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A Short Crash Course: How To Sell Yourself (and your Company) Effectively

Selling oneself is a skill that everyone should learn. Whether you’re looking for a job, asking someone out for a date, or asking people for a favor, we’ve all been in scenarios where we tried to persuade others and win them over to our point of view.
Often, the word “selling” has a negative connotation. As a matter of fact, we often associate sales representatives with being greedy, deceitful, and willing to say anything just to close a deal. But the truth is that we are all marketers to some extent. I firmly believe that coming in with a mindset of helping people by offering yourself, or your product or service will serve you better.

The purpose of all sales techniques is to communicate the worth of a product. As a result, “selling yourself” entails communicating your worth, which is a skill that you can benefit from when you want to sell your business. Put yourself in the other person’s shoes. Does buying from you help their situation or fix a problem?
To help you understand the importance of “selling yourself” to your internal and external customers, here is a short crash course from Nick Rodites and Geoffrey James:

For Buyers

“People do business with people they like.” Do you agree? For buyers in the M&A arena, this is an important insight to remember. We often find ourselves coaching inexperienced buyers on using this logic as an effective technique to negotiate their best deal.
While price and terms are important to owners seeking to sell their closely held company, oftentimes sellers emphasize the importance of finding the “right” successor. They place a high priority on finding someone:

  • With the skills and experience to take their business to the next level
  • That will take great care of the good name and reputation they have established over many years
  • That will treat their employees right
  • That is respectful of the sellers’ personal, emotional, and financial concerns of turning over the reins to a qualified person.

On a number of occasions, clients select an offer from someone that met these conditions, rather than alternative buyers with higher price offers. Therefore, when representing buyers in our Targeted Acquisition Search Program, we insist on packaging the buyer in much the same way we painstakingly package a Seller before entering the market.
Packaging a buyer includes being ready to share:

  • Financial qualifications by securing a credit report and signing a personal financial statement
  • A professional bio and resume
  • A written pre-due diligence list of relevant and thoughtful questions shared in advance of meetings
  • A humble, yet positive and confident attitude

Above all, as a buyer evaluating potential acquisition targets, you need information and cooperation from the seller as quickly as possible. Approaching your potential targets prepared, and making the effort to give them what they need to qualify you, creates the desire and motivation to want to do business with you.
Whether that gets returned to you in the form of price, terms, extra efforts to ensure success during the transition, or any number of other valuable concessions, selling yourself as the buyer is the best approach.

For Sellers

Why is it important to sell yourself to your customers? Well, before anybody is going to buy from you or your company, they’ve got to “buy” the idea that you’re somebody trustworthy. In other words, just like a job candidate, your first task is always to sell yourself. That said, here are some effective ways to sell your business to your customers from Geoffrey James of Inc.com:

1. Research the Target
Before visiting a potential customer, examine the company’s website. Notice how they communicate about themselves, how they view their market, and whom they see as their primary customers. Use Wikipedia and other online resources (like Hoovers.com) to learn the basics and the background of the industry and market. Then use LinkedIn and online news stories to learn about key individuals in the company.

2. Create a Story

At some point in the relationship, the customer is going to want to know what you’re all about.  The best way to give an impression of who you are is to tell a personal story about some event in your life. Preferably one that inspired your interest in what you’re selling: that is, your company and your products.
For example, if you own a chemical wholesaler, start your story with the chemistry set that you had as a kid and explain how you’ve always been fascinated by how the chemical industry works.

3. Anticipate Inevitable Questions

Before buying, a customer will want to know specifics about what you and your firm has accomplished.  “Tell detailed accomplishment stories that clearly illustrate the … challenge, what [you] did about it, what results [you] produced,” says Ford R. Myers, author of the newly published. Get the Job You Want, Even When No One’s Hiring.

4. Be a Professional

At the risk of stating the obvious, you don’t have a second chance to make a first impression. To sell your business, being professional is a must. If your meeting with a customer is face to face, get lots of rest the night before, wear your best clothes, leave plenty of time for traffic, and arrive at least 10 minutes early.
Just before the interview starts, take a deep breath and focus on the task at hand. That’s not “making the sale,” but rather determining whether your offering actually matches the customer’s wants and needs.

