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Ho-hum, you may be thinking. Or, boring. Maybe even, when can I possibly fit this into my hectic week?

As an entrepreneur, you are an extremely busy individual who probably shoots from the hip more often than not. So, do you really need to take the time and effort to put a business plan in writing?

Almost every CEO and business consultant in the country would answer with a resounding, “Yes!” The importance of a business plan cannot be overemphasized; however, the plan should be carefully considered and comprehensive and objective in nature.

Many entrepreneurs are quick to write a plan if they are seeking external financing, but the reality is every company needs a plan.
Having a good business plan in place will help you stay focused and achieve the goals you have set.

The U.S. Small Business Administration notes that “a business plan should be a work in progress.” Conditions change every day. Our national economic climate is not what it was ten years ago, and your local business environment has more than likely changed in the last few years. Factor progress or decline in your specific industry into this mix as well.

Focus on what makes your company special: what niche does it serve? Think about where you want your business to be in one year, five years, ten years.
What should be included? An executive summary that states the intent and purpose of the company; a thorough description of the business (including information on marketing, human resources, policies, procedures and competition); financial data (P&L statements, balance sheet, list of equipment); and any supporting exhibits (including resumes of principals, lease agreements and other legal documents).

Time spent today creating a business plan is definitely a solid investment in your company’s future.
 

You may be dreaming of starting your own business from scratch. Or are you really dreaming of being your own boss and seizing control of your financial destiny?

Most entrepreneurs would be wise to take a look at purchasing an existing business, provided they have the financial power to do so. Most business owners and industry experts would agree with the logic behind this decision. After all, the potential for failure is huge when starting something brand new, whereas stepping into the shoes of a successful entrepreneur provides the new owner a tremendous head start.

According to the U.S. Small Business Administration, over half of all small businesses fail in the first five years. Start-ups are tricky, and that first year of operating a company can be like walking through a field of land mines. What equipment should you buy? Who is the best vendor for supplies? Will you need to hire employees? Where should the business be located? What are going to name it? Do you need to create a logo? What about establishing policies and procedures? How will you attract customers? Have you thought through an emergency plan? Those are only a few items that will need addressing in the initial stages of establishing your entity.

By purchasing an existing company, you dramatically reduce problems that generally arise within the first few months of operating a business. The company is established, and you inherit a name, location, equipment, vendors and suppliers. Perhaps most important are the customers that are in place, familiar with the business and its products or services.

When an entrepreneur buys an existing company, a training period with the former owner is generally included. The amount of training time is often negotiated when an offer is made to purchase the business. Savvy entrepreneurs use this time wisely to learn about the day-to-day operations, as well as demand, seasonal fluctuations, competitors and marketing. Ask questions and perhaps suggest that the previous owner be available via phone for a period after the training (be reasonable with this request: a question here or there is expected, not lengthy conversations on basic issues that should have been covered during initial training).

Not only are customers in place, but buying an existing business usually means there are employees in place who want to remain with the company. Having a built-in customer base, earning a profit from Day One and retaining knowledgeable employees are a great way to begin your new venture.


 

A recent national survey confirmed what business brokers have noted for years: making money is not the primary reason buyers are interested in owning their own business.

When asked to rank 12 factors in order of importance, the majority of buyers did not place potential earnings in the first half of the list. Freedom, flexibility and control of one's destiny are the main reasons buyers are attracted to independent businesses. Interaction with customers and clients also was consistently ranked higher in importance than personal income.

Keeping these motivating factors in mind during the business transfer process helps buyers and sellers. Qualified buyers generally possess the entrepreneurial spirit necessary to take risks and make decisions. As business brokers, we facilitate this process by interviewing prospective buyers to learn more about their educational and occupational backgrounds and why they are looking to acquire a company. Understanding a buyer's motivation helps a good business broker suggest listings that may be of interest to the buyer and provide a good fit with the buyer's needs.

Recently, I've noticed several articles in various publications regarding changes in residential real estate marketing strategies. It seems that open houses (except those hosted for other real estate agents) are no longer a preferred way to reach potential home buyers. Today's tech-savvy buyers prefer to research listings on the Internet, taking virtual tours when and where it is most convenient to them. Most buyers, these articles note, make a decision whether or not to contact the listing agent based on these virtual home tours.

This got me thinking about buyers looking for a business to purchase and the similarities of utilizing the Internet for research. The majority of advertising and marketing for business brokers is handled through web sites that feature businesses for sale. While a few of these sites are available to entrepreneurs looking to sell their companies themselves, the majority are available only to business brokers through professional subscriptions.
As we've discussed, maintaining confidentiality of the business is a key factor for a successful business transfer. After all, a small business owner does not want to announce to his customers or competitors that he is thinking of retiring or leaving the industry.

The larger sites available to business brokers offer more space for describing key points about the companies for sale, while still maintaining complete confidentiality. Business brokers are experienced in wording listing descriptions that grab attention and highlight the factors most buyers will find attractive.

You only get one chance to market your business. Most buyers will find your company's listing by searching online. Make sure to maximize your marketing strategy when the time is right for you to sell.
 

“Loose lips sink ships.” It’s a familiar phrase to Americans, originally written by the War Advertising Council during World War II as “Loose lips might sink ships.” The British also used variations of the phrase that encouraged citizens and military personnel to avoid careless talk that might serve the enemy.
The phrase is still used today to caution against thoughtless chatter in general.

When selling a company, it is vitally important that confidentiality be maintained throughout the business transfer process. A breach of confidentiality may not only kill the deal, it can cause further repercussions to the seller as employees and customers may leave, creditors may begin to scrutinize more intently and competitors may capitalize on the perceived opportunity.

If a business owner is unable to disclose information, how is he supposed to sell his company?

Business brokers are professionals in this arena and have the experience and tools in place to manage the business transfer process discreetly, helping sellers maintain the utmost confidentiality until the transaction has been completed. This is accomplished by:
•    Marketing effectively
•    Qualifying buyers
•    Using documents that require confidentiality
•    Managing the information flow

A business broker should prepare a customized marketing approach for each company he lists for sale. This includes describing the business in a generic fashion -- one that will appeal to prospective buyers without jeopardizing the seller’s identity.

Approximately 90% of prospects who initially reply to advertisements are usually not a fit at all, generally because they lack the necessary experience or cash investment for the transaction. There are also a lot of “lookers” or “tire kickers” who can easily drain a seller’s time and tax his emotional energy. Business brokers have the skills to help qualify buyers immediately, before the seller is ever involved.

Business brokers use confidentiality agreements, with wording prospective buyers must agree to, in writing, before additional information is released.
Business brokers also manage the flow of information, holding the most sensitive records secure until a formal offer to purchase (with escrow deposit) has been accepted by the seller.

The business transfer process is somewhat unique in that the details of the entity being sold are not shared initially, but rather peeled away as the buyer becomes more interested and continues to offer proof of his sincerity and qualifications.