One of the most overlooked things when business owners sell their business is the planning stage. So many of us get hyper focused on the day-to-day activities of our business and never plan for how we are going to leave our business. All too often business owners expect their to be someone ready, willing and able to purchase their business when the business owner is ready to be done. The harsh reality is these businesses, while successful under the guidance of the owner, have to be liquidated because their is no one that is willing to pay to step into that owners shoes.
The skilled Mergers and Acquisition Attorneys at The Business Law Group have connections to business brokers and professionals who conduct business valuations. We know what they look for when evaluating if a business is marketable and how much the business is worth. We can make sure that risks are eliminated, processes are in place, and relationships are stable and secure.
How Do I Plan To Sell My Michigan Business
The biggest product you will ever build is the business you own. Setting up your business in a manner that is appealing to a potential buyer or market can mean the difference between hundreds of thousands of dollars, if not more, in the final selling price. A little planning can also impact how much of the payment is received upfront and how much is paid over time through promissory notes or earnout payments. Failing to plan can also delay your ability to retire or move on to other ventures because you will have to provide transition services to a buyer.
Many businesses that fail to plan at all end up not being able to sell and the assets are sold off piece by piece. Planning is something that can take years to implement. The process of change can be slow. There are a number of areas that generally need to be planned for but some common areas are as follows:
Management
Management is one of the most overlooked areas for planning. Generally the business owner or owners are the management team. An easy test to determine how solid your management team is to ask yourself "If you were to leave your business for a month, what shape would the business me in when you came back?" A lot of business owners know that if they leave things will not go well. They are putting in 60-80 hours of work a week and when they do take a vacation for even a long weekend, you hear them complain about how much work they have waiting for them when they get back. Business buyers want to buy a business and they never want to buy a 60 hour per week job where they cannot take a vacation.Know More
Customers
A business generally develops great customer loyalty over the course of its life. Being able to take certain steps to help ensure your current customers continue to return to your business is something every business owner should plan for. That means having agreements with customers, solidifying a marketing plan or other positive steps that can help a potential buyer see that your customers will become their customers.Know More
Vendors
Vendor or supplier relationships are often forgotten about in the planning process. Often business owners have long relationships with vendors. This relationship can often lull us into believing that vendor will keep supplying the business the same quality products in the amounts and price ranges that we are used to. In reality, if steps are not taken to ensure those vendor relationships are stable, there is nothing to guarantee that the new owners will have the same relationship with your vendors.Know More
Growth and Innovation
Many business owners do not see growth and innovation as that important especially when they are nearing the end of their time as the owner of the business. But when you think about someone that is buying a business, a business that has new innovations in the pipeline and has new room for future growth is going to be a lot more appealing. Business purchasers do not want to buy a business that is going remain with the status quo forever. They want to buy a business that will grow their investment. Having the processes in place that show that your business is already innovating and growing can be a lot more appealing because new owners do not have to come in and put those process in place.Know More
Business Buyers Need To Plan
When buying a business there needs to be a well thought out plan. Obviously due diligence will give you specifics on a specific business but being prepared even before you start exploring the market can be crucial.
Its quite common for the purchaser of a business to be another business or an individual (or individuals) that own other businesses. The buying of another business can sometimes stretch your time and assets. Making sure that your other endeavors are prepared for you to have less time to oversee them and maybe have to run a little leaner than normal can be crucial to making a smooth purchase.
If you are going to integrate a new operation into your existing operations, it can be shock to the system you have in place if their is not a plan for that. Merging an entity into another one means a new management structure, new employees, and maybe even new facilities. Having everyone prepared for that can be the difference between everything going smoothly and the potentially bringing the entire business down.
For more information of how to sell your business or if you are buying a business, contact The Business Law Group by clicking HERE or give us a call at (616) 528-0007. Its always FREE to talk with us or check out some more information about what is takes to buy or sell a Michigan business by clicking HERE.
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