5. Ask Thoughtful Questions

Never ask questions that could be answered with a little research on the Web.  Instead, ask questions, and start conversations that build on the research that you accomplished in Step 1–and which illustrate your business acumen.  Provide relevant examples of what you and your firm have accomplished in the past. Then, tie them into the requirements of the current situation.

6. Close on Next Steps

As the meeting comes to its conclusion, establish the way forward.  In most situations, this will be another meeting or some form of communication.  Most importantly, you must follow up immediately on any commitment that you’ve made. A prompt follow-up tells your customer that you’ll do what’s necessary to make them more successful–without forcing them to wait for you.

We hope that this guide has encouraged you that “selling yourself” isn’t necessarily a bad thing, and that it’s always important to maximize your full potential when the time comes to sell your business.

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When To Sell Your Business: A Short Guide from Nick Rodites, AVA

As an AVA and former leader of the Central Florida Office for Bankers Advocate, business owners often ask me how to predict the right time to sell. I know from recent conversations, that many owners feel they missed their chance to exit a few years ago when the market was ripe for transactions. Now the question revolves around when the market will return.
Let me suggest that, as an entrepreneur, you have the opportunity to develop a more reliable approach to timing your exit, then attempting to predict the cyclical nature of the mergers and acquisitions market. There are simple steps you can take to gain control of your own timing, whenever that may be. These steps require a focus on what you, and only you, can control.

1. Plan Your Exit

The first step is to know what your exit will look like when you arrive, regardless of when that might be. For instance, you should know at any given moment how much after-tax “cash” you will need from the sale of your business to meet your goals. Do not just pick an arbitrary number out of a hat because it sounds good. Get specific and know why you have that number as your target.
This step is relatively simple if you hire a certified financial planner to help you update or create your personal financial plan (you can contact us for a referral to a trusted advisor in this area if you do not already have one). Be sure that your plan takes into account the lifestyle needs you are seeking, a reasonable rate of return you can expect from the investment of your after-tax proceeds, and any required adjustments for taxes and inflation.

2. Determine Your Current Business Value

Now that you know your target amount of cash, you need to determine your current business value. This is definitely a situation where you get what you pay for. While you could arrive at an estimate at no charge by contacting a business broker or using an industry multiple for your own calculation, you will actually be doing yourself a disservice. More than knowing the value your business could fetch currently, you want to know why your business holds its current value and the areas you need to improve to increase that value. Therefore, you need more than just a business broker.
This is why a third party valuation is certainly a worthwhile investment at this time. Think of your valuation, not simply as a number, but more importantly, as an analysis of your Strengths, Weaknesses, Opportunities, and Threats (SWOT Analysis). If you invest in a certified appraisal from a business broker, you will gain the business intelligence you need to close the gap between your current value and target value.

3. Involve Your Trusted Advisors

Share your valuation with your trusted advisors including your financial advisor, CPA, attorney, and chosen transaction advisor. Enlist their help to interpret, identify, prioritize, and make a recommended task list that can help you build value and overcome weaknesses as efficiently as possible. It should be clear to these advisors from your financial plan and complete valuation report, what your objectives are, and the areas you need to address. Having this information available before you meet with your advisors keeps you in control and will save you a considerable amount of time and expense getting their help.

4. Implement Your Task List

Finally, implement your task list. Be honest about what you can do for yourself while maintaining your business operations, and what you may need to hire out. If you schedule your tasks in a manageable way, hold your advisors accountable, and ask them to do the same for you, you will be well on your way to achieving your objective – timing your business exit on your terms.
At the completion of each tax year, have your valuation updated, which should only require a minimal investment. When you cross your threshold value you identified in step one, the timing is right for you. However, do not be surprised if you are still not ready to exit. The improvements you make that build value in the eyes of your future acquirer; fulfill the same needs you have to be a satisfied owner of your business as well.

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Escape Plan: Business Ownership Exit Strategies That Really Work

There are many independent businesses in the US. The Census Bureau estimated in 2016 that there were about 7.7 million establishments across the country where at least one paid employee worked. But with more than 32.5 million businesses in the United States, it turns out those offices, stores, and factories are in the minority when it comes to where people conduct business. The far bigger share is the percentage of those so-called “nonemployer” businesses in the country. It’s about 25 million businesses or 76.2%. That includes sole proprietors who set up shop in their home or at a shared office space but also includes people who work as independent contractors, consultants, or freelancers for larger businesses.

