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Hub You - Seven Things You Need to Know About Selling Your Business
Nonprofit fund-raising events are the hallmark of most nonprofit organizations and they often host these annual events in order to raise much-needed funds for their group. If these fund-raising events are successful the group can propel its work and help those people in need.This brings us to the next point; publicity and public relations are a key for nonprofit group fund raising, but it is not always enough. Sometimes it is important to advertise the nonprofit group's fund-raising events.Of course one problem with heavy advertising for nonprofit fund raising event is that if you spend too much money you will take away from the money you earn during a fund-raising event. That means less money goes to the needy people that nonprofit group is trying to help.This is why I recommend direct-mail marketing advertising pieces like you seen those little coupon booklets that come in the mail. If a nonprofit fund-raising event is to take place within two months it makes sense to send out these direct-mail marketing pieces with invitations inside to the event.I recommend sending them each month that is possible before the date of the event. This will help get more people to the event and may also help you generate volunteers for your nonprofit organization. I hope you will please consider this in 2006 and I hope that the direct-mail marketing advertising company will give you a discount when you ask; sin
Get professional help
Do not make the mistake of thinking that you can sell your business without help from professionals. In the course of the sale, there are numerous federal, state, local, and tax issues to consider. Use your time wisely and spend your time running your business successfully to increase its sales appeal. Ask for help from your accountant; lawyer; business broker; and business appraiser.
7. Consider the tax consequences
How income is taxed
If you owned your business for at least one year, the increased value of your business will be taxed as a long-term capital gain at approximately 20 percent. If you owned your business for less than one year, the increased value will be taxed as personal income at more than 30 percent. When you sell the company's assets, they are classified as capital assets and will be taxed as long-term capital gain or ordinary income. When you sell inventory, the proceeds will be classified and taxed as ordinary income or loss.
As you prepare your business for sale, you should make succession-management plans. Prepare the firm's next generation of leadership to include capable managers. The absence of a succession strategy is considered to be a company weakness. The lack of a practical succession plan can complicate a potential IPO, discourage a buyout, and be less desirable for underwriters or institutional investors.
Jo Ann Joy, Esq., MBA, CEO
The future of your business starts here!
You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. I have many published articles, and I will send any article to you free of charge. Most consultations are free.
For information about other important legal, tax, and business topics, free copies of articles, or EBooks, please visit our website at http://www.Indi
Once upon a time, there was a village on the banks of a fine, clear river. The villagers all drew their water from the river, and used it to cook, and bathe and water their gardens. Life was good.During one particular rainy season, the river flooded. When the water went down, the river had cut itself a new channel, far from the village.The wise village elders conferred and decided to hire someone to supply the village with water. Two villagers stepped forward and asked for the water contract. The village elders decided that a little competition might be a good thing, and issued both villagers a contract.The first villager, John the Wise, took the new water contract and left the village, saying he would return to the village with great amounts of clear water. It would be many weeks before the villagers again saw John the Wise.The other villager, Eli the Strong, seeing that he was the only one with a water contract, bought two shiny new buckets and set to work. Every day, Eli would take a bucket in each hand, walk to the river, fill his buckets, and walk back to the village. The villagers would all come and take some of Eli’s water and pay him for it. Eli the Strong was happy.Soon, however, the villagers wanted more water than Eli could carry in his two buckets. So Eli started making two trips a day, and doubled the amount of money coming in. Eli's wife was happy.Again, the villagers s
The IPO
If you business is large enough, you can consider an initial public offering (IPO) in which you will sell your company’s shares publicly on the open market. This can be a good alternative to selling the business, but IPO’s require the outlay of large sums of money that may be out of reach for your company. If you have money available to finance an IPO, research the IPOs of similar-size companies in your field and look at their track record and whether they experienced accelerated growth.
An IPO for your company will mean that you will lose a significant amount of control. You will be face outside investors, strict Securities and Exchange Commission regulations and record-keeping rules. Your company information will become a matter of public record.
Selling Corporate Assets
Sometimes it becomes difficult to cut back or restructure your business into a smaller business by selling some of your corporate assets, but this may be the best alternative to selling the business outright. If you consider selling off part of your business, hire an outside financial advisor to appraise your assets and determine a fair market price for the assets you are considering selling. Choose assets that are not directly tied to your core business. Choose assets for which there is a strong market. Obtain input from legal and accounting experts.
