Making the decision to sell a business is an extremely important one but many business owners do not realize just how important it is until it is their business. It is absolutely imperative that you take the time to consider your options before making a decision, regardless of whether you built the business from nothing or bought into it and made it your own. There are plenty of factors to consider but if you decide to sell your business, you should do your research before marketing your business for sale.
There are several tips that could help you when selling your business, and ten of them are outlined below. This information is essential so make sure that you adhere to the following points:
1. Plan Your Exit Strategy – Experts agree that you should always plan ahead when you want to sell the business, and begin to prepare at least three years in advance where possible. This allows you to prepare for the handover, both personally and regarding the business for sale. It will allow you to maximize profit and get your paperwork in order.
2. Prepare The Business – If you want to get a higher price when selling your business, you need to make sure that it is well prepared. Any outstanding issues should be solved, new policies and strategies implemented, and fulfilling training will get you up to 10% more on your business than would otherwise be possible.
3. Disregard Your Own Valuation – You are emotionally involved in your business so any price expectations you place on it would be emotionally affected. As such, you are likely to over inflate the price and no buyer will want to know how much you believe your business is worth. The only valuation that matters is that of a valuation specialist or qualified appraiser.
4. Protect Yourself – Have your attorney draw up a confidentiality agreement with no possible loopholes before you make any disclosures pertaining to the business. This will protect your business no matter what and ensure that you are not stung if any sale falls through.
5. Inform Your Shareholders – Shareholders and other individuals with an interest in the business, such as board members, could actually stop any sale of your business going through. Advising them in advance and taking steps to ensure that their influence is ultimately muted is essential. Failing to do so may leave you with your business in your name along with a huge bill for costs incurred by brokers, accountants, and attorneys.
6. Prepare Your Conditions – Many business owners wait until a bid is made on their businesses before preparing their own terms and this can hold up a potential sale. It may even be the cause for a sale falling through. Preparing your written terms and conditions before you put your business on the market will inform buyers before they place a bid. You will then be able to negotiate.
7. Consider Your Retirement – Selling a business may only be the start of your retirement but it could lead to problems in your personal life. You need to consider what you will do following the sale of your business for your own peace of mind and general health. Do not neglect this point. Although it may not sound important now, it will be following the sale.
8. Do Not Give Priority To Price – You should never look at the sale of your business in immediate financial terms. The bids offered may be distinguished as the highest monetary bid and the lower ones, but accepting the former may mean you lose out. Lower bids may have clauses by which you earn a percentage of profits for so many years or even retain shares, As such, the cash amount should be placed behind the content of the bid terms when you consider them.
9. Full Disclosure – No matter what the weaknesses are for your business, you should always make a full disclosure, including warranties, about the state of your business. Be sure to include “to the best of your knowledge” in your contracts, and qualify all disclosure made so you and your buyer know exactly where you stand.
10. Choose The Deal – Approving a deal structure is of paramount importance when selling your business. You need to ensure that you are completely happy with every aspect of the deal. For example, you may want to retain a certain aspect of technology from your business for your future interests so this should be qualified in the terms. You may also wish to keep certain business interests out of the sale. Whatever your decision, you should always act in your own best interests so only offer the deal that you feel comfortable with.
About the Author:
GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchise opportunities. Sell a business for free with no listing fees and zero commissions. We have all the top franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.
Category: How-To Guides
You have two big decisions to make when deliberating over whether to use a franchise opportunity to set up a business. If you have already determined that a franchise may be the way to go for you then you have to choose the right one, but how can you do that?
First, you have to analyze yourself in depth to ensure that you have the personal skills, wants, and needs. You have to know exactly what you are capable of and the extent of your business aspirations. Brainstorming is a handy tool to use in this situation and it is essential that you do so before investigating current franchise opportunities that are available. Starting with industry analysis is the best route because you can then match your skill set to the industry requirements. As such, you can then narrow down your options to a few select industries before assessing whether those franchise options would work in your local geographic area. Only then can you begin to contact the franchisors and create a business plan.
When contacting franchisors about possible opportunities, always ask them to send you franchise information. If they are to be trusted then this should be available at no cost. When you receive the information, be sure to read it extremely carefully, paying attention to every detail. Do not take anything at face value and research every detail given in depth. After all, this is your future and no stone should be left unturned. You can use trade magazines, Internet profiles, professional journals, and annual reports. You should also contact the Federal Trade Commission (FTC) and local authorities to make sure that there are no issues with the franchisor. You should extensively look into the reputation, financial health, growth, management, and day to day running of the business because it will be passed onto you as a franchisee.
When you have digested all of the above information and you are happy with it, ask for details of existing franchisees. It is essential to speak to them because they can give you an accurate viewpoint of how the franchisor runs the business, what the management is like to deal with, insider secrets, how the business is faring, and so on. Any good franchisor will be more than happy to provide this information whereas others may be reticent. Franchisees provide critical information so again only pursue franchises that are accessible. Only then should you assemble a legal team and accountant to answer any legal and financial questions you may have. They will also be able to find any holes that you have yet to discover, thus protecting your own interests.