Whether you have one or one hundred employees, your business is a huge part of your life and running it can be challenging. In fact, most business owners consider getting the day-to-day and year-to-year tasks done a small victory. Making profits in the industry involves eventually showing a good cash flow and a bottom-line profit. In this kind of thinking, entrepreneurs also find out that, at some stage in the future, they will build and execute their exit strategies. Sadly, not all have this chance. The key is to build a business that someone will want to buy, which means it is financeable.

It is a fact that none of us can anticipate the future, but having a strategy in place that foresees future developments and situations can help one gain economic gains that are expected to occur in the future. This rule applies to the sale of businesses. If the owner of the company has an escape plan in motion, opportunities might not be overlooked as easily as they could without a plan. The exit plan is intended as a tool to get the owner to think about the future and serve as a guide once arriving at the point of exiting. This is why having a written exit plan is always important to have.

What’s in it for Business Owners?

It’s always beneficial to be proactive in business, especially now! Do you remember the time you saw an item on sale for a large amount off and you did not buy it only to realize a month later you should have made the purchase? Alternatively, did you ever buy an asset that was more valuable to a purchaser a month or a year ago than it is today (i.e. securities, commodities, or real estate)? Many of them can contribute to circumstances like this. If either the buyer or seller should have expected the scenario, today they would be better off economically.

There are different types of exit strategies to pick from. Many business start-ups set their targets with an initial public offering. Although this is a respectable and worthy objective, it is unlikely to happen to any of us. The majority of exits from the business include the purchase or selling of a business. It is crucial to have a realistic target when designing an exit strategy. However, this does not mean that does not mean an IPO is unreasonable for everyone, but the business owner should think about possible alternatives to their primary goal or their intended exit. 
Here is a discussion of the various types of business exits or selling agreements that can be made:

1) Sale of a Business – A business is sold to an individual, group of individuals, or an entity. Doing this, the business owner receives cash or an equivalent for the business. However, it can be difficult to find a ready, willing, and able buyer to purchase the business.
2) Acquisition – Similar to the “Sale of a Business” exit, but usually involves an outright purchase of another company. You receive cash right away, but you must find a ready, willing, and able buyer that wants to acquire your business and add to their business.
3) Merger – In this type of exit, the business joins with an existing company. As with a sale of a business, you get cash, stock, or a cash equivalent, but you join in with new partners and may suffer a partial or complete loss of control of your business. A Buy-Sell Agreement is used for the future exit strategy

Steps Toward a Smooth Exit

1. Getting Started
Since we cannot predict the future, it is necessary for the business owner to follow a “what if” attitude when thinking about exit plans. It’s a really clear logic. To pursue this, ask “What if” or “What should I do if” and then name or state a scenario. Examples: What do I do if my company is expanding rapidly in the next five years? What happens if the country hits a depression? If the type of wording of the thought is not relevant, this sort of thinking helps the business owner to cover a wide variety of contingencies and to plan accordingly.
While it can be helpful to list multiple contingencies, you cannot prepare for every possibility that occurs. It is more important to pick the most important scenarios from the several anticipated possibilities. Establish a document detailing the actions and procedures to be implemented in the case of any contingency arising. 
Each exit strategy should take into account various considerations, such as market, competitiveness, owner’s capital & priorities, and any other related intangibles. Also, the right plan takes into account the objectives of all involved people.

2. The Homework
The homework consists of reviewing any existing agreements you have with partners, shareholders, and others who are involved in the organization. The agreement may consist of articles of incorporation, by-laws, and buy/sell agreements. The exit plan must conform to the existing agreements or it could defeat the plan. If you don’t have any existing agreements between shareholders and partners, now may be the best time to create one in conformity with the plan you want to follow.
Important Note: A buy/sell agreement is the most significant legal document a business can have that encompasses exit strategies.

3. Shaping The Plan
The remainder of the outline should be completed after the homework has been finished. The strategy does not actually have to be complex or even well written in order to be successful as scenarios occur. The most effective strategies are those that are most carefully thought out, so it pays to consider at this point.

