  • Contingencies
  • Fees, including brokers fees
  • Date of closing

For additional guidance and to view a sample sales agreement, visit Agreement to Sell a Business.

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Plan Your Exit

An Original Article from Small Business Administration (SBA.gov)

Do you know how you are going to exit your business? You may have a dream of going public, selling to the highest bidder, or retiring and handing over your business legacy to your family.

Big dreams aside, the truth is that many small business owners have no exit strategy for their businesses in the event of their disability, retirement, or death. Given the current economy, it isn’t surprising small business owners focus their energies on business survival, future growth, and even remaining active in business after retirement. However, a business exit strategy not only means having a plan for the unexpected – including financial hardship, injury, disability and even death – it also means having a plan for the succession or transfer of ownership of your business when it comes time to hang up your hat and retire.

Here are a few things to consider as you plan your business exit strategy:

Develop a Succession Plan

There is no “one plan fits all” when it comes to developing a succession plan for your business. But following SCORE’s recommended five steps to succession planning (including choosing and training a successor) can help provide some practical direction and deliver the peace of mind that comes from knowing that your life’s achievement is in good hands. You can also read more from the SBA about succession planning for family-owned businesses here.

Invest in a Retirement Plan and Insure your Worth

As with career employees, you will want to ensure that you invest in a retirement plan, life insurance and even personal disability insurance – all of which will protect you and your family when it’s time, forcibly or not, to step away from your business.

It’s relatively easy to address retirement planning, because we all hope to get there and, more importantly, want to enjoy it. But life and disability insurance are equally important for the small business owners, because they protect you and your family, should the worst happen. Here are some tips for finding the right plans for you and your business:

  • Finding the Right Retirement Plan – If you are a sole proprietor then you may want to talk to your bank about a setting up an IRA or other retirement solution. If you have employees, on the other hand, setting up a small business retirement plan for both you and your employees needn’t be that difficult – and also offers a nice tax deduction.
  • Disability and Life Insurance Options – While some states require employers to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury, most businesses opt to provide both disability and life insurance as part of an overall compensation or benefits plan.

The Process of Exiting Your Business

Whether you are selling your business, transferring ownership, seeking retirement, or facing a “forced-exit” such as bankruptcy or liquidation – planning your exit is a big undertaking that has implications on employees, your business structure, its assets, and your tax obligation. Before you embark on your exit strategy, be sure to engage your lawyer and even a business evaluation expert.  That way, you will be sure that you have explored all the options available to you.

If you have more specific questions about exiting your business, be sure to check out the IRS’ guide to closing a business.

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Starting

Offer a Business Opportunity

An Original Article from Entrepreneur.com

You’ve grown a successful business and now you want to expand. There are a number of potential paths you can choose to do that, and each has different advantages and disadvantages for you. Your choices can include:

  • Expanding your business by opening more outlets yourself. This option has the advantage of letting you keep all the profits generated by these additional outlets and also allows you to retain complete control of the business. The disadvantages to this strategy are that you’d have to invest all the capital required to grow the additional outlets yourself and you’d have to find employees who would run the other units for you while you run the original business. These are difficult challenges for many business owners, and this approach often results in slow growth because of these factors.
  • Expanding your business by franchising the concept. This alternative has the advantage of potentially creating more rapid growth for your brand and also allows you a fair amount of control over the operating system used by the additional outlets that are opened. The disadvantages of franchising your business are the costs and risks associated with getting this type of venture set up properly. There are numerous legal and regulatory hurdles to franchising, and you have to set up a support structure (including staff) before you ever begin seeing any revenue from these activities. There’s also the risk of not being able to recruit new franchisees for your system after you go through the expense of setting up a franchise company.
  • Expanding your business by offering a business opportunity so others can set up an operation comparable to yours. This is often an intriguing choice for an entrepreneur because it has the potential advantage of rapid and profitable expansion without most of the risks and costs associated with franchising.

For this article, we’ll focus on the option of offering a business opportunity. And in this context, we’re not talking about a multilevel marketing business but rather a more traditional approach to the business opportunity option.

First off, it’s important to understand the legal differences between a franchise and a business opportunity–there are laws and regulations that govern the activities of someone using either strategy to grow a business. It’s important to know–at least in general terms–what these laws are so you don’t inadvertently cross a line and become subject to costs and regulations you don’t want to have to pay or adhere to. As a general rule, a franchise structure is more highly regulated than a business opportunity, but most states have business opportunity statutes as well.

