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Getting Out of Business is a Process
Jun 22nd
We Buy Your Business
Getting out of business is a process. The length of time required to complete the process is directly related to the complexity of the business, and the circumstances underlying the decision to get out. Planning how you exit your business is just as important as how you started it.
The exit process, timing of events; and tasks associated need to be tailored to the type and complexity of the business. Each case is individual because reasons for dissolution differ, and problems that arise are unique to each circumstance. The following checklist contains key elements that should be evaluated as early in the exit process as possible to eliminate pitfalls later on.
The process for exiting a business should include evaluation of the following points:
1. Engage Professionals & Consultants as Team Members.
2. Prepare a List of Assets & Perform a Physical Inventory.
3. Perform a Valuation of the Business.
4. Prepare Detailed Plan & Assign Responsibilities.
5. Release Announcements & Notices.
6. Conclude or Transfer Contract Obligations.
7. Dispose of & Transfer Assets.
8. Settle Accounts Payable & Debt Obligations.
9. Prepare Final Financial Statements & Tax Returns
10. File Articles of Dissolution.
11. Prepare & Issue Special Filings, Notices, Informational Returns, & Taxes.
12. Receive Tax Clearance Notice.
13. Close Bank Account.
14. Store Business Records
The process for successfully exiting a business requires the same amount if not even more planning as starting the business. While the process may be easier, it is likely to be less enjoyable and more stressful. The best advice for business owners is to incorporate potential exit strategies in the early stages of setting up their business. Vigilance and diligent managerial oversight is needed to ensure that complications and problems which could affect dissolution, and net value, do not develop into roadblocks. When the time comes to divest or sell the business, be sure to engage the relevant expertise needed, and prepare an action plan.
We Buy Your Business enables clients an opportunity to sell businesses and business assets fast for cash. If your exit strategy requires a quick divesture option Contact WBYB for cash offer NOW. Website: www.WeBuyYourBusiness.com
The Unplanned Business Exit
Jun 22nd
We Buy Your Business
For some, planning a business exit can be a predictable, methodical process. We know the competition; we understand market demands, know when we want to sell and might even know the actual date. But for far too many business owners, the business exit comes as a harsh reality and often unplanned event.
Protecting your business and assets against the dreaded six D’s of an unplanned business exit can give whole new meaning to the term “Disaster Management”. While every business may experience unexpected pitfalls, careful planning to ensure risk exposure is minimized can assist in keeping you in the driver’s seat when it comes to managing your company. Familiarize yourself with the six D’s of an unplanned business exit: debt, death, disability, divorce, departure and disaster. Know the enemy and look to address all six D’s in your operating and buy / sell agreements.
The Six D’s of an Unplanned Business Exit
Debt:No one goes into business and plans on it not succeeding, but 40,000 businesses fail every month in the United States. When debt exceeds revenue, it is critical to exit timely in order to minimize loses. Understanding limitations and protecting critical assets are key to successful divesture.
Death:Many businesses are solely dependant on their owner’s abilities, relationships, and passion to drive success, and when there is a death of an owner or partner of a business, it can have significant impact to a business almost immediately. While no one wants to consider their own demise, the strength and longevity of a business relies on being able to plan for such a critical loss even if it means downsizing or reorganization. The survival of a business in relation to key individuals needs to be evaluated and exit strategies planned accordingly.
Disability:Unbelievably, death is not as likely to end the business as a disability. A disability to a business partner can put a significant drain on cash flow, daily workloads, and excess down time, all of which can be devastating. Insurance and financial planning towards alleviating such an impact needs to be carefully evaluated especially when dealing with small business start ups where funding and resources are limited.
Divorce:No one wants to plan for a business or personal divorce, yet while Pre-nuptial agreements may be gaining in popularity many people never look to manage such impact to their businesses. What happens when the partners cannot get along? Or worse, you inherit another partner due to a personal divorce settlement? Exiting the business might be the only alternative you are provided.
Departure:It does not sound as bad as death, but it can wreak the same results. A partner, key employees, or other resources decide to go to the competition, retire, burn out, or win the lotto. When they leave, how does this impact your business going forward?
Disaster:If the five D’s above where not enough to impact your business, there are no limit to the other disasters that may occur that were never planned on: robbery, sickness, employee theft, employee turnover, natural devastating events, etc. In today’s post Katrina, 911 world the impact of the chaos theory is enough to keep even the best business minds awake at night. Plan for the worst; strive for the best and know when to get out if need be.
For the typical business owner, each one of the six D’s has special demands on the family, income, taxes, and control of assets. An agreement, commonly called buy/sell agreements, can be used to plan for the impact associated with the dreaded six D’s. A successful sustaining business exists as a separate entity from personal concerns and risk can be reduced by developing mutually fair and equitable agreements prior to these events occurring.