The Goal – It is important to define a goal. Obviously, the main goal in any exit plan is to achieve the best results. These results may include reviewing the biggest monetary gain, the smoothest transition into the next generation, paying the least taxes, or to create a retirement plan.

The People – Next it is important to choose the players to be involved in the exit plan. Decide what partners or key people will handle what or what you would like them to do. When the time comes, the people named may not be willing to do the task, so be wary of this situation and always keep your plan up to date and current.

The Business Valuation – Valuation of the company is also important. It is important to identify a company or professional that has expertise in this specialized area. A poor valuation by a business broker can lead to selling the business for a price short of what it should be. An entire lifetime of hard work and sacrifice should not be devalued by means of a shoddy valuation; it would not be fair to you or those around you. Valuation of a company should take place every year because the results and value-added drivers of operation are important to the overall value of the business.

Due Diligence – Potential due diligence issues then need to be addressed. Due diligence is the process of ensuring the accuracy and completeness of assertions. It is best to address the issues now rather than wait until the exit. Items such as obsolete inventory, family members on the payroll, and real estate all need to be dealt with and thought of before the business is put it for sale. An issue in due diligence can result in a deal-breaker when your exit plan is put in action.

Conclusion
Being proactive in business pays, especially pays when you are dealing with an exit strategy. Dealing with the issues that come up now can eliminate lost opportunity, headaches, and problems that may not be able to be solved when the exit occurs. Therefore, it is important to have an exit plan at all stages of a business. If you like, please contact the professionals at the Center for further assistance in your business and tax needs. The professionals at the Center specialize in exit strategies for private companies. Financial, legal, and tax advice is provided in developing exit strategies.

Author’s Note: “I have worked with Bart Basi on transactions for over ten years and I wanted to share his latest article.” – Chris Curtin

Bart A. Basi
Dr. Bart A. Basi is an expert on closely held enterprises. He is an attorney, a Certified Public Accountant, and the Senior Advisor of the Center for Financial, Legal & Tax Planning, Inc. He is a member of the American Bar Association’s Tax Committees on Closely-Held Businesses and Business Planning.

Marcus S. Renwick
Marcus Renwick is an attorney and the Director of Research and Publications with the firm

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Top 4 Practical Succession Planning Tips Every Business Should Follow

A good business should have a vision, and a succession strategy should be considered when the time is right to sustain the owner’s legacy. There are several aspects that have an effect on the overall performance of the succession plan and its execution, but below are four realistic tips to remember when preparing the succession of your business.

1. Define the Succession Plan’s Goals

As a business owner, what is the most important thing to you in the succession planning process? Is it financial stability for your family or continuing employment for productive team members? What about maintaining local ownership versus integrating with a larger company? After setting the targets, the CPA will assist in setting up a succession plan that can make your goals easier to achieve.

2. Ensure a Willing Seller/Willing Buyer Scenario

Many business owners expect that children or other family members may choose to inherit their business. They also dream that a bigger corporation would want to purchase the whole enterprise. All of these situations are based on assumptions. Thus, start by holding realistic negotiations with everyone you’d like to be involved in the future of your business. After these discussions, it is much easier to plan a transition that encourages an honest appraisal of potential choices and requisite planning.

3. Plan Efficient Financial and Tax Terms

After investing a lot in a profitable business, most business owners are terrified at the idea of selling away their business. But there are a lot of tax benefits for gifts. Accountants and business consultants of CRI are able to assist you in the definition of the right tax maximization techniques for your succession plan—as well as in the supervision of the financial transaction necessary for the succession of your business.

4. Review and Update The Succession Plan

Changes will take place, thus you should revise your succession plans accordingly. Please review it periodically, or at least semi-annually. This is to reflect improvements in your personal life, business model, staff, competitors, and economic factors. Just be sure that if the client base shifts, the succession plan protects consumer and distributor communications in the event of a drastic transition.

Bottom Line

Succession planning is critical to any business’ long-term success. Realism and preparation are two keys to the success of a succession plan. For more details, visit our related succession planning video blog. Remember that planning now has the potential to pay off exponentially later. Therefore, contact the CPAs of CRI with any questions.

