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.