A franchise requires that a new franchisee pay an initial cost or fee to get involved; it has some form of obligated ongoing payment required (usually in exchange for a commitment to provide ongoing services), and has a common brand or brands used in the operation of the business. If you eliminate one or more of these characteristics, you’re generally considered to be operating a traditional business opportunity rather than a franchise.

The Documentation

The most typical method of setting up a business opportunity involves the owner of the successful business taking the time to document all the key operational characteristics and procedures involved in both starting up and successfully running the business. This is usually done by creating one or more manuals that explain everything a new person would need to know about the business based on the owner’s experience. The manuals need to explain the following areas in detail:

  • Startup. This covers every aspect of setting up the business properly. This section of the manual would include information on identifying all necessary supplies, furniture, fixtures and other materials needed for the business and the source for acquiring all such items. It would also include detailed information on how to find the right site for the business location and how to lay out all the equipment, signage, furniture and fixtures. Finally, it would also provide information about getting set up as an employer (government requirements, payroll services, insurance, and so on) as well as explaining in detail how to find the right initial group of employees for the business.
  • Operations. This section describes every aspect of running the business properly. This would include explaining customer relations, order taking, order processing, handling of cash or funds, hours of operation, employee management, payroll processes, and so on–basically a complete walk-through of every key aspect involved in successfully running the business once it’s open. The operations manual often also points out risks or mistakes to avoid while running the business in a section about “lessons learned the hard way.”
  • Marketing. This includes every aspect of properly building the customer base for the business. The one thing all businesses need to succeed is a sufficient number of customers. This documentation would include all tested and proven methods that have worked to attract and retain customers, whether that involves print advertising, direct mail, mass media, internet advertising or trade shows and events, among other things.

All this documentation, contained in a set of manuals, becomes the “business plan” for successfully operating this concept. The owner then offers this business plan for sale to interested parties who would like to start this type of a business.

Training and Fees

In addition to the manuals, the seller of a business opportunity usually provides an initial training program, which is normally conducted at the owner’s existing business location. The buyer comes to the location for a week or two to get hands-on training experience in an actual operating unit.

You typically charge a one-time fee for the business opportunity, and then after the training’s finished, the person who bought the business opportunity will be on their own. The contract for such a sale is usually pretty simple, and its main features are the price a person has to pay for the opportunity and a confidentiality agreement requiring the investor not to share the business plan information with anyone else.

The initial fee charged for a traditional business opportunity fluctuates widely, but for a reasonably thorough preparation for a reasonably complex business, it’s not uncommon for the one-time fee to range from about $10,000 to $25,000. Frankly, if you can’t generate a fee in this range, it’s probably not worth the effort to go through the process of preparing and then attempting to sell your business plan.

A business opportunity typically doesn’t require (and may even forbid) the new investor from using the same brand name as the existing business. A common brand is one of the characteristics that makes a business a franchise, and you want to make sure you’re not treading in franchise water if you mean to be a business opportunity. A business opportunity may also grant some form of exclusive territory as part of the sale, though many do not.

There’s typically no assumption that there will be any ongoing fees of any kind paid to the owner under the terms of the business opportunity contract. There’s also normally no assumption that there’ll be any ongoing service or support responsibility after the initial training in this type of relationship. As the creator of a business opportunity, you’re simply agreeing to give someone the initial advantage of your experience in exchange for a one-time fee payment.

Though there are usually no requirements to do so, most business opportunity owners do provide some ongoing communication facilitation to the people who bought their business plan. These buyers generally form a network of business owners with the common denominator of having all started from basically the same place. This communication can be as simple as a newsletter or, even more common today, an intranet with forums to share best practices and other helpful information.

The Step-by-Step Process

The path to setting up a business opportunity is fairly clear and involves the following main steps:

  • You’ll need to invest some time creating the business plan, but this is all information you already know from your own experience. If you don’t feel you have strong writing or communication skills, you can hire someone else to write the documentation for the business. You can also find templates for sale on the internet or in bookstores that will provide extensive support in the preparation of your manuals and business plan. These templates are usually available at a relatively low cost and consist of boilerplate language that you customize to fit your specific business concept.
  • Before you attempt to start selling the business plans, you’ll want to consult with an attorney familiar with business opportunity statues. There are four principle areas you’ll need to cover with your attorney. First, you need to make sure that the structure you’re contemplating for your business opportunity doesn’t make it a franchise under the definitions of either federal or state laws. Second, you’ll need your attorney to prepare the proper contracts for you to use in the sale of the business opportunity. Third, you’ll need your attorney to review any promotional materials you intend to use in selling the opportunity and also to carefully explain what you can and cannot say and do during the sales process in order to comply with all applicable laws and regulations. Fourth, you’ll need your attorney to review your business plan materials to make sure you’re delivering whatever you’re promising in the sales process. This probably sounds more complicated than it really is. This process shouldn’t be very expensive, but it is an essential component of reducing your risk when you begin operating your business as a business opportunity.
  • You’ll also need to decide how you’re going to market the business opportunity in order to find people who’ll buy the business plan from you. The easiest way to get ideas on this subject is to study what other successful business opportunities are doing to promote the sale of their plans. You should analyze internet-based activities and promotional sites, newspaper and other print media advertising or PR efforts, tradeshows and other event promotions, and any other methods that are being effectively used by others. If possible, it’s also very helpful to develop one or more relationships with other people who’ve worked this route successfully before you to act as mentors while you’re getting started in marketing your opportunity.

What Businesses Should Offer Business Opportunities?

The types of businesses that work well under a business opportunity structure tend to have two common characteristics. First of all, they’re concepts that don’t require a common brand in order to convey quality or value to potential customers. Second, they’re concepts that are easy enough to learn that someone without experience in the concept’s operation can be taught whatever they’ll need to know to be successful in a relatively short period of time (say, two weeks of training or less).

Most business opportunities that are successful in selling a significant number of business plans also feature a fairly low total investment (including working capital and a grand opening advertising budget) to get started in the business. They’re almost always less than $150,000 in total investment, and many are under $50,000.

The types of businesses that don’t tend to work well under a business opportunity structure are usually ones with more complicated operations and/or ones that require special licenses to conduct business, especially if the licenses take months or years to acquire. It’s also much harder to sell a business opportunity if the total investment to start the business is greater than $200,000 or so.

Deciding to expand your business by preparing and offering a business opportunity can be very rewarding financially. And if you’re the kind of person who gets satisfaction from helping others achieve success, you’ll probably find that many nonfinancial rewards come to you after you start offering a business opportunity based on your already successful venture.

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When You’re Ready to Sell the Business

An Original Article from Entrepreneur.com

For a number of small business owners who may be ready to sell their companies, the past few years have been a time to cut unnecessary expenses, make ends meet and to patiently wait for the market to rebound. There simply was no use in trying to sell the business when company revenues and profits were down. Low purchase-price valuations only made matters worse.

But 2010 saw a slight improvement in the business-for-sale market and many experts expect that 2011 will be a turning point for the industry. Financing options are improving for buyers and banks are putting a new focus on lending.

So, if you’re thinking of selling your business this year, here are four tips to maximize your profit.

Plan Ahead

Like they do for any big purchase, business buyers will do their research before signing on the dotted line. That means it’s important for sellers to be ready to demonstrate their business is worth the asking price. Make sure your financial records are in order. Keep a minimum of three years of documents, including tax returns and expense records. These are essential to establish buyer trust in the economic history of the business. Also, be sure to resolve any outstanding business issues. These can include short-term lease agreements, over-reliance on one or a few key customers and any outstanding legal issues.

Don’t forget the physical elements of the business as well. Take care of any building improvements such as painting the storefront, cleaning up the distribution facility or re-decorating the interior. The physical appearance is often the first impression a buyer gets, so make sure it’s a positive one.

Understand the Market

To set your asking price accurately, you need to know where your business stands in the market compared to other businesses for sale. Overestimating your value can lead to a long and difficult sale process, while underestimating will leave money on the table. Expect an improved selling environment in 2011, but don’t make the mistake of asking for pre-recessionary prices.

To determine the right price, find out what similar businesses have sold for or listed for recently. Websites like BizBuySell.com and BizQuest.com allow you to search for similar listings based on factors such as industry, size and location. You can also purchase a valuation report to see detailed information on recent local sales.

Take a look at your own financials as well. If your business’ revenue and cash flow have declined, take that into consideration. Buyers will. Don’t be fooled into thinking they’ll pay you based on business results prior to the downturn. The goal is to set a price that will attract the greatest number of serious buyers and enable you to close a deal at the highest possible price.

Get the Word Out

One way to get a leg up on the competition and ensure the best possible outcome is to hire an accomplished business broker. Check broker references carefully and see if you can find additional references they don’t provide themselves.