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Selling Your Business: 6 Year-End Steps You Must Know

A profitable business opportunity sometimes comes around but does not work because the owner of the business has not properly planned a sales strategy, developed a tax plan, streamlined finances, and made arrangements for the partners or relatives involved.
Whether you are ready to sell your business now or in the future, important steps should be implemented to make your business more salable. Potential buyers will weigh purchasing your business against other investment opportunities. 
If you are planning to sell your business this year, consider following these steps:

  • Determine the accurate value of your business
  • Don’t hesitate to seek legal and financial expertise
  • Tie up loose ends
  • Document your offers
  • Separate your personal expenses from the business
  • Organize and prepare the paperwork

Taking these six steps will also help your business stand out from the other poorly presented companies for sales. We advise using Professionals Advisors, but we hope these six steps will take you to the right direction in selling your business.

Step 1: Clean up Your Books

Are your monthly financials completed by the 15th of the following month? Are you comfortable that the P&L, Balance Sheet, AR, and AP are accurate and truly represent the overall status of your business? Do NOT run your business by only eyeballing the checkbook. The balance Sheet is critical as many businesses have errors in the Balance Sheet or they do not tie in with the tax returns. Borrowing money is Balance Sheet-driven which means buying a company is Balance Sheet-driven.

Step 2: Understand your Books 

One reason many businesses don’t follow step one is that many times financial numbers are not that meaningful to business owners. Financials are only a useful tool if understood and utilized correctly. If you don’t fully understand your books, don’t hesitate to get some help. 
Also, make sure the data is presented to you in a useful format. Many businesses have too many general ledger accounts to be meaningful. Use sub-accounts to clean up the clutter. Review expense items as a percent of sales. Track the change in percentage of key expense accounts and manage them accordingly.

Step 3: Identify Accounts Receivable Issues

Many businesses have liquidity issues. One of the easiest ways to find the “low hanging fruit” is to take a hard look at your accounts receivable (A/R). What percent of your A/R is over 60 days old? 90 days old? Recently, a client at our urging reduced their largest customer’s 60+ days A/R by $100,000 even though sales had increased. This cash increase reduced their yearly borrowing costs by over $35,000.

Step 4: Address Inventory Issues 

Inventory is another area where businesses waste a lot of cash. Check your turnover on stocked items. You need to evaluate the ttems that you hold for more than 90 days, whether for different re-order or manufacturing levels. 
Any inventory that is older than 180 days needs special attention. I have heard many arguments about this “great deal” clients made buying goods. However, inventory is described as a “wasting” asset. Besides consuming precious working capital, it also generates additional storage, insurance, and handling costs. Unless inventory turns and solid profits are realized-Liquidate!

Step 5: Surplus Equipment 

Entrepreneurs are great accumulators of “stuff”. I am not a psychologist, but I think it provides business owners with some measure of comfort to see all the bulldozers, trailers, forklifts, and tanks that they own. Bottom line is that if an asset does not earn your business profits compensatory to its value, it is a drain on cash flow. Again, liquidate!

Step 6: Analyze Lead Sources 

I believe much money is wasted on fixed-cost advertising (yellow pages, newspapers, radio, etc.). I understand it is important to have a presence and a clear message in the marketplace, but when was the last time you researched the source of your new clients. 
You might be better served by cultivating more referral sources. Know your true sources and costs to secure and keep clients. Bankers Advocate utilizes overseas Virtual Assistances to keep our costs way down.

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Why You Need a Business Valuation 2021

The value of a private company is essential to its operations and long-term sustainability. And under a wide variety of cases, business valuations are needed and necessary. These circumstances may include the following:

  • Selling of a business (including a retirement exit strategy)
  • The purchase of a business
  • A potential merging of businesses
  • The procurement of additional financing
  • The dissolution of the business
  • The withdrawal of one or more partners or shareholders from the business
  • The resolution of personal or family issues, such as a divorce proceeding
  • Estate and tax planning purposes

One or more of these problems are likely to occur at any point in time. Thus, an up-to-date valuation of the company should be available to any business owner. It’s like staying up to date with your resume, just in case.

Here are some of the biggest reasons why you need a business valuation in 2021:

1. It’s an Art and a Science

Valuing a business is as much an art as it is a science. As one analyst put it, “how much the business is worth depends on who asks and why.”

In this comprehensive guide, we will discuss the differences in valuation methodologies. We will also elaborate on the reasons for conducting the valuations.

