How Do I Sell a Distressed Business

As the Great Recession in the US starts to heal and spread through the economy, many business owners are looking to sell their business and regain control of their lives. For different reasons, the recession has been longer and deeper than many imagined, one of the main reasons why Chairman Bernanke at the Federal Reserve keeps saying he will not be raising interest rates for the 'foreseeable future' as he wants to make sure the growth in the economy is permanent and not temporary as happened during the Great Depression.

Despite the return to growth in the economy, a lot of business owners are unable or unwilling to hold on to their business in the hope of getting a better price if they sold. At the moment there are many buyers for certain types of businesses but I am seeing these buyers look for bargains. I am also seeing many business owners saying "Get me out, I am done." They are highly motivated to sell rather than close the business as they want to see their business survive and feel a new owner with marketing money and energy can make it thrive and the price they want is extremely reasonable, that is, just the value of the assets.

If you own a business and want to sell because the physical, financial and emotional price is too great here are some steps to take.

The first step is probably the most important. It's critical to step back from the business to be clear where it is at. If sales are declining rapidly then that business will be very hard to sell. If sales are flat then that is good. If sales are starting to increase that's better. To help with this step, look at the cash flow. If a business has positive cash flow it has so many more options to a business that has no cash flow and/or no chance of this improving.

The second step is to look at the finance in place. If the business has no loans, that is great as the assets can be sold free and clear. If the business has loans from family and friends, it is time for heart to heart discussion about who gets how much. If the business has loans from a bank it can be well worth having a discussion with them. Take care with this approach as you need to be sure the bank will partner with you. Banks are in the business of lending so talk to their Asset Protection manager whose job is to protect the interests of the bank by getting bad loans off their books.

The third step is to move forward with selling the business. As I mentioned above, the sale will be around the hard assets. As the seller of the business you may be tempted to think there is value in customer lists, software, a website or the business phone numbers but the reality is these assets are not producing enough cash from the business sales. Do not get me wrong, a buyer will want them but they will not be willing to pay for them; only the hard physical assets or fixtures, furniture and equipment.

Make a detailed list of all the fixtures, furniture and equipment so you can clearly show a buyer what you have including the make, model, date of purchase and any other positive points you would like to make.

Step four is to start marketing the business and the assets. This is probably the hardest part. If the business has employees you do not want them to find out the business is for sale as they will likely fear their job and leave. Customers will be unsettled as well. The other party to worry about is suppliers. If their current terms include credit then they move to require cash only on all sales, so care needs to be taken.

If a suitable buyer comes along, it will be important to run the sale through an escrow company. This protects all parties in the transaction especially the buyer as they want to acquire the assets free and clear.

The process to sell a distressed business can be beyond the skill set and patience of the owner and there is a need to find expert or professional help. There is a cost to this professional help but it can be minimized and pushed to the end of the transaction so they only get paid if the assets are sold. Depending on the business, there may be options such as the expert taking an equity position that does not cost money. The critical step is to find the right expert that can evaluate the business and offer a viable solution.

The place to look for an expert includes any association in your particular industry. That is, if your business is in the auto repair industry or manufacturing industry, check with your association to see if they know any experts. There are two associations that have consultants that work with businesses in distress. These are the Association for Corporate Growth and the Turnaround Management Association. To find a local contact in your market, simply do a Google search for these associations and see if you can find a local chapter and a point of contact to call and ask for help.

The biggest challenge for small business owners and a business in distress can be the owner themselves. The emotions of being overwhelmed with what to do, accepting the reality of the situation, but not being too critical of themselves, that is, seeing it as a failure and being concerned about what to do if they owe money to family and friends. The situation also puts stress on their immediate relationships and simply adds to the negativity of the situation. However, selling a distressed business is now about the future of the business including its customers, employees, suppliers and a positive legacy of seeing the business move from survive to thrive.

Andrew is a 5-time business owner that helps entrepreneurs exit or enter business ownership. His services include helping owners sell and/or buyers purchase an existing business or consult on purchasing a franchise. He also provides certified machinery and equipment appraisