Interesting video (May 20, 2011) for Small Business Owners

Interested in selling your business?

If you’ve successfully “survived” the recent recession, this video may help…

http://video.foxbusiness.com/v/952724040001/how-to-sell-your-business/?playlist_id=87185

Video Series Launched for Business Sellers

For the last six months, I’ve been working to produce “Gearing Up to Sell Your Company,” a 20-segment on-line video series. Here’s a media release announcing it:

Video Series Launched for Business Sellers

Houston, TX, May 25, 2010 — Eric R. Voth, Business Transaction Consultant, today launched “Gearing Up to Sell Your Company,” a 20-segment on-line video series for business owners thinking of selling their companies. The series, available at no cost, is geared toward educating mid-market and small business owners.

The videos feature a wide array of topics on top concerns that owners may have as they contemplate selling their companies. Tips guiding an owner through the selling process are also included. Running time for each segment is 4 to 7 minutes.

“During the next few years, tens of thousands of baby boomers will seek to liquidate their privately owned companies in what may be remembered as ‘The Great Business Sell-Off of 2010 and Beyond,'” says Voth. “What we’re seeing is a massive shift between Baby Boomers and Generation X,” he added. “But tight credit, combined with a glut of businesses for sale, make it a buyer’s market.”

Competition for buyers means business owners seeking to sell will need to know how to properly position their companies to attract the attention of larger companies and private equity firms.

“The key to a successful business sale is knowledge, plus a well-thought-out exit plan,” says Voth.

“When planning to sell, an owner’s best strategy for avoiding any pitfalls is to acquire the proper knowledge — and to exercise diligent preparation. My videos provide educational information about how to sell a company in the least amount of time, for the most money, while maintaining confidentiality throughout the entire process,” he concluded.

The series is part of Voth’s effort to be a valued consultant that provides important tools to support business owners prior to listing their companies for sale.
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Access to the “Gearing Up to Sell Your Company” video series is available at no cost by registering at http://www.ericrvoth.com/
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ABOUT ERIC R. VOTH: (http://ervoth.com/) Eric R. Voth is a consultant, serial entrepreneur, private investor, and author. He is not a Business Broker. Rather, Voth is a Business Transaction Consultant who helps company owners gear up to sell their businesses. Then he assists them with the selection of an appropriate, qualified, professional — a Business Broker, a Merger and Acquisition (M&A) Intermediary, or an Investment Banker — who will serve as their advocate during the selling process. These other professionals handle the actual sale. The scope of his consulting practice is nationwide. It encompasses all business sectors and all SIC codes.

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Media contact:
Eric R. Voth, Consultant, ERV Productions, Inc.
Phone 281-852-4707, Email: erv@xyz-ideas.com

Results of Family Owned Business Exit Plan Survey

Rothstein Kass (www.rkco.com), a New York based accounting and advisory services firm, recently introduced “Heading for the Exits: Preparing for the Sale of a Family Business,” a survey report that evaluates the near- and intermediate-term outlook for family-owned enterprises considering the sale of a majority stake.

It contains some very enlightening information…
• Over 92 percent of family business owners pursuing a sale reported that no family member is able to take over.
• Inaccurate or outdated business valuations can make it more difficult to determine if a proposed sale will yield a fair price.
• Nearly 95 percent of business owners reported that getting the best price remains a central concern.

For more information on the report, check out this link to Private Equity Professional Digest:
http://www.pepdigest.com/index.php?option=com_content&view=article&id=3533:rothstein-kass-family-owned-businesses-need-private-equity&catid=34:news-to-know&Itemid=24

Putting together your business-selling team

“For sale by owner” might be a money-saving strategy if you’re selling a house or a car.  But when selling a business, it can cost you more money than you’ll save.

FSBO might work when selling a house, but selling a business needs the help of seasoned professionals.

When selling your business, keep in mind the old adage, “A doctor who performs surgery on himself has a fool for a patient.”

In the long run, any investment you make in a selling team will lead to a greater payoff in the end.

Here’s who needs to be on your team:

•  business broker or intermediary who’ll be your chief seller’s advocate

• an accountant with a track record in mergers and acquisitions

• a business transaction attorney with experience in the M&A arena.

You may also want a wealth manager to guide you about investments following the sale.

It’s the broker’s job to set the agenda and coordinate the work of the team.

He’ll probably also recommend engaging a third party business valuation specialist.

And if real estate or machinery or equipment is involved, third party appraisers will be needed to establish the current values of these assets.

In addition to coordinating the work of others, it’s the broker’s job to devise a marketing plan to sell your company for the best possible price and terms.

Your job throughout this process is to continue what you do best … operate your business.