Business is an evolution and travels a diverse path. While some may look on an unplanned exit as a failure others may see an opportunity for growth and freedom.www.WeBuyYourBusiness.com
Is Selling Your Business the Best “Exit Plan”?
Jun 22nd
My neighbor asked me, “Why would anyone sell a successful company?”. He could not understand why anyone would leave a business that was doing well. Of course successful companies get sold all the time.
So why do these business owners sell? The short answer is that most closely held businesses sell for human reasons, such as burn out, retirement, illness, partnership disputes, family issues or other personal reasons. Usually the business is fine but the human being running the business needs a change. To understand this better it is key to understand the other options for exiting a business.
Close the Business/Liquidation
Closing a business that is profitable never makes sense. Even if the assets are liquidated the price is likely to be pennies on the dollar versus selling the business as a going concern with employees, customers and a reputation that is intact. Not only does the business owner get the lowest value but the employees, vendors and customers are hurt by this type of exit.
Accident, Illness or Death
No one wants to exit their business this way, but many do. The loss of an owner not only creates tremendous issues for the family but also creates a leadership void in the business. Even the most competent management can struggle when a key business leader is lost to a serious accident, illness or death. No one plans for this type of exit but many end up exiting the business this way because they failed to create an alternate plan.
Succession
Succession by a family member or key employee has its benefits. They know the business, its product or service, employees, customers and vendors. Succession can be operationally successful for the exiting owner if they make sure the successor is carefully selected, qualified and groomed for the position. The owner must be careful not to make an emotional choice of a relative or favorite employee but instead choose the successor with the right skills to lead the company into the future. You are not seeking an “Employee” mentality but an “Owner” mentality. If that rare person can be found in the business who can make the transition to Owner, they often do not have the cash needed to purchase the business. They are also likely to want to pay less for the business as familiarity will blind them to many of the value drivers of the company. So although succession can be operationally successful it is rarely a financial success for the outgoing owner.
Sell
Closing or liquidating the business minimizes the value to the owner. Accident, illness or death forces the issue on the owner. Succession provided a very limited pool of options with limited financial reward.
Selling on the other hand allows the business owner to decide their ideal timing, maximize the value of the business they worked so hard to build, coordinate the use of the sale proceeds for financial planning and align their personal goals with the sale of a business. Selling the business allows the business owner to create a wealth event and often significant on-going passive income without having to run their business.
Whatever they are, human reasons are always pushing and pulling on a business owner. Burn out, stress, divorce, illness, partner disputes and limited growth capital are some of the human reasons that push owners out of the business. Retirement, enjoying life, relocating, a new business opportunity and passive income are some of the reasons that pull a business owner out. Whatever the motivation, the fundamental reason a business owner chooses a sale as their ideal exit plan is control. The business owner chooses to understand the value of their business and to proactively pursue the right buyer and the right price. By selling a business you choose to exit your business by choice, not by force.
The professional team at Sunbelt Midwest can help you confidentially sell or buy a business in Minneapolis, Milwaukee, Chicago, and surrounding areas. For more information check out our site at http://www.sunbeltmidwest.com.
More on Trade Shows
Feb 8th
Planning to expand your business? Do you want for consumers or other businesses to know more about your company? Well, there are many ways to do this. One of these ways is joining trade shows in malls or during business conference!
Trade shows have been proven to expand a company’s clientele due to the exposure of its products and services. Based on the study conducted by Simmons Market Research Bureau, 91% of its respondents have ranked trade shows as “extremely useful” as a source of product or services information and almost half these bought products and services at trade shows.
Since during trade shows, many other businesses are setting up their booth and even your competitors. So, how do you stand up against them or increase your traffic to your company’s booth? Simple, make your company’s booth stand out from the rest! Make sure you have attractive trade show flooring. Don’t just use the vicinity’s floor but reinvent it by placing a trade show carpet or place logo mats (mats with your company’s logo). Aside from that, you can also install a logo canopy to attract customers and prospects from the far side of the trade show hall.
Another trick for attracting more clientele in trade shows is by assigning a company representative that is accommodating, patient and tactful since trade shows is an avenue of first impressions to you would be customers.
So, when some event organizers invite you for a trade show, don’t decline. Accept the invitation, prepare for it, make a lasting impression and make more money in the future!
5 Ways to Prevent Social Media Disaster
Oct 7th
As the NFL season kicks off in the U.S., I’m just waiting for this year’s top end zone celebration to be someone pulling an iPhone out of their pants and sending out a tweet or updating their Facebook status with a misplaced comment that reveals the team’s new playbook.
Social media continues to pop up in unexpected places. But, what’s wildly entertaining for us, could be considered disaster to an NFL team. In fact to prevent loose lips (or careless keyboarding), the NFL has created strict social media guidelines for players on game day.
The popularity of social media, has caused many disasters for corporations around the globe including(…)
Read the rest of 5 Ways to Prevent Social Media Disaster
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