2. Ways to Determine The Value of Your Business
If you decide that you must sell your business, there are a number of ways to value your company and determine your selling price.
Informal and formal appraisals
Find out the selling prices of similar businesses in your area and compare their companies to yours. You can also contact the national trade association for your industry. You can also hire a professional business appraiser. This method is the most credible and your potential buyers will be more likely to accept the formal appraisal.
Market-based valuation
One commonly used method of valuation is based upon past experiences selling of similar businesses. A business broker may recommend an asking price based on the sale prices of similar businesses in your area and industry. This is similar to find comparable sales for residential real estate, and it is the least expensive. It is commonly used for the sale of small businesses.
Asset-based valuation
Your business assets may be considered at book value to determine the liquidation value of the business. The result is a fire-sale price that will be the bare minimums value.
Earnings-based valuation
Your company’s historical financial results will be considered and future income projections will be calculated and multiplied times a “Cap Rate,” the interest rate usually earned in the market.
Price Building
Price building is a valuation method that looks at the assets, leases, real estate, and goodwill of the business. It considers the value of the tangible assets on the balance sheet and the valuable intangibles that create the company’s value in determining the amount a buyer would be expected to pay for the business. The intangibles include location, unique product or service, profitability, favorable lease, goodwill, and good employees. The tangible assets will be real estate, equipment, and inventory.
After you inventory the tangible assets and calculate their value, you will estimate a value for the intangible assets. The rule of thumb for valuing these intangibles is that their combined value should be approximately one year's net income. Add together the value for the tangible assets, the intangible assets, the agent's commission, and other costs of sale to calculate your asking price.
Return on investment (ROI)
Consider your annual business net profit to calculate the buyer's return on investment. Divide your net profit by the buyer’s original cash investment, and the result is the return on investment. The typical ROI is 12 to 25 percent. The higher the ROI, the higher the sales price is likely to be.
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and procedures manual and consider employees
Create a procedures manual that documents the best way to run the business and deal with its employees. Remember the importance of keeping key employees during a sale and whether they will be crucial to the new owner's success. If they are, the new owner will want to know which employees will stay with the company after the sale. Have a company meeting to explain to employees that your are selling the business and tell them what effect the sale will have on their jobs.
Evaluate and update company assets
Do a complete inventory or all assets, equipment, and inventory. If your computer systems are obsolete, upgrading the system will make it easier to sell your business. If company assets include real estate, decide whether you should or sell the real estate before the company is listed for sale.
4. Legal Consequences of Selling a Business
Disclosure
You must make a complete disclosure to the buyer about all aspects of the business. Open up the books for inspection. Show them all leases and other relevant contracts. Do not withhold any information from a potential buyer. Your failure to disclose material information could be considered fraud.
Will the Bulk Sales Law Apply to your business?
"Bulk sales" laws were enacted to prevent business owners from defrauding creditors by transferring their assets to another individual or entity to keep their assets away from creditors. When one corporation receives the assets of another company, it is expected to assume its debts and accountable for the debts. If, however, one business transfers all of its assets to another business, but the receiving business does not assume all of the debts, you must consult an attorney to be sure you comply with the law.
5. Collect Outstanding Accounts Receivable
Create an aggressive collections plan
You should make collections a top priority and devise a systematic method for collections. Put your collections plan in writing and share it with the employees who are part of the collections team. Make sure everyone consistently carries out the plan. Contact your past-due account holders by email to remind them that their account is overdue. Tell them how many days they are late and the precise amount that they owe.Ask recipients to acknowledge your e-mail. If you do not receive a response on your first e-mail, send another email advising them that you will contact your attorney.
Hire a collections agency or attorney
Hiring a collections agency as a last resort may be the only way to recover your money. When you create your aggressive collections plan, collect some names of reputable firms and make some initial inquiries to know what to expect. Their fees will be between 25 and 40 percent of the amounts collected. If you have very large overdue accounts, you may want to hire a collections attorney with experiece in collecting outstanding accounts receivable.