If you choose to sell on your own then market aggressively. Put together a full marketing plan, including but not limited to getting your listings posted online, in the local newspapers and appropriate trade publications, and networking through friends and family.

Be Prepared To Offer Financing

In today’s market, seller financing is essential. While lending from local and national banks will continue to loosen based on the economic stimulus and the Small Business Jobs Act of 2010, banks are still almost universally requiring that seller financing is part of any deal they fund.

That means you’ll be required to take a minimum of 20 percent of the sale price in the form of a buyer note that the buyer will pay back over time, with interest. This also means that you’ll have an investment in the business even after the sale. The buyer and lender will expect you to participate in a successful transition with the new owner and to help get them off to a strong start.

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Selling Your Business? Serial Trep Gurbaksh Chahal Says Be Bought, Not Sold

An Original Article from Entrepreneur.com

In this ‘Trep Talk Extra, serial entrepreneur Gurbaksh Chahal talks about the three stages of an entrepreneur — and offers advice for business owners who are ready to sell their companies.

The young multimillionaire entrepreneur says why “you never want to be sold, you want to be bought” and explains why perception and positioning are key to making that happen.

Emigrating from India to California with his family at age 4, Gurbaksh Chahal struggled with bullies at school. But he leaned on family for strength that would become his entrepreneurial fuel. He dropped out of school, started a business and never looked back. Chahal sold his first online advertising startup ClickAgents for $40 million, cashed out his second company BlueLithium for $300 million, and now he’s on his third venture, RadiumOne.

‘Trep Talk: Gurbaksh Chahal on Turning Obstacles into Opportunities

‘Trep Talk EXTRA: Gurbaksh Chahal on a Business Idea Myth

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Advantages and Disadvantages of Self-Employment

An Original Article from 360FinancialLiteracy.com

You’ve grown tired of commuting to a job where you sit in a cubicle and do someone else’s bidding. You’ve got a better idea, you can build a better mousetrap, you know you have the knack for being in the right place at the right time, and so you’re thinking of self-employment. But how do you determine if this is a pipe dream or an idea worth pursuing?

Can you handle it?

Whether you’re running your own business or working as an independent contractor, you’ll soon realize that working for yourself isn’t just another job, it’s a way of life.

Are you someone who likes a nine-to-five routine and collecting a regular paycheck? When you’re self-employed, you must be willing to make sacrifices for the sake of the job. You’re going to work long hours, which means that you won’t have as much time as you used to for family or leisure activities. And if the cash flow becomes a trickle, you’re going to be the last one to get paid.

Can you get along well with all types of people? Being self-employed is all about managing relationships–with your clients or customers, your suppliers, perhaps with your employees, certainly with your family, and probably with your banker, lawyer, and accountant, too. If you’re the type who wants to be alone to do the few things that you’re good at, then you should do that–for someone else.

Are you a disciplined self-starter? Being self-employed means that you’re your own boss. There may be days when you’ll have to make yourself sit at your desk instead of going for a long lunch, or (especially if you work out of your home) place those business calls instead of reading the newspaper.

Finally, do you enjoy wearing many hats? Depending on your line of work, you may be involved in handling marketing and sales duties, financial planning and accounting responsibilities, administrative and personnel management chores–or all of the above.

Your dream come true

Think about how great it will feel to get paid to do what you’d love to do anyway. If you’re working for yourself, chances are you’ll be doing work that you enjoy. You’ll get to pick who you’ll work for or with, and in most cases you’ll work with your customers or clients directly–no go-betweens muddying the waters. As a result, you may have days when it hardly feels as if you’re working at all. Such harmony between your working life and the rest of your life is what attracted you to self-employment in the first place.

Being your own boss means that you’ll be in control of all of the decisions affecting your working life. You’ll decide on your business plan, your quality assurance procedures, your pricing and marketing strategies–everything. You’ll have job security; you can’t be fired for doing things your way. As you perform a variety of tasks related to your work, you’ll learn new skills and broaden your abilities.

You’ll even have the flexibility to decide your own hours of operation, working conditions, and business location. If you’re working out of your home, your start-up costs may be reduced. You’ll also experience lower operating costs; after all, you’ll be paying for the rent and utilities anyway. If the location of your work isn’t important (perhaps you’re a freelance writer or a consultant), you can live wherever you want. At any rate, if you work at home, you’ll greatly reduce your daily commuting time and expense.

If all goes well and you’re making money, chances are you can make more than you did working for someone else. And since you’re working for yourself, you may not have to share the proceeds with anyone else. The fruits of your labor will be all yours, because you own the vineyard.