Furthermore, it’s important to have a fair and supportable asking price for those owners selling a business. The opportunity for a sale is compromised by proposing an unreasonably high price tag on a business. Indeed, one organization suggests that the most important reason that certain small companies do not sell or do not sell quickly is that they are drastically overpriced.

For potential buyers, an authoritative valuation provides support for the offer they are making. It can also help in obtaining financing to make the purchase. Many lenders will require a business valuation before approving a loan for acquiring a business.

2. Valuations in Buy-Sell Agreements

The dissolution of a company, or the separation from the business of one or more owners, may create possible issues with how much the departing owner gets after leaving the business. Many businesses with two or more owners sign a buy-sell agreement to prevent or mitigate this issue. This allows for the business or other shareholders to buy the interests of the owner who leaves. A buy-sell agreement will include a valuation agreement that either sets a fixed price or provides a price calculation formula that will be obtained by the person leaving the company.
For example, some agreements contain a provision that the departing individual will receive “the fair market value of the shares as determined by a qualified business appraiser.”

3. Valuations in a Divorce

Since such a large proportion of marriages end in divorce, a large number of business valuations are carried out in order to split the company’s assets among the divorcing parties equitably. These valuations are carried out in order to determine the company’s fair market value. Expert testimony may sometimes be required if a settlement can not be established by the parties.
A spouse who does not partake in the operation of the company frequently assumes that the company is worth more than the other spouse does. And the gaps between the two conceptions may often be very wide. Usually, family court judges do not have substantial business appraisal experience, so it would always be prudent for the operating spouse to hire a good business appraiser to make a reasonable judgment, one that will make the judge a convincing argument.
The valuation is often complicated by the fact that most states distinguish between two types of value in a business: 

  1. “Enterprise goodwill” reflects the value of the business itself, and is deemed to be transferable to another party. 
  2. “Personal goodwill” arises from the talents and efforts of the spouse who actually operates the business. In a divorce, the enterprise goodwill is considered part of the marital estate, while the personal goodwill is excluded from the estate. 

This division of the value of the business can have a significant effect on the division of the business as between the two divorcing spouses.

4. Taxes and Estate Planning

For tax and estate planning purposes, valuations are often made. For estate planning, it is essential for the business owner to have an accurate valuation. This is done in order to provide sufficient funds for a potential estate tax liability. When a business owner dies, providing a precise assessment of the company’s value can be critically valuable to his or her heirs. 
Getting an accurate estimate of the value of the business will assist the owner in arranging liquidity to meet the estate tax obligation (typically via a life insurance policy). However, by gifting ownership shares in the company to the probable heirs while the owner is still alive, the owner may be able to counteract or prevent the estate tax liability.

5. Some Additional Times When Valuations are Needed

We’ve covered most of the major times when valuations are required. There are a number of other issues that will trigger the need for a valuation. Most of these have to do with raising capital.
For example, if a small public company has not developed a liquid market, the major shareholders may wish to go private in order to eliminate the need and expense of reporting, and other requirements of being a public company. 
Note: A fair price must be offered to minority shareholders, and a formal valuation process will help ensure that this occurs.

The Bottom Line

Valuations are subject to a variety of calculations, some of which do not necessarily coincide with each other. And depending on the particular reason for the valuation, one or another of the many valuation methodologies may be used. 
For example, when you’re selling your business, you would like the valuation to be higher rather than lower so that the bidding would start as high as reasonably possible.
Conversely, if you’re contemplating buying a business, you would prefer that the valuation be somewhat lower. In that case, perhaps you should not rely on the valuation put forward by the selling firm, but rather you should hire your own valuation expert.
Nevertheless, there is a good reason why the buyer’s valuation should not be too low. A higher valuation makes a lender more comfortable in providing financing since it provides greater collateral for making the loan.

Choose Bankers Advocate

Prominently, certified business valuations are a necessary aspect of running a business – business cannot be conducted over any reasonable period of time without such valuations. For this reason, it is always a good idea to have an up-to-date and accurate assessment of the worth of your business handy. 
A business valuation in 2021 conducted by a qualified valuation specialist in Bankers Advocate offers the best way to ensure that you, your partners, your spouse, your heirs and other interested parties have the most accurate information about the business.

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