6. Define your priorities
Sales price and terms
Decide exactly what you want from the sale. Do you have to have an all-cash deal or can you finance part of the sale price? Is it important to you that the buyer continue your business traditions? Decide on the minimum price that you will take. Do you have to have a lump sum at closing or can you accept payments over time?
Time your decision to sell
When the national economy is strong and your business is having its best year, you will receive the highest dollar value for your business. keep an eye on what the national economy is doing and be flexible about when you will sell. Sell early if you can avoid being caught up in a bad economic cycle.
Prepare to sell
The average time for a businesses to sell is approximately one year. Start planning two years in advance of the date you want to sell. Also, prepare your business for the sale by cleaning, painting, and doing whatever you can do to make your business premises more attractive. Keep your clean and attractive every day, because you never know when a potential buyer will drive by.
Get professional help
Do not make the mistake of thinking that you can sell your business without help from professionals. In the course of the sale, there are numerous federal, state, local, and tax issues to consider. Use your time wisely and spend your time running your business successfully to increase its sales appeal. Ask for help from your accountant; lawyer; business broker; and business appraiser.
7. Consider the tax consequences
How income is taxed
If you owned your business for at least one year, the increased value of your business will be taxed as a long-term capital gain at approximately 20 percent. If you owned your business for less than one year, the increased value will be taxed as personal income at more than 30 percent. When you sell the company's assets, they are classified as capital assets and will be taxed as long-term capital gain or ordinary income. When you sell inventory, the proceeds will be classified and taxed as ordinary income or loss.
As you prepare your business for sale, you should make succession-management plans. Prepare the firm's next generation of leadership to include capable managers. The absence of a succession strategy is considered to be a company weakness. The lack of a practical succession plan can complicate a potential IPO, discourage a buyout, and be less desirable for underwriters or institutional investors.
Jo Ann Joy, Esq., MBA, CEO
The future of your business starts here!
You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. I have many published articles, and I will send any article to you free of charge. Most consultations are free.
For information about other important legal, tax, and business topics, free copies of articles, or EBooks, please visit our website at http://www.Indig
There are quite a few types of background checks that can be done on a job applicant. These include credit checks, criminal record checks, driving records, and past employer checks. Even though it may be difficult to find candidates to fill all positions within an organization, cautious business practices require a person to conduct certain essential checks on potential employees. This is undertaken for the sake of restraining probable liabilities that can occur from neglectful hiring practices.Credit checks are often carried out for positions that contain financial responsibilities. The Fair Credit Reporting Act (FCRA) directs using credit checks for employment selection purposes. This is particularly true if the position involves handling large sums of money or exercising financial prudence. If the position does not involve this type of responsibility, the employer must be very cautious. It is a good practice to curb the use of credit reports to circumstances where this type of information is essential. Credit checks are of two types investigative consumer credit reports and consumer credit reports. An analytical consumer credit report contains a written report along with interviews from friends and neighbors. A written notice is to be given to a candidate before an analytical credit check is carried outCriminal background check refers to the checking of a person?s past record in order to find out whether the
Asset-based valuation
Your business assets may be considered at book value to determine the liquidation value of the business. The result is a fire-sale price that will be the bare minimums value.
Earnings-based valuation
Your company’s historical financial results will be considered and future income projections will be calculated and multiplied times a “Cap Rate,” the interest rate usually earned in the market.
Price Building
Price building is a valuation method that looks at the assets, leases, real estate, and goodwill of the business. It considers the value of the tangible assets on the balance sheet and the valuable intangibles that create the company’s value in determining the amount a buyer would be expected to pay for the business. The intangibles include location, unique product or service, profitability, favorable lease, goodwill, and good employees. The tangible assets will be real estate, equipment, and inventory.
After you inventory the tangible assets and calculate their value, you will estimate a value for the intangible assets. The rule of thumb for valuing these intangibles is that their combined value should be approximately one year's net income. Add together the value for the tangible assets, the intangible assets, the agent's commission, and other costs of sale to calculate your asking price.
Return on investment (ROI)
Consider your annual business net profit to calculate the buyer's return on investment. Divide your net profit by the buyer’s original cash investment, and the result is the return on investment. The typical ROI is 12 to 25 percent. The higher the ROI, the higher the sales price is likely to be.
