Day One is the Day to Prepare Your Exit

Pepperjam CTO, Greg Shepard recently published “Planning Your Exit Should Begin When You Launch” in Entrepreneur magazine.  In this article, Shepard puts forward a variety of thought-provoking ideas including that entrepreneurs should be thinking about partnering early on with those they believe will ultimately want to buy their business. Thinking Ahead Much of Shepard’s thinking centers around the fact that a large percentage of startups end in acquisitions.  In particular, he notes that in 2017, “mergers and acquisitions accounted for 93 percent of the 809 ventures capital-backed exits, yielding a total of $45.6 billion in disclosed exit value.”  Not too surprising, he also points out that according to a recent Silicon Valley Bank survey, over 50% of all startups are “hoping for an acquisition.” For this reason, Shepard points out that entrepreneurs should be thinking about who may potentially acquire them from day one.  In particular, startups will want to build their companies in … [Read more...]

What Makes the Sale of a Business Fall Through?

There are a myriad of reasons why the sale of a business doesn’t close successfully; these multiple causes can, however, be broken down into four categories: those caused by the seller, those caused by the buyer, those that just happen (“acts of fate”), and those caused by third parties.  The following examines the part each of these components can play in contributing to the wrecked deal: The Seller 1. In some instances, the seller doesn’t have a valid reason for entering into the sale process.  Without a strong reason for selling, he or she has neither the willingness to negotiate nor the flexibility to see the sale to a conclusion.  Without such a commitment, the desire to sell is not powerful enough to overcome the many complexities necessary to finalize the sales process. 2. Some sellers are merely testing the waters.  As detailed above, they are not at that “hungry” stage that provides the push toward a successful transaction.  These sellers merely want to see if anyone wants to … [Read more...]

When It’s Time to Sell, Put Your Strengths First

Putting your strengths first will help you sell your business.  While this may seem obvious, a surprising number of business owners will either improperly index the strengths of their business or fail to emphasize those strengths adequately.  In this article, we will examine five key business strengths that you should focus on when it comes time to sell. Understand Your Buyer You know your business, but you don’t necessarily know what buyer is best for it in the long run.  If you’ve never sold a business before (and most business owners haven’t), then you may not know how to best position and present your business for sale. A business broker is immensely valuable in this regard.  These professionals are very good at determining which prospective buyers are serious and which ones are not.  Additionally, a business broker will use their own databases of prospective and vetted buyers and try to match your business up with the prospective buyers that are most likely to be a good fit.  When … [Read more...]

Evaluating Your Company’s Weaknesses

The time you spend evaluating your company’s weaknesses is, as it turns out, one of the single best investments you can hope to make.  No one should understand your company better than you.  But to fully understand your company, it is essential that you invest the time to understand your company’s various strengths and weakness. Your company, from the beginning, has been an investment.  It’s an investment in your time, your mental energy and, of course, your financial resources.  The time and effort you expend to locate, understand and then fix your businesses’ weaknesses is time very well spent.  Addressing and remedying your businesses’ weakness will not only pay dividends in the here and now, but will also help get your business ready to sell.  Let’s turn our attention to some of the key areas of weakness that can cause some buyers to look elsewhere. An Industry in Decline A declining market can serve as a major red flag for buyers.  You as a businessowner must be savvy enough to … [Read more...]

The Top Three Major Legal Mistakes to Avoid During a Sale

The business sale process can be complex, which is part of the reason why it makes sense to have expert help in the form of a business broker.  Legal mistakes can be very costly mistakes.  A legal mistake can also bring the entire sale process to a sudden and complete halt.  Let’s take a closer look at what you can do to avoid these kinds of issues when selling your business. Major Mistake 1 – You Skipped the Non-Disclosure Agreement Nothing quite invites trouble like skipping the non-disclosure agreement.  If a deal falls through, then you have the NDA backing you up.  This document ensures that the prospective buyer doesn’t tell the world that your business is up for sale.  Never assume that a deal is going through until it actually is 100% complete.  Buying or selling a business is a complex process with lots of moving parts.  There is plenty of room for things to go wrong, and that is why you always need to have an NDA in place. Major Mistake 2 – You Don’t Work with an … [Read more...]