About the Author:
GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchise opportunities. Sell a business for free with no listing fees and zero commissions. We have all the top franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.
Where other businesses struggle, franchise businesses thrive. Wendy’s and McDonald’s are prime examples of successful franchise businesses, and also provide inspiration for those individuals who really want to form their own successful businesses in the future. With a brand behind you and a good idea of what does and does not sell, it is no wonder that you have chosen to consider a franchise.
There are two types of franchises out there. One is the good franchise that takes care of its franchisees, providing training and support throughout. The second type does nothing but take from the franchisee and pushes for profit. There is a third type of franchise and that is the one that will rip off franchisees, taking them for as much money as possible. The latter two are not worth the time, money and energy, whereas the former is extremely desirable.
As such, it is essential that you do your research and investigate a franchise thoroughly before signing a contract or paying out any money. The list of questions below may help you to find the better ones as the answers they will yield will give you enough information to make an informed decision:
1. Have you and your attorney analyzed the franchise agreement in detail and do you both completely agree with the details?
2. Are there any elements or step required of you that would break the law or be to the detriment of yourself or your country?
3. Do the provisions in the franchise agreement give you exclusive territory for the period of your contract? If not, what is the maximum number of franchises that may open in your area?
4. Is this franchisor connected in any way with any other franchise company handling similar products or services?
5. If you answered yes to the above question, what is your protection against the second franchising company?
6. If you decide to end the franchising contract for any reason, what are the provisions for you to pull out of the contract and how much would you have to pay to break the agreement?
7. Are you able to sell your franchise during or at the end of your contract? If you are legally allowed to do so, what are the repercussions related to compensation?
8. What time period represents the duration of your contract and how long has the franchisor actually been in full operation?
9. Does the company offering you this franchise have a reputation for honesty and fair dealing among its franchisees?
10. Has the franchisor shown you any certified figures indicating exact net profits of one or more of its members, and have you personally checked the figures with these people?
11. Are you able to tap into franchisor assistance with training, PR, advertising, capital, credit or merchandising?
12. Are you offered assistance for finding the best location possible in your chosen area?
13. Does the franchising firm have solid financial input to ensure stability and the establishment of goals?
14. Does the franchisor have experienced management, trained in-depth?
15. Can the franchisor do anything above and beyond what you are capable of yourself?
16. Have investigations into your background been carried out and has the franchisor been assured that you are capable of making a profit?
17. Does the state in which you live in have franchising laws in place, and does the franchisor adhere to them completely?
18. How much equity capital will you need to purchase the franchise and operate it until your income equals your expenses?
It is extremely important to answer these questions fully and to your complete satisfaction. If this is the case then you may be extremely eager to become a franchisee. However, you should research all answers to get them verified in several places to ensure that your investment would be a wise one.
Purchasing a franchise can provide you with stability and profits in a short period of time but that is not to say that it is infallible. Less than 20% of all franchises fail so you need to ensure that you do not become a statistic. Information regarding specific franchising ideas can be found in the franchising directories, which are generally available at the local library. This will give you a little assistance to get started but you need to ensure that you are completely happy before committing.
About the Author:
GlobalBX provides a FREE business for sale exchange connecting business buyers, sellers and lenders. Search over 32,000 businesses for sale and franchise opportunities. Sell a business for free with no listing fees and zero commissions. We have all the top franchises as well as franchise resales. Find franchise reviews and get free franchise information. You can also contact over 300 lenders directly and get a business loan.
When a limited company is formed the founding subscribers and directors will decide the company name which when submitted forms part of the company registration..
First of all the last word in the name for company must be limited, unlimited or public limited company depending upon the type of company being formed. Accepted abbreviations of the name of company are accepted, those abbreviations typically being ltd and plc.
Company names can be rejected by Companies House for a number of reasons, the principal reason being that the name already exists on the company name register. When considering if a name is similar to another then punctuation and insignificant words such as the, and etc., would be ignored.
Name a company that sounds the same but contains a different spelling may be accepted. For example if Read Limited exists on the company names register and Reed Limited does not the proposal to name a company Reed Limited would be acceptable. If the name could be interpreted as misleading due to similarity of an existing name then that name would not be acceptable.
A name company adopts also be rejected if it is proposed to name a company including the words, limited, unlimited or public limited company occurs in the company name and not as the last word.
Other words which are not acceptable include investment company with variable capital, open ended investment company and the abbreviation SE. A company name would also be rejected if that name was deemed offensive or using a proposed name would be a criminal offence.
Names which include certain words are also rejected unless approved by government. Any name which suggests affiliation to a local authority or central government should be avoided. While the use of words indicating banking activity do not require to be approved using such words should be avoided as using such a name might well contravene other legislation relating to financial services requiring the business to be authorised.
When a company name is accepted the acceptance and inclusion in the company name register does not protect the new company from objecting to that name on the grounds of similarity. If such an objection was successful then a company name change would be required. In addition should a name indicate the activities of another company that other company can take legal action to prevent the use of the company name.
Should the chosen company name be similar to a registered trade mark that name could be accepted onto the company name register but would not protect the company from legal action to prevent that name being used. Having the name registered on the company name register would not constitute a defence should legal action be taken by the trade mark holder.
Before a company name is proposed for either registration or a change from an existing name it is strongly advised to carry out a company name search with the Companies House register of company names.. The company name register is arranged in alphabetical order and when the proposed name is entered to conduct a company name search the company name register defaults to those names which may be similar.
The chosen company name is registered when submitted on the Companies House company formation form 10 and accepted by Companies House. Following the company registration the incorporation certificate containing the company name is issued by Companies House.
A sole trader in the UK can operate a very basic accounting system. Provided supporting evidence is retained to show the basic accounts are realistic and the income and expenditure statement accurate for basic tax purposes sophisticated accountancy, debits and credits are not required. Basic accounts for a sole trader do not require the production of a balance sheet.
In order for a sole trader to be able to keep basic tax accounts certain conditions regarding the status of business accounts must be satisfied. Sales turnover should be under the vat threshold limit, a balance sheet not required, a business bank account not used and no employees employed. If the conditions are met then a simple income and expenditure statement is all that is required greatly simplifying the bookkeeping.
Self employed businesses are not required to maintain a balance sheet. If a balance sheet is maintained then to produce one the business needs to operate an accounting system based upon double entry bookkeeping and involving technical features such as debtors and creditors control accounts. Sole traders who do not need to produce a balance sheet can then maintain their basic accounting using single entry bookkeeping which is basically making lists of the financial transactions.
If a balance sheet is not produced the sole trader must keep a record of all capital expenditure items as part of the basic tax accounts to enable the capital allowances to be claimed each tax year. Receipts need to be retained as part of the basic accounts to enable the annual investment allowance to be claimed in the first year and writing down allowances in subsequent years.
More detailed financial records are required to be kept by the sole trader if they are vat registered. The vat threshold for the financial year starting April 2008 is £67,000. Part of the vat rules state that when a business is vat registered they should maintain an audit trail of transactions to support the vat return.
A sole trader does not have to operate a business bank account however if a business bank account is used then accounting records should be kept as the taxation authority, HMRC can ask to see details of the account. This inspection is to verify the transactions support the basic accounts produced. If a business bank account is not used then HMRC do not have a statutory right to view the sole trader personal bank account and that personal; account does not have to be a feature of the sole trader basic accounts.
When a sole trader has employees then as an employer a PAYE system is required which involves maintaining accurate wages records of employees, gross wages, income tax and national insurance deductions and net pay. Various PAYE records must also be maintained such as the working deductions sheet and also payslips must be issued to employees. The payroll records form part of the financial accounts of the sole trader who would actually be better called self employed if they have employees.
In the circumstances where a sole trader has no employees, is not vat registered and does not maintain a business bank account then formal accounts are not essential and a simple income and expenditure account statement can be produced. It is still essential that those sole trader basic accounts are supported with copies of invoices given to customers or records of amounts taken plus documentary evidence to support the payments made to suppliers.
On the sales side the basic accounting can consist of a list of the sales which when totalled produces the sales turnover of the business which is the income side of the income and expenditure statement. As not all sales may be received at the time of sale it is useful to keep a record of the date of the sale, the customer, amount and when and how much the customer has paid for credit control purposes.
Similar to the income side the expenditure can consist of a list of the amounts paid out to suppliers. It is advisable to perform a small amount of analysis of this expenditure as when reported on the self employed tax return the expenditure may need to be analysed according to the type of expense. All expenditure items claimed as business expenses should be supported with documentary evidence of that expense for basic tax purposes.
At the end of the financial year the sole trader income and expenditure account statement will state the total sales with the expenditure side being a list of all the expenditure by type of expense including any capital allowances claimed. Total the expenditure and deduct the total from the sales turnover to produce basic accounting record showing the net taxable profit.
A simple method of keeping the information to produce the income and expenditure account statement is to use accounting software spreadsheets with preset columns for sales and the expenditure types. The sole trader should also consider maintaining a separate list of the assets purchased as part of the basic tax accounts.
Terry Cartwright qualified as a Chartered Management Accountant and Chartered Company Secretary in 1971. A successful business career followed as Head of Finance for major companies in the UK and several consultancy appointments. In 2006 he created DIY Accounting producing Accounting Software for self employed and small companies that use simple accounts spreadsheets to automate tax returns.