Limit the “do it yourself” projects to those that you do well because of your experience.

It’s a good bet that selling a business is probably NOT one of them.

In the long run, any investment you make in the services of a professional selling team will lead you to a greater payoff in the end.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.


Keep this between us

One question that’s generally on the mind of every owner thinking of selling a business is the matter of confidentiality.

The matter of confidentiality is something that should NOT be taken lightly –especially on an in-house basis – when it comes to people you interact with on a regular basis.

World War II poster

At this level, you need to keep mum on your decision to sell until the deal is closed.

During World War II there was a saying that “loose lips sink ships.”

When selling a company, loose lips may very possibly torpedo your ability to get the most money for your company, because it can have an adverse effect on your operations, on your sales, and on your profitability.

Think about the various people you have relationships with, and how they’d react if they knew your business was for sale.

These folks are:

• Your employees.

• Your suppliers and vendors.

• Your customers.

• And, your competitors.

Your workforce will start wondering about job security, which could affect how they deal with customers.

Vendors can also get nervous. They may alter their terms and start demanding cash on delivery.

Customers can lose confidence and go elsewhere.

And what do you suppose your competitors will do if they find out that your company’s for sale?

Until the deal is closed, there are only three people who need to know about your decision to sell.

No. 1 is your attorney.

No. 2 is your outside accountant.

No. 3 is your broker or merger & acquisition intermediary.

When dealing with anyone else, remember the old adage:

“Loose lips sink ships.”

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

How to determine a business’ worth

As you think about selling, one of the questions that probably comes to mind is:

“How much can I get for my company … what’s it worth?”

In reality, you must be ready to sell for a price that the market is prepared to pay … because the market sets the price.

Book value, which is the amount of assets on a balance sheet, is not a true reflection of a company’s worth.

Selling value IS based on recent results, growth opportunities,

and overall company quality.

Some other value drivers are:

• historical profits

• good books and records that are defendable

• reputation

• location

• employee tenure.

Here’s why good books and records are important…

Most businesses are sold based on what’s called a multiple of earnings.

Earnings are really profits.

In smaller companies, earnings are sometimes called Discretionary Cash Flow… or the letters D-C-F.

D-C-F is the TOTAL of economic benefits to owners before taxes.

Discretionary earnings are calculated by taking the Net Profit on a financial statement, then adding back the dollar value of certain items.

Some of them include adjusted Officers’ Salaries, Interest, Depreciation and Amortization.

Others are nonrecurring expenses, plus ownership perks.

These are items that are NOT absolutely essential for the operation of the business.

They’re expenses that a new owner may or may not be faced with.

So, when trying to determine what you can get for your company, keep in mind that it’s probably worth some multiple of earnings or a multiple of owner’s Discretionary Cash Flow.

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

The credit trap

Small-business owners are as acutely aware as anyone of how tight credit has become. And with the bankruptcy this week of major small-business lender CIT Group (not to be confused with last year’s bailout of Citigroup), the credit crunch isn’t likely to get better any time soon.

Another report cites the use of business credit card accounts as the source of choice for quick credit. These are relatively easy to get (often based on an owner’s personal credit rating), but they usually have much higher interest rates and their convenience (just swipe and sign) also provides a serious threat as a debt trap.

But if you’re thinking of selling your privately owned business, you can actually turn this credit crunch to your advantage if you’re willing to be flexible in helping the buyer finance the transaction.

My book, How to Sell Your Privately Owned Business, devotes a section to finding creative ways to help a prospective buyer complete the purchase.

A short excerpt:

“Typically, you as the seller decide on the minimum price you want for the business. Consider taking anything over that amount in owner financing. This minimizes the risk for you. The most you can lose is the amount received that is higher than your lowest acceptable price.

“This type of sale – called an ‘installment sale’ – can be very good for both the buyer and the seller. However, be aware of the risk implications. A buyer will see buying your company as his risk and believe that it’s only fair that you see some risk too. In the buyer’s mind, if you will not take some of the risk, then perhaps your company’s future isn’t at all what you said it would be.”

Eric R. Voth is a serial entrepreneur, a private investor, consultant, and writer. He is author of How to Sell Your Privately Owned Company, a Basic Guide for Independent Business Owners, Baby Boomer’s Edition. Eric and his colleagues help a business Seller prepare and groom his or her company prior to offering it for sale or merger – then guide the owner through the actual process. He became involved in this field as a result of merging his own company in 1993.

http://money.cnn.com/2009/10/26/smallbusiness/small_business_credit_cards_loans/index.htm?postversion=2009102705

http://money.cnn.com/2009/11/03/smallbusiness/cit_bankruptcy_ripple_effects/index.htm?postversion=2009110316