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Thinking of Buying Or Selling Your Business in the New Year, How is Your Transition Plan?

The process to sell a business is not a quick and easy matter. At the moment it is taking about 8 months to sell a business, if it sells. This means the business sits on the market for about 6 months before finally getting an offer from a buyer. Once the negotiations finish, due diligence commences and closes and escrow opens and closes we arrive at the 8 month period. And this applies if the business sells. Depending on which statistics you read, approximately 75% of businesses never sell.

As the entrepreneur looking to sell and transition out of being a business owner, it’s not a quick process. It can even drag on if the buyer wants the seller to continue in an active role in the business in some capacity. At the end of the day, however, it all needs to make sense to the entrepreneur and the best way to do that is to build a transition plan.

What should be included in the transition plan? A transition plan can overlap with an Exit Plan. An exit plan is essentially a process to exit business ownership. A transition plan is a strategy to manage the protection and eventual transfer of assets or stock in a proactive, tax efficient manner. Essentially an entrepreneur can have 5 types of assets. These are Personal Property, Real Estate, Business Interests, Insurance Plans and Employee Benefits.

Personal property includes savings, stocks, bonds and personal effects. Real estate includes both residential and commercial property. Business interests include the business legal entity such as a corporation, partnership or LLC. Insurance plans include life, health and annuities. Employee benefits include pension, 401(k), IRA and stock options.

Creating a Transition Plan touches all aspects of an entrepreneur from the obvious personal financial need and therefore personal security to matters such as tax and perhaps not always recognized, the emotional needs of the entrepreneur. At all times the emotional needs of the entrepreneur are always exposed. Things like divorce, health issues, family issues, personal safety and disability are always looming. The pressure of the business from customers, suppliers, landlords, employees, government agencies, lenders and a myriad of others constantly keeps an entrepreneur thinking, planning and reacting.

When transitioning the ownership of a business there are many options. An outright sale to a buyer is one of the most obvious but there are 4 other possible options. These are selling the business to the employees through an ESOP program, sell through a Charitable Trust, transfer to a family member and sell to a partner. In certain circumstances, the owner could take the business public and sell his interest via an Initial Public Offering or IPO but most businesses would not meet the criteria including handling the associated costs.

A quality Transition Plan is all about success. Its ultimate goal is to ensure that the business and the owner moves from one state to the next. The best analogy I like is that it’s like juggling two snowflakes. Every snowflake is unique because of temperature, the absence or inclusion of a piece of dirt, the number of water molecules, spins of electrons, hydrogen and oxygen etc. So too is a business and its owner. To preserve and maintain the business and protect its uniqueness it must be treated carefully and properly.

The same applies to the owner. The owner can live without the business and the business can live without the owner as long as proper care and attention are given to each so when the next owner comes along with their uniqueness, like another snowflake, it has to make sure it can mesh with the business and both be successful.

Business to Business Marketing

Attracting the attention of other businesses for marketing purposes can be somewhat difficult at times. Since all businesses are interested in attracting more exposure and in turn creating more revenue there has to be a win-win situation in order for business to business marketing to work. When this type of marketing is instituted correctly both businesses can gain quite a lot. There are special marketing needs for those that are interested in business to business marketing. This is especially true for those that are interested in marketing via the internet. Understanding the special needs of the business to business marketer is necessary for identifying internet marketing techniques that will be worthwhile.

There is a difference in the marketing techniques that are used for business to business marketing. Unlike consumer marketing where a business is trying to reach a large number of consumers, business to business marketing tends to be a bit more personal. Businesses are selling their products and services to one another so there tends to be more interaction at a closer level. Because of this the methods that are used for internet marketing have to be tweaked just a bit. In the initial phase of establishing relationships the internet marketing techniques can be used to give a company exposure. For example, article writing can be used to help a business obtain new prospects. The articles can be written just as they would be for any other business. The use of links and keywords for article marketing still applies to articles written for business to business marketing. The main difference is that the method of submission will be a tad bit different when dealing with articles that are written specifically for business to business marketing.

The submission of internet marketing articles for business to business marketing will be targeted to towards businesses only. Keeping this in mind, articles are more likely to be posted on blogs that are run by other companies. Sometimes the article may be sent as part of a mass email to other businesses for promotional purposes. Also, many businesses are now using social networking sites in order to communicate with consumers. These social networking sites make it possible for businesses to connect with one another as well. When connecting a link to the article can be sent from one business to the other making it easy to relay information about the services that are offered.

There a number of other ways in which business to business marketing can be effective using the internet. If a company wanted to have a presentation to market its goods to another company they could easily send a video to the company via email or through a social networking platform. The business could also upload a video to their website so that visitors to the site have a visual presentation of all the services that are offered by the business.
All of these methods are very valuable for any business that is looking to utilize the internet for their business to business marketing.

Should You Sell a Business Privately Or Use a Broker

This article on businesses for sale by owner can be from the perspective of a business owner or from the perspective of a business buyer. A business can be for sale by the owner or he can make arrangements with a broker to sell it. Business opportunities can come in several ways and has been enumerated in the second to last paragraph.

If you are a business owner and decide to sell your business yourself then the first thing you have to do is to find out the value of your business. This can be done by ascertaining the price that similar businesses have fetched, over a period, say, in the last five years. The research for this can be done on the Internet and also by talking with people in a similar business. There are also trade magazines which can be used to gather information.

You also need to decide whether you will handle all the legal matters pertaining to the sale yourself or whether you need to hire an attorney. If you decide to hire an attorney you can decide the scope of his work. The fees can be determined as an amount for the job from start to finish or you and the attorney may decide that you will be billed on an hourly basis. You should in that case ascertain an estimate from the attorney and perhaps also have the phrase not to exceed in your contract with the attorney.

After you have ascertained the value of your business you need to advertise it in the proper media. Depending on what business it is, a certain medium may be more conducive for this purpose. For example, certain businesses might advertise their sale in the local newspaper or in a magazine whilst others may advertise the sale on the Internet.

After you have advertised the business in the proper medium/media you will receive offers. You will need to respond to these offers. Some offers may be rejected right away as they are too low or are conditional.

When you are satisfied with an offer and decide to sell the business you will receive payment and go through the process of transferring the ownership of the business to the buyer. You may also decide the payment method which is most beneficial to you from a tax perspective.

Business opportunities can be found in your neighborhood, on the Internet and in your local newspapers. It is prudent to buy a business which you know something about.

Some business opportunities come in the form of franchises. To buy a franchise may be the easiest way to run your own business. When you buy a franchise you will receive training or guidelines on how to run it. Examples of franchises are Subway, McDonald’s and so on.

While a business is for sale by owner saves the owner from paying a commission to a broker it may also not bring in the best offers. A broker is usually an experienced knowledgeable professional and if the broker works hard on behalf of the owner he will be able to find several buyers and thus several offers. The owner needs just one offer to make the sale provided it is a good offer and meets his expectations. Business opportunities are available to buy a business from an owner or through a broker or when you buy a franchise.