3. Prepare Your Business for Sale
Prepare in advance
The best results come from an owner who starts preparing his or her business for sale at least one year in advance. The owner should carefully review the financial statements and have a cleare understanding of the company's revenue and growth potential.
Prepare company records and contracts
All company records must be entered to clearly document all company transactions so that potential buyers can review and evaluate the company’s financial status. Examine all supplier and customer contracts to be sure that their terms and conditions will not require renegotiation by the new owner and to be sure that they are financially good for the company. Review your real estate leases to find out if they require renegotiation upon sale. Analyze the equipment leases and other material contracts from the buyer's perspective.
Write a policies and procedures manual and consider employees
Create a procedures manual that documents the best way to run the business and deal with its employees. Remember the importance of keeping key employees during a sale and whether they will be crucial to the new owner's success. If they are, the new owner will want to know which employees will stay with the company after the sale. Have a company meeting to explain to employees that your are selling the business and tell them what effect the sale will have on their jobs.
Evaluate and update company assets
Do a complete inventory or all assets, equipment, and inventory. If your computer systems are obsolete, upgrading the system will make it easier to sell your business. If company assets include real estate, decide whether you should or sell the real estate before the company is listed for sale.
4. Legal Consequences of Selling a Business
Disclosure
You must make a complete disclosure to the buyer about all aspects of the business. Open up the books for inspection. Show them all leases and other relevant contracts. Do not withhold any information from a potential buyer. Your failure to disclose material information could be considered fraud.
Will the Bulk Sales Law Apply to your business?
"Bulk sales" laws were enacted to prevent business owners from defrauding creditors by transferring their assets to another individual or entity to keep their assets away from creditors. When one corporation receives the assets of another company, it is expected to assume its debts and accountable for the debts. If, however, one business transfers all of its assets to another business, but the receiving business does not assume all of the debts, you must consult an attorney to be sure you comply with the law.
5. Collect Outstanding Accounts Receivable
Create an aggressive collections plan
You should make collections a top priority and devise a systematic method for collections. Put your collections plan in writing and share it with the employees who are part of the collections team. Make sure everyone consistently carries out the plan. Contact your past-due account holders by email to remind them that their account is overdue. Tell them how many days they are late and the precise amount that they owe.Ask recipients to acknowledge your e-mail. If you do not receive a response on your first e-mail, send another email advising them that you will contact your attorney.
Hire a collections agency or attorney
Hiring a collections agency as a last resort may be the only way to recover your money. When you create your aggressive collections plan, collect some names of reputable firms and make some initial inquiries to know what to expect. Their fees will be between 25 and 40 percent of the amounts collected. If you have very large overdue accounts, you may want to hire a collections attorney with experiece in collecting outstanding accounts receivable.
6. Define your priorities
Sales price and terms
Decide exactly what you want from the sale. Do you have to have an all-cash deal or can you finance part of the sale price? Is it important to you that the buyer continue your business traditions? Decide on the minimum price that you will take. Do you have to have a lump sum at closing or can you accept payments over time?
Time your decision to sell
When the national economy is strong and your business is having its best year, you will receive the highest dollar value for your business. keep an eye on what the national economy is doing and be flexible about when you will sell. Sell early if you can avoid being caught up in a bad economic cycle.
Prepare to sell
The average time for a businesses to sell is approximately one year. Start planning two years in advance of the date you want to sell. Also, prepare your business for the sale by cleaning, painting, and doing whatever you can do to make your business premises more attractive. Keep your clean and attractive every day, because you never know when a potential buyer will drive by.
Get professional help
Do not make the mistake of thinking that you can sell your business without help from professionals. In the course of the sale, there are numerous federal, state, local, and tax issues to consider. Use your time wisely and spend your time running your business successfully to increase its sales appeal. Ask for help from your accountant; lawyer; business broker; and business appraiser.
7. Consider the tax consequences
How income is taxed
If you owned your business for at least one year, the increased value of your business will be taxed as a long-term capital gain at approximately 20 percent. If you owned your business for less than one year, the increased value will be taxed as personal income at more than 30 percent. When you sell the company's assets, they are classified as capital assets and will be taxed as long-term capital gain or ordinary income. When you sell inventory, the proceeds will be classified and taxed as ordinary income or loss.