The Top Two Ways to Purchase a Business without Collateral

Banks love collateral and for a very simple reason.  If you have collateral, then the bank has something it can take if you fail to repay your loan.  At its heart, collateral is a remarkably simple concept.  However, unfortunately, many people who want to start a business lack it.  All of this leads us to the simple question, “Can I start a business without a collateral. 1. Try the SBA There are ways that you can start a business without collateral, but you will need some amount of money.  The larger the business, obviously the more money you’ll need.  Those interested in the zero collateral route will want to take a look at the SBA’s 7 (a) program.  This program incentivizes banks to make loans to prospective buyers.  Through this program, the SBA guarantees an impressive 75% of the loan amount. Of course, the buyer still has to put up 25% of the money in order to buy the business, but for those looking to own a business without having to put up collateral, the SBA’s 7 (a) program is … [Read more...]

It’s Time To Embrace CSR (Corporate Social Responsibility)

If you are unfamiliar with CSR or corporate social responsibility, you are certainly not alone. In the coming years, you'll be hearing a lot about CSR. In this article, we'll look at CSR and how, when implemented with sincerity, it can positively impact your company and its operation. Building Your CSR Locally One of the key ways that you can build your CSR is to think about ways to help your community. Contributing to local community programs, for example, is a great place to start. Everything from personal involvement to direct financial support can help build your company's reputation within your community. Your Connection to the Environment A second way to build your CSR is to show that your company is thinking about its impact on the environment. Recycling is important but so is using eco-friendly packaging and containers. Additionally, embracing low-emission and high mileage vehicles is another good step as this lowers your company's carbon footprint. Advertising and Good … [Read more...]

You Know the Old Saying About Loose Lips? How Does It Impact You?

The saying “loose lips sink ships,” doesn't have ancient origins. While it sounds like one of those sayings that has been around forever, the saying was actually invented during World War II. It was taken quite literally. The idea was that a lack of secrecy could lead to the loses of actual ships or other wartime deaths. So in other words, this saying was serious business. It should come as no surprise that this saying is alive and well in the business world. Few things are more important than safeguarding your business from leaks. Leaks can, simply stated, spell disaster for your business. Leaks can be particularly damaging if you are looking to or are in the process of selling business. A leak that you are planning on selling your business can have a range of consequences. Everyone from employees to customers, suppliers and, of course, prospective buyers and competitors could all take notice and this could have ramifications. Yet, confidentiality stands as a bit of a … [Read more...]

Top Four Statistics You Need to Know About Ownership Transition

If you own a business, then ownership transition should definitely be a central topic in your planning. A few years ago, MassMutual Life Insurance Company conducted a very interesting and thought-provoking survey of family-owned businesses. Obviously, family-owned businesses have their own unique needs and challenges. The MassMutual Life Insurance Company survey certainly underscored this fact. While the survey was conducted a few years ago, the information it contained is more relevant and actionable than ever. Let's take a closer look at some of the key conclusions and discoveries. Founder Control One of the most important findings of the survey was that a full 80% of family-owned businesses are still controlled by the founders. The survey also discovered that 90% of family-run businesses intend to stay family-owned in the future. Lack of Leadership Plans Leadership is another area of great interest. Strikingly, approximately 30% of family-owned businesses will in fact … [Read more...]

Reasons for Sale

The reasons for selling a business can be divided into two main categories. The first is a sale that is planned almost from the beginning or by an owner who knows that selling is or should be a planned event. The second is exactly the opposite – unplanned; the sale is motivated by a specific event such as health, divorce, business crises, etc. However, in between the two major reasons, are a host of unpredictable ones. A seller may not even be thinking of selling when he or she is approached by an individual, group or another company, and an attractive offer is made. The owner of a business may die, and the heirs have no interest in operating it. A company may bring in new management who decides to sell off a division or two; or maybe even decides that selling the entire business is in the best interests of everyone. A major competitor may enter the market, forcing an owner to elect to sell. And the competition may not just be another company. The owner of a business may realize that … [Read more...]