Your brand is a customer’s perception about your business. It determines how they feel about the services and product that you offer. A consistent brand message over time will shape what clients and customers think about you and what you stand for. As a business owner, you need to be able to answer the following important question: why should customers care about you? Every business owner has to think about the art of branding in order to build a stronger and more robust organization. This should incorporate the art of storytelling and the science of strategy in order to build a dynamic and memorable brand. Relationships with Your Clients In creating a brand, it is vital to remember that brand creation ultimately takes place in the mind of the consumer. Each individual consumer will create their own version of the brand based on his or her perception. At the core of the entire process is building trust. The goal, both in the short-term and the long-term, is for customers to feel safe … Read More »
An Overview of Term Sheets
If you’re planning on a business agreement to buy or sell a business, you’ll want to know about term sheets. These non-binding agreements will help with progress for both parties. The information covered in the term sheet should include everything from pricing and terms to special considerations. You can expect it to be between one and five pages in length. What is the Difference Between a Term Sheet and a Contract? When a term sheet is created, it demonstrates that there is an agreement between the buyer and seller and a business transaction is possible. However, neither party is bound to this transaction. On the other hand, a contract is typically a legally binding agreement that would hold up in a court of law. What are the Pros and Cons of a Term Sheet While it can be beneficial that a term sheet is non-binding when buyers and sellers are exploring the terms of a deal, it’s also important to know that a term sheet can come with risks. Due to the fact that it covers many details … Read More »
Is Your Deal Really Going to be Successful?
If you’re selling your business and things are looking positive with your buyer, you might be tempted to start resting easy. If you have a signed letter of intent, you might be even more tempted to think that things are pretty settled. However, the fact of the matter is that much can be uncovered during the due diligence process, and that is often when deals start to fall apart. Due diligence is an essential step that protects buyers, and sellers should be well-prepared to have things in good shape far in advance. Let’s take a closer look at some areas where a deal can potentially go awry. Products and Equipment When the sale involves a business that handles manufacturing, equipment is carefully evaluated during due diligence. Buyers will be thinking about any potential environmental issues that could affect the business. If you’re selling a business and have loose ends with your equipment or facility, this should be handled in advance if possible. Buyers will also be looking at the … Read More »
When Should Sellers Proceed with Caution?
Selling your business is typically quite an involved process that takes a series of months. Sellers typically experience a variety of ups and downs during that time. This is true even in the case of the most successful deals. That’s why you will want to keep your eyes open during the process so that you will be equipped to vet your potential buyers. This article will take a look at various aspects of the sales transaction that could be concerning and could mean that a deal is less likely to be successful. It’s a good idea to identify these types of situations so you’ll be better prepared to notice them if they were to occur. After all, the last thing you’ll want to do is waste your time and energy dealing with a prospective buyer that is not a good candidate for buying your business. Signs of Lack of Interest There are countless instances when sellers have been approached by prospective buyers, but the parties controlling the purchase are never involved. If a company expresses … Read More »
How Improved Negotiation Tactics Can Benefit Your Deals
There is no underestimating the importance of negotiation when you are buying or selling a business. Let’s take a look at some of the most often used strategies and our recommendations. The Direct Approach One approach in negotiations is what we often refer to as the “take it or leave it” strategy. In this scenario, the buyer makes an offer, and the seller then counters that offer. There is little negotiation work necessary, as both parties are direct and simple about the numbers and terms they propose. The drawback to this approach, however, is that when it doesn’t work, there is little to no recourse. When this “direct approach” offer isn’t accepted by one of the parties, there is little opportunity for flexibility on either side. Therefore, the direct approach can be somewhat of a risk. Focusing on Influential Details There are typically certain aspects of a deal where a buyer or seller is unwilling to compromise. Sometimes this aspect isn’t even financial in nature. It could be … Read More »
How Leases Factor into Business Sales
If you’re planning to buy or sell a business that involves a lease, this can lead to an extra level of complication. Oftentimes, such as in the case of a restaurant or retail establishment, the location is essential to the success of the business itself. That means that if you’re buying a business, you’ll have to make sure any lease issues you might encounter are straightened out before you sign on the bottom line. But even if you’re buying a business that isn’t location-sensitive, you’ll still want to iron out all the details about your lease ahead of time. Negotiating a Lease If you’re buying a business with a lease, one word of advice is to have a clear way out of the lease in the near future. After all, with a business so new to you, you might make changes in the short term. The general recommendation is to negotiate a one-year lease that has an option for a longer period of time. In many instances, the buyer of a business with a lease will find that he or she doesn’t have too … Read More »
How Can You Identify a Serious Buyer?
No one wants to waste their time and energy trying to sell their business to someone who isn’t actually planning to buy. That’s why it’s so important for you and your business broker or M&A advisor to focus on the most qualified and serious buyers. But how can you really make these kinds of assessments about a buyer’s viability until they sign on the dotted line? Let’s take a look at some signs that will help you figure out your buyer well in advance. Do they have a history of ownership? When someone has owned a business in the past, they have a firm understanding of what is involved. As a result, they are more likely to be a serious buyer. It also means they are more likely to move forward. You will also find that they have the ability to make a substantial down payment and financing options. While they might want you to help them with financing, you should still be looking to ensure they will put their own capital at risk as well. Are they seeking information about your cash … Read More »
Are You Cut Out to Own a Business?
There are clearly qualities that make a person an ideal candidate to be a business owner. On the other side of the coin, however, it’s clear that owning a business isn’t for everyone. Let’s take a look at some of the unique personality aspects that help motivated individuals identify owning a business as a good fit for them. You Seek to Guide Your Destiny A common reason people become business owners is that they want to have more control over their lives. After all, if you’re working for someone else, your fate is never truly in your own hands. You can always be fired or let go. When you are a business owner however, not only do you have control over your job itself and the tasks you accomplish on a daily basis, but you can also determine who you work with and where you work. You also need to have optimism to keep working with the belief that things are moving in a positive direction. You are Comfortable with Risk When you take the role of business owner, you invite a certain degree … Read More »
Can You Buy a Business Without Collateral?
If you’ve ever gotten any type of substantial loan, chances are that you’re already familiar with the concept of collateral. This is when something of value is pledged as security. As a result, the lender has something of value that they could potentially take if the loan is not repaid. Collateral is designed to protect the lender. Of course, the most common example of collateral is your house when you have a mortgage. Oftentimes, those looking for a loan to buy a small business wonder if they can do so if they have no collateral. Let’s take a closer look at some of the most popular options in this situation. The 7(a) Loan Assistance Program If you’re lacking collateral and looking for a business loan, it’s a good idea to check with the Small Business Administration. The SBA 7(a) loan is one of their most popular programs. While it can be used for establishing or acquiring a new business, it’s also commonly used for long and short-term working capital, refinancing business debt, or … Read More »
What is a Partnership Agreement?
A partnership agreement is a legal document that provides an outline of how a business will be run. This agreement will often be used by small for-profit businesses when two or more people are involved. It’s an essential document to have, especially in the case when a dispute arises between partners. Even if you have gone into business with a friend or relative, you should have this document in place to make sure everyone is protected. Let’s take a look at some of the key elements that should be in this document. The Basics It goes without saying that your partnership agreement should include the basics, such as the name of the business and the names of key parties involved. You’ll also want to outline the goals of your partnership and how long it will last. Rules and Responsibilities When you create your partnership agreement, you’ll want to make sure it offers a lot of clarity on different points with an eye to everyone’s responsibilities. Think through what concerns or … Read More »
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