As you prepare your business for sale, you should make succession-management plans. Prepare the firm's next generation of leadership to include capable managers. The absence of a succession strategy is considered to be a company weakness. The lack of a practical succession plan can complicate a potential IPO, discourage a buyout, and be less desirable for underwriters or institutional investors.
Jo Ann Joy, Esq., MBA, CEO
The future of your business starts here!
You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. I have many published articles, and I will send any article to you free of charge. Most consultations are free.
For information about other important legal, tax, and business topics, free copies of articles, or EBooks, please visit our website at http://www.Indi
The Businessman's Best Bet - Singapore's economic prowess is aptly embodied in its name: the lion city. With an economic infrastructure fit to rival even the best of Europe, Singapore is frequented by a healthy number of business travelers and global investors year-round. Its strategic location, amazing connectivity, great convention venues and superior hotels make Singapore one of the world's leading business hubs.Strategic Location – Its central location in the growing business region of Asia places Singapore at an advantage over other countries. Surrounding the lion city are the fast-emerging markets of China and India. Its strategic location also allows it easy access to air transport facilities. More than 4,000 weekly flights depart from Singapore to more than 180 cities around the world.Unparalleled Connectivity – All businessmen know that connectivity plays an important role in the cutthroat business world. Global Information Technology Report ranks Singapore as the “Most Network-ready Country in the World”. In addition, numerous high-class hotels in the country offer Internet and teleconferencing services to its business guests. Businessmen will not have a problem staying in touch with the rest of the world while in Singapore.World-class Corporate Venues – Singapore offers a wide selection of convention centers, exhibit halls and meeting venues to the businessman-on-th
Write a policies and procedures manual and consider employees
Create a procedures manual that documents the best way to run the business and deal with its employees. Remember the importance of keeping key employees during a sale and whether they will be crucial to the new owner's success. If they are, the new owner will want to know which employees will stay with the company after the sale. Have a company meeting to explain to employees that your are selling the business and tell them what effect the sale will have on their jobs.
Evaluate and update company assets
Do a complete inventory or all assets, equipment, and inventory. If your computer systems are obsolete, upgrading the system will make it easier to sell your business. If company assets include real estate, decide whether you should or sell the real estate before the company is listed for sale.
4. Legal Consequences of Selling a Business
Disclosure
You must make a complete disclosure to the buyer about all aspects of the business. Open up the books for inspection. Show them all leases and other relevant contracts. Do not withhold any information from a potential buyer. Your failure to disclose material information could be considered fraud.
Will the Bulk Sales Law Apply to your business?
"Bulk sales" laws were enacted to prevent business owners from defrauding creditors by transferring their assets to another individual or entity to keep their assets away from creditors. When one corporation receives the assets of another company, it is expected to assume its debts and accountable for the debts. If, however, one business transfers all of its assets to another business, but the receiving business does not assume all of the debts, you must consult an attorney to be sure you comply with the law.
5. Collect Outstanding Accounts Receivable
Create an aggressive collections plan
You should make collections a top priority and devise a systematic method for collections. Put your collections plan in writing and share it with the employees who are part of the collections team. Make sure everyone consistently carries out the plan. Contact your past-due account holders by email to remind them that their account is overdue. Tell them how many days they are late and the precise amount that they owe.Ask recipients to acknowledge your e-mail. If you do not receive a response on your first e-mail, send another email advising them that you will contact your attorney.
Hire a collections agency or attorney
Hiring a collections agency as a last resort may be the only way to recover your money. When you create your aggressive collections plan, collect some names of reputable firms and make some initial inquiries to know what to expect. Their fees will be between 25 and 40 percent of the amounts collected. If you have very large overdue accounts, you may want to hire a collections attorney with experiece in collecting outstanding accounts receivable.
6. Define your priorities
Sales price and terms
Decide exactly what you want from the sale. Do you have to have an all-cash deal or can you finance part of the sale price? Is it important to you that the buyer continue your business traditions? Decide on the minimum price that you will take. Do you have to have a lump sum at closing or can you accept payments over time?
Time your decision to sell
When the national economy is strong and your business is having its best year, you will receive the highest dollar value for your business. keep an eye on what the national economy is doing and be flexible about when you will sell. Sell early if you can avoid being caught up in a bad economic cycle.
Prepare to sell
The average time for a businesses to sell is approximately one year. Start planning two years in advance of the date you want to sell. Also, prepare your business for the sale by cleaning, painting, and doing whatever you can do to make your business premises more attractive. Keep your clean and attractive every day, because you never know when a potential buyer will drive by.
Get professional help
Do not make the mistake of thinking that you can sell your business without help from professionals. In the course of the sale, there are numerous federal, state, local, and tax issues to consider. Use your time wisely and spend your time running your business successfully to increase its sales appeal. Ask for help from your accountant; lawyer; business broker; and business appraiser.
7. Consider the tax consequences
How income is taxed
If you owned your business for at least one year, the increased value of your business will be taxed as a long-term capital gain at approximately 20 percent. If you owned your business for less than one year, the increased value will be taxed as personal income at more than 30 percent. When you sell the company's assets, they are classified as capital assets and will be taxed as long-term capital gain or ordinary income. When you sell inventory, the proceeds will be classified and taxed as ordinary income or loss.
As you prepare your business for sale, you should make succession-management plans. Prepare the firm's next generation of leadership to include capable managers. The absence of a succession strategy is considered to be a company weakness. The lack of a practical succession plan can complicate a potential IPO, discourage a buyout, and be less desirable for underwriters or institutional investors.
Jo Ann Joy, Esq., MBA, CEO
The future of your business starts here!
You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. I have many published articles, and I will send any article to you free of charge. Most consultations are free.
For information about other important legal, tax, and business topics, free copies of articles, or EBooks, please visit our website at http://www.Indi
Finding The Right FranchiseWhether it’s hamburgers, pizza, telecom, coffee, Internet, muffler parts, or seniors’ services, there are Franchise opportunities available to evaluate. There are great Franchise systems, good Franchise systems, and bad Franchise systems. The challenge is to ask the right questions to find the right system that will fit your goals and dreams. The key is to ask the questions – and listen closely to the responses. Only then can you determine if the Franchise opportunity is the right fit for you. So whether it’s food services like burgers or coffee, professional services like telecom or IT, or manual services like cleaning or oil changes, ask the questions and record the answers.Communications With Existing FranchiseesOne of the most important sources of valuable information will be the existing Franchisees. The Franchisor’s system should include available exposure to all of the Franchisees. First of all, in most jurisdictions where Disclosure Documents are required, one of the required disclosures is a full list of all Franchisees, including contact information.If you get a feel that a Franchisor is discouraging you from communicating with certain Franchisees – well, there’s that alarm bell again.That’s not to say that all Franchisees will be happy, or that all will be great operators. In fact, most systems have disgruntled or unsuccessful Franchisees. It will be im
5. Collect Outstanding Accounts Receivable
Create an aggressive collections plan
You should make collections a top priority and devise a systematic method for collections. Put your collections plan in writing and share it with the employees who are part of the collections team. Make sure everyone consistently carries out the plan. Contact your past-due account holders by email to remind them that their account is overdue. Tell them how many days they are late and the precise amount that they owe.Ask recipients to acknowledge your e-mail. If you do not receive a response on your first e-mail, send another email advising them that you will contact your attorney.
Hire a collections agency or attorney
Hiring a collections agency as a last resort may be the only way to recover your money. When you create your aggressive collections plan, collect some names of reputable firms and make some initial inquiries to know what to expect. Their fees will be between 25 and 40 percent of the amounts collected. If you have very large overdue accounts, you may want to hire a collections attorney with experiece in collecting outstanding accounts receivable.
6. Define your priorities
Sales price and terms
Decide exactly what you want from the sale. Do you have to have an all-cash deal or can you finance part of the sale price? Is it important to you that the buyer continue your business traditions? Decide on the minimum price that you will take. Do you have to have a lump sum at closing or can you accept payments over time?
Time your decision to sell
When the national economy is strong and your business is having its best year, you will receive the highest dollar value for your business. keep an eye on what the national economy is doing and be flexible about when you will sell. Sell early if you can avoid being caught up in a bad economic cycle.