On the other hand . . .

When you’re self-employed, particularly if you’re starting your own business, you may have to take on a substantial financial risk. If you need to raise additional money to get started, you may need a cosigner or collateral (such as your home) for a loan. Depending on how much or little work you can line up, you may find that your cash flow varies from a flood to a trickle. You’ll need a cash backup so you can pay your bills while you’re waiting for business to come in or waiting to be paid for completed work. Since you’ll have to pay your own creditors first, this means that sometimes you may eat cereal instead of steak.

Remember that you’re not making any money if you’re not working. You don’t have any employer benefit package, which means that it’s going to be hard for you to go on vacation, take a day off, or even stay home sick without losing income. It also means that you’ll have to provide your own health insurance and retirement plan. Remember, too, that you can choose your clients or customers, but you can’t control their expectations or actions. If you don’t come through for them, or if you do something that offends them, you might not get paid for your work.

Because you’re working for yourself, you’re going to have to take care of everything yourself, from figuring your taxes to watering the office plants. You’ll probably need some new skills, such as bookkeeping and filing quarterly taxes. You can learn to do these things yourself–many software programs are designed just for this market–or you can hire others (e.g., an accountant) to take care of them for you. If you’re not careful, however, you may find that you’re spending more time on the business of being in business for yourself than you are on the work that attracted you to self-employment in the first place.

The bottom line

If you can work long and hard, tolerate risk and stress, cope well with potential disaster and failure, and work well alone and with others, then perhaps self-employment is right for you. If not, then perhaps you should keep that job in the cubicle.

How to Create an E-Mail Marketing Campaign That People Will Notice

An Original Article from Entrepreneur.com

In a world where social media gives businesses more immediate ways to connect with customers, is e-mail marketing still relevant? I think so. In fact, the volume of e-mail marketing messages remained at record-setting levels in June, according to Chad White, research director at marketing company Responsys, and retail e-mail volume will grow about 20 percent this year (vs. more than 16 percent in 2011), thanks to a shift away from old-school direct mail and print.

That makes for a more crowded party. Your e-mails are competing with (literally!) millions of others, which means you must be intentional in your efforts to create messages that truly engage your customers. Here’s how.

1. Start with a robust list.

This is an obvious point, but it’s worth reiterating: Make sure the contacts on your e-mail list actually want your messages. You may be as witty as David Sedaris, but if your audience has already tuned you out, what’s the point?

How do you know if your list is stale? Check your open rate. The average is 20 percent, according to the Email Marketing Metrics Benchmark Study released in July by marketing firm Silverpop. If your open rate is significantly less than that, you might have a stale list (or the average for your industry varies significantly from that of others).

Other measures of the health of an e-mail list include click-through rates (how many people took a desired action; i.e., clicked on a link) and conversion rates (how many completed a task in an e-mail message, such as buying a product or signing up for an offer). But the open rate is probably the most telling metric.

2. Freshen things up.

Freshen it up by doing something unexpected, suggests DJ Waldow, co-author of The Rebel’s Guide to Email Marketing. Segment your list to send a dedicated message to those who haven’t opened an e-mail recently, and make the content slightly offbeat–shocking, humorous or whatever fits your brand best. “Whatever you normally do, do the opposite,” Waldow says. The idea is to incite reaction and (one would hope) reengagement.

It’s tempting to hang on to those unresponsive addresses — it can be painful to think of purging unengaged recipients. But, as Waldow says, “E-mail marketing works best when you speak to those who really want to hear from you.”

3. Use real images.

Stock photography is so yesterday — it’s far better to use your own images. Punctuate e-mails with images from your Instagram or Pinterest feeds, or use staff photos. I like the way the Ibex Outdoor Clothing newsletter features company employees as models.

“Imagery doesn’t have to be polished to tell the story,” Waldow says. “Keep it real, light and fun.”

But be aware that too many graphic elements might make it more difficult for your message to render across every e-mail client and on multiple devices.

4. Keep it simple.

Kill the buzzwords, corporate jargon and Frankenspeak. Instead, communicate like an actual human–even if what you sell is complicated. Simple terms are more likely to be read, so write clearly, and use the first person.

Make your calls to action simple, too. In fact, make them stupid-obvious. Haven’t we all been the recipients of confounding e-mails that make it difficult to tell how to access an offer? “Don’t make me search!” Waldow says.

5. Create shareable moments.

Outfit your e-mail with social-sharing bling: forward-to-a-friend links and buttons for seamlessly sharing the content on Twitter, Facebook, LinkedIn and Google+. I like the way Boston-based VC firm OpenView Venture Partners places a “tweet this” link after each headline teaser in its weekly newsletter, so readers can share the headline directly from the e-mail (instead of having to click through to the article itself).

Also consider how you can make the e-mail itself more social. At MarketingProfs, we highlight a tweet from a member of our community in our daily newsletter. Such features create a sense of camaraderie and add an element of surprise, Waldow notes, “because you never know if you’re going to be featured, so a reader is likely to open to see if today is the lucky day!”

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Government Contracts a Lesson in Patience

An Original Article from The Wallstreet Journal

Like many business owners who have suffered during the downturn, Randy Lebolo decided the most reliable client for his small construction firm would be Uncle Sam.

When the real-estate market was in free fall nearly two years ago, Mr. Lebolo decided to shave staff, negotiate with his landlord for a lower lease, and begin the long process of becoming certified to bid on federal work opportunities. He finally won his first government contract recently to remodel a courtroom in a Fort Lauderdale, Fla., courthouse. But the job pays just $250,000, not nearly the lucrative amount Mr. Lebolo—who says his Boynton Beach, Fla., firm had a history of multimillion-dollar commercial construction jobs before the downturn—thought he’d land.

Many small businesses are learning that it’s not always easy to get a foot in the government’s door, and the rewards might not always seem worth the hassle. Winning a government contract can require massive amounts of research, long wait times and capital—all difficult investments for a struggling enterprise.

Documentation is required to prove small-business eligibility and to obtain a number of certifications and registrations. Owners need to learn which agencies are best to target, how to write a government proposal and how to network with procurement agents.

The process requires lots of patience. On average, businesses have found that winning a contract takes nearly two years of trying, according to a recent American Express survey of about 1,500 businesses either engaged or interested in federal procurement opportunities. Some 42% of business owners who haven’t landed their first contract said they registered in the government’s procurement system for the first time within the past two years.

That means government work might not be a viable lifeline for businesses on the brink of shuttering. Despite an influx in training and networking events, some sponsored by the Small Business Administration, winning an initial contract can require more time, energy and money than some business owners can afford. Mr. Lebolo, for instance, spent months traveling the country to attend events, and hired advisers, lawyers and accountants to help him file all the necessary paperwork.

Still, the federal government is an attractive source of money for many businesses that have lost private-sector work or clients. Roughly one in five business owners who are seeking government contracts say they are doing so to counter the ebb and flow of their business, according to the American Express survey.

The federal government is mandated to award 23% of its prime contracts to small businesses every year, which amounted to $97 billion in 2009, according to preliminary data from the SBA. And contracts from the February 2009 stimulus have been particularly lucrative for small businesses, as nearly 30%, or $7.4 billion, have gone to Main Street firms.

Stimulus opportunities will continue to flow in coming years, given that only a third of allocated funds have been paid out thus far.

Mr. Lebolo is optimistic his recently won contract will lead to more. “You need to learn the [government contracting] process slowly, take a smaller job and understand what the requirements are,” says Mr. Lebolo, who has taken a few small commercial jobs to keep his firm, Lebolo Construction Management Inc., afloat. “If they ask you to paint a door, then take it,” he says.

But even business owners who are growing and interested in new revenue streams find the government-contracting process less than attractive.

A few weeks ago, Ben Engber attended an informational event in New York City sponsored by American Express OPEN, the company’s small-business division, to learn how his Brooklyn-based software development firm, Thumbtack Technology Inc., could land government projects.

“The biggest takeaway was that it’s a different world than the one I’m used to,” Mr. Engber says, adding that government agencies “want a specific service, and have set criteria to evaluate you.” With commercial work, “you can go in and explain what you do and why it’s superior,” he says.

Mr. Engber says he’d likely need to rebrand his firm and tweak his business model before diving into the process. Knowing the amount of time and energy that would take, he has decided to hold off on pushing into the federal arena, especially since his company is growing in other areas, he says.

Mr. Lebolo, however, is shifting his firm’s strategy to primarily focus on government work. “I made a determination to look hard into the federal market because it was the only place with money,” he says.

He says he’s not frustrated by the relatively small price tag of his first government assignment. Now that the process of landing a contract is behind him, he says there is no going back to commercial construction. He hopes to grow and begin hiring again by the end of this year. “This is a long-term decision,” he says.

Write to Emily Maltby at emily.maltby@wsj.com

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