Learning the Basics of how to Sell your Business

A strange thing tends to happen to even the most hard-nosed businessman, when it comes to considering an offer for his business.  He tends to just let everything he knows about selling go out the window. When it comes to selling the business that you have put years of your life into, sometimes, you can become a bit self-absorbed. You can just be all about "me, me, me". That's not how you succeed in selling anything. To sell something successfully, you need to focus on fulfilling the needs of the buyer - and not on fulfilling your own needs. Let's look at what you need to know to learn how to sell your business.

The first thing you need to realize learning how to sell your business is, that this happens to be like any other sale you've made in your life. As any sales intern knows, selling is supposed to be about first determining what it is that a customer is looking for when he walks in. You need to ask the buyer of your business what he hopes to achieve buying you up. You need to know how your business will make a good act extension of theirs, what kind of returns they expect once they do acquire your business, and so on.

It can be a complex equation what determines the price of your business. But to simplify, if the value of your business is $100, and the buyer is looking for a 20% return on their investment, they're basically looking for a five-fold return on what they pay for your business (100/20=5). The fivefold return would be earnings before taxes and everything. It's the figure they call EBITDA. The more they expect your business to bring them, the less they will be willing to pay for you. Now why is that? Doesn't that sound kind of counter intuitive?

It's just that the more a business is expected to earn in a short period of time, the riskier this supposed to be. And more risk there is involved, the less a buyer is usually willing to pay. It's the way it is when you invest your money in shares. Usually, when your broker points out a high-performing small-cap fund to you, you know that since it's a small-cap fund that's performing usually well, it can't be all that solid an investment. You're taking a risk, a bet on it. And for that, you expect a lower price.

Learning how to sell your business then is all about learning to make your business look like a low risk investment for the buyer. How do you do this? Well, if you are a business that relies on just two or three important clients, if you are a business that has just one or two suppliers for everything, if you have just one or two important employees whose skills you depend on, and if you have handshake agreements to put all of these in place, you happen to be high risk business. Fix all these, and suddenly, magically, you turn lower risk and become worth a lot more.

Putting your Best Foot Forward Entering the Organic Restaurant Business

The serving of organic foods was once a mere niche in the restaurant business; today, it makes more than $1 billion every year for the restaurant business. Even with growing demand and an established base, starting and running an organic food restaurant business is hardly a straightforward matter. A restaurateur who deals in the business of serving organic food needs to take into account how his raw materials cost far more than regular raw materials (organic lemons, for instance, cost three times what conventional lemons cost); and you have to find a way to remain competitive against other restaurants that serve regular food. With the right strategy though, success is certainly possible.  As many businesses have demonstrated.

The future appears to be very bright for the organic restaurant business; even through the economic downturn, organic food sales have arisen at four times the rate of conventional food sales. The average restaurant costs about $400,000 to start. Work in the part about your restaurant being organic, and you'll need to count on be prepared for another $100,000. An organic restaurant usually needs expensive equipment that other restaurants don't need - things like materials for takeaway items that can be composted. If yours is a vegetarian organic restaurant, you could face lower insurance costs if you only serve raw foods. When there is no stove on the premises, your insurance costs fall.

An organic restaurant business needs to be completely prepared to keep changing the recipes to help manage costs. Whenever a specific organic ingredient becomes scarce or too expensive, you need chefs who are prepared to experiment with and reshuffle recipes so that they can improvise. You basically need to keep the menu steady, but find new ways to make them without the usual ingredients. When ingredients like tomatoes go out of season, the organic versions become exorbitantly expensive. Flexibility in the chefs one employs is key.

Typically, going vegetarian isn't the route to success in the organic restaurant business. The moment you go vegetarian, you lose half your potential customer base. And while we're on the subject of catering to your customer base, you need to know that the more seriously you take government regulations for the organic label, the more favor you will win with your customer base. You need every recipe to be 95% organic to be considered deserving of the Wholly Organic label. The more fervently you cater to your customer base, the more popular you will be. It might take a little extra work at first, but it'll be well worth it for the success prospects of your restaurant.

McWorld - a Surreptitious McDonalds Fast Food Ad. Aimed at Children?

Have you ever heard of proxy advertising? This is where a company that deals in a product that is illegal to advertise, finds roundabout ways of advertising it anyway. For instance, in India, where it is illegal to advertise alcohol and tobacco, manufacturers get around the law by trying to design and sell a product whose packaging looks exactly like the alcohol or tobacco they would rather advertise. For instance, if they wish to advertise whiskey, they'll do it by manufacturing and advertising a line of mineral water with packaging that looks identical to the whiskey; they even call the water almost the same thing. And instead of advertising to cigarettes tobacco, they'll advertise packs of playing cards that are made to look like packs of cigarettes. Fast food is perfectly legal to advertise; but to directly advertise unhealthy food to children doesn't get very far with parents these days. So, the McDonalds fast food company has found itself in a position where it needs to advertise itself without actually appearing to advertise itself. That's where the McWorld website comes in.

By itself, McWorld happens to be quite an entertaining place for children. As a child, you get to make your own imaginary characters, you get to go on treasure hunts in a virtual landscape, and so on. And in a surprising show of restraint for a company that doesn't hesitate to stoop to advertising its products even in schools there isn't a single mention of buying any McDonalds fast food menu items.

What they're doing has been well tried and tested; they're trying to build a kind of fun place where children can have fun and learn to associate fun with the McDonald's name. The hope is that children who play at McWorld will naturally make the mental leap of associating fun at McWorld with fun eating at the parent company's restaurants.

You've heard of product placement advertising; you'd heard of proxy advertising; this thing McDonald's is trying out is the latest thing and it has its own snazzy name as well - it's called engagement marketing. It's about engaging the interest of an audience in the company name without necessarily getting them interested in the company's products. The final joining up of the dots is something the audience is supposed to on its own.

Now while McWorld doesn't try to directly tell children how delicious McDonalds fast food is, they do engage in quite a bit of indirect pressure. For lots of fun activities on the website, a child needs to have codes that are only to be found on Happy Meals. They may not actually ask you to go out and buy stuff; but if you want to have fun, the message is clear.

McDonald's, of course, feels that they are doing nothing wrong. They're just trying to get children to like them. What could be wrong with that?

Learning to Read an Accounting Balance Sheet

When you run a business, you often tend to be pretty focused on having the accounting department produce the kind of financial statements that give you the best chance of impressing investors. The financial statement that does the best job in that area is usually the income statement. The poor accounting balance sheet, on the other hand, is a document that remains in the background, uncared for, and barely heard about. And yet, the balance sheet is the financial statement that starts everything off.

Basically, the accounting balance sheet is something that gives you a snapshot of everything about the financial position of a business that you need really know. This double-columned financial statement on the one side, gives you a list of everything that the business owns, what they call its assets, and another list of everything that the business owes outside parties, what they call its liabilities. What is a professional accountant actually see when he sees two lists of stuff set out one next to the other? Once you know how to read a balance sheet, there's so much you will find it can tell you.

When a professional accountant casts an expert eye over the accounting balance sheet, the first things he looks for are clues to the liquidity and solvency of the business. To most people, the two terms are quite interchangeable. The two terms do both refer to how a company is able to deal with money it owes. But there's a difference.

Liquidity in a business is all about how ready it is with cash to deal with immediate obligations. Solvency is how well set up it is to deal with obligations that are spread out over years. When a professional accountant casts an eye over a balance sheet, he tries to look at something called a coverage ratio. That's a figure that tells one about how much a business owes right away as compared how much it has in cash and money coming in right away in the short term. In general, in the short term, a business needs to have twice as much money as it owes. That's what a bank likes to see when a businessman approaches them for a loan. So there's a figure that you need to keep in mind for what you can learn from an accounting balance sheet - it's the current ratio.

A pro can look at a balance sheet and right away see something he calls a common size analysis. Now what is that? Basically, for a common size analysis, you take individual assets or liabilities that the business has and you try to see how that measures up against the total assets or liabilities that the business has. They call this a vertical common size analysis. If you want a horizontal common size analysis, you take the same figure an average it out over three years. It gives you better idea of the direction the company takes over time.

Finding the Best Advertising Company

Everyone wants to work with the best advertising company for their advertising needs but for most people, getting the best is never a walk in the park. One of the best ways of knowing that an advertising company is ideal is by conducting a thorough research that will reveal everything in terms of the kind of work done as well as the prices that are paid for each project. There are different modes of advertising and working with the advertising that works for the specific product is key. One should therefore look for a company that knows how to place their advert as well. The kind of help that is needed is often very instrumental in determining the kind of advertising firm that will be used to advertise a particular product. For instance if the campaign is going to be huge, then most likely a small advertising company will not be able to handle it because of lack of proper mechanisms.

Quite a number of people have gone into advertising without putting a thought in the kind of scope that their business bears and this is not only for that time, but for the next six months to one year. This usually works against them and more so when they go out to look for a suitable advertising company to send out their message for them. It is advisable that a person should give a though to their business’ overall scope for about a year before going into advertising. Having specific, measurable goals should also come into play when one is looking for the ideal adverting agency as well.

Unlike a few years ago when most people had to do with only offline advertising companies, these days there are also online advertising companies which provide another alternative to advertisers. When choosing an advertising company to use it is important that one considers their product as this is what is going to guide them as to whether they should use an offline advertising company or one that is on the Internet. It should be noted that the best advertising companies will go out of their way to give their clients the best online and offline services that are within their clients’ budget.

When looking for the ideal advertising company one should also look at how responsive they are. Being responsive means their manner of dealing with calls and emails. If they respond to pre-sales questions on time and properly then it means they are the best to work with. Some clients often request to have a number of meetings with the agency that they want to hire and this is usually a good idea as afterwards they usually go through the details of each meeting in their minds. It is after these sessions of searching the mind that most of these people have been able to know the best advertising company to work with.

Advertising Billboards Seem To Be a Lost Art Form

The other day, I was driving down the freeway when I saw two advertising billboards that were pushing technology products. I wondered why I was so impressed by the advertisements, when it occurred to me that I rarely see them anymore. I am not sure why it is, but it seems that advertising billboards are a lost art form.

I had the very good fortune to ride along with my father on his mail route when I was a young boy, and it was a very bucolic area to which my father delivered mail, and we would often drive for miles down the highway without seeing a home or business. One thing we would see were advertising billboards that pushed everything from chewing gum to cigarettes to fireworks.

I remember looking down at my father's half-smoked pack of Marlboros at the same time we saw a billboard with the Marlboro Man on it, and I looked up and said, “hey Dad, that's the kind of cigarettes that you smoke.” Little did I know at the time why billboards like that existed, nor did I make the connection between my father's choice of cigarette and the advertising billboard. I just thought it was an amazing coincidence.

I saw another billboard for Skittles on the way to a little town called Christoval in central Texas. I asked my father if I could get some Skittles at the next convenience store we visited. He asked me what made me think of Skittles, and I said I didn't know. He just laughed, and the next time we stopped he got me some Skittles.

I have always felt that advertising billboards were a good way to bring in customers, but I have noticed fewer and fewer as I drive these days. I have tried to figure out why that is, and I have come to a couple of conclusions.

First, there are so many other ways to advertise these days that people just might not even think about using advertising billboards as an overhead medium. I know that I still see billboards for fast food places and gas stations, but that is pretty much it.

I also think that maybe a lot of companies view advertising billboards as a bit old-fashioned. I know they were pretty popular 25 years ago or so, and maybe they are still popular in other parts of the country, but they are rare in my neck of the woods.

Whatever the reason is, advertising billboards seem to be a lost art form, and I think that is really sad. For me, they are not only an excellent marketing tool, but also a part of my childhood that I look back upon with great fondness.