Prepare to sell
The average time for a businesses to sell is approximately one year. Start planning two years in advance of the date you want to sell. Also, prepare your business for the sale by cleaning, painting, and doing whatever you can do to make your business premises more attractive. Keep your clean and attractive every day, because you never know when a potential buyer will drive by.
Get professional help
Do not make the mistake of thinking that you can sell your business without help from professionals. In the course of the sale, there are numerous federal, state, local, and tax issues to consider. Use your time wisely and spend your time running your business successfully to increase its sales appeal. Ask for help from your accountant; lawyer; business broker; and business appraiser.
7. Consider the tax consequences
How income is taxed
If you owned your business for at least one year, the increased value of your business will be taxed as a long-term capital gain at approximately 20 percent. If you owned your business for less than one year, the increased value will be taxed as personal income at more than 30 percent. When you sell the company's assets, they are classified as capital assets and will be taxed as long-term capital gain or ordinary income. When you sell inventory, the proceeds will be classified and taxed as ordinary income or loss.
As you prepare your business for sale, you should make succession-management plans. Prepare the firm's next generation of leadership to include capable managers. The absence of a succession strategy is considered to be a company weakness. The lack of a practical succession plan can complicate a potential IPO, discourage a buyout, and be less desirable for underwriters or institutional investors.
Jo Ann Joy, Esq., MBA, CEO
The future of your business starts here!
You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. I have many published articles, and I will send any article to you free of charge. Most consultations are free.
For information about other important legal, tax, and business topics, free copies of articles, or EBooks, please visit our website at http://www.Indi
Each marketing campaign plan should be tested on a smaller group of Customers, before being deployed. Based on the results of the test campaign, the marketing campaign can be reshaped to achieve better results.Testing is essential in every campaign, given that the business environment changes dynamically. Nothing should be taken for granted. Testing can be used not only for the estimation of short term response rates and marketing campaign ROI, but also to monitor the medium term effect (e.g. one year) of a campaign.The steps to implement a test campaign, are the following:1. identify a group of customers, who are potential buyers of a product, e.g. 20.000 Business Customers to receive an offer developed for the Business segment.2. set up a test and a control group (e.g. 2.000 Business Customers each). The test group gets the offer. The control group is treated as usual, but it does not get the offer or any other offer. Ideally, the test & control groups consist of the same type of Customers (Business Customers). The groups can be easily selected by sorting the Customer group and taking the 3rd out of each 10 for the test group and the 5th out of each 10 for the control group. The size of the control group has to be sufficient to provide statistically accurate results.3. the test campaign is executed and results (orders made by the 2 groups) are captured.4. the effectiveness of the t
Get professional help
Do not make the mistake of thinking that you can sell your business without help from professionals. In the course of the sale, there are numerous federal, state, local, and tax issues to consider. Use your time wisely and spend your time running your business successfully to increase its sales appeal. Ask for help from your accountant; lawyer; business broker; and business appraiser.
7. Consider the tax consequences
How income is taxed
If you owned your business for at least one year, the increased value of your business will be taxed as a long-term capital gain at approximately 20 percent. If you owned your business for less than one year, the increased value will be taxed as personal income at more than 30 percent. When you sell the company's assets, they are classified as capital assets and will be taxed as long-term capital gain or ordinary income. When you sell inventory, the proceeds will be classified and taxed as ordinary income or loss.
As you prepare your business for sale, you should make succession-management plans. Prepare the firm's next generation of leadership to include capable managers. The absence of a succession strategy is considered to be a company weakness. The lack of a practical succession plan can complicate a potential IPO, discourage a buyout, and be less desirable for underwriters or institutional investors.
Jo Ann Joy, Esq., MBA, CEO
The future of your business starts here!
You may contact Jo Ann by phone at (602) 663-7007, by fax at (602) 324-7582, by email at joannjoy@Indigo Business Solutions.net, and by mail at 2313 East Ocotillo Rd., Phoenix, AZ 85016. I have many published articles, and I will send any article to you free of charge. Most consultations are free.
For information about other important legal, tax, and business topics, free copies of articles, or EBooks, please visit our website at http://www.IndigoBusinessSolutions.net Copyright 2006. All rights reserved. Indigo Business Solutions is a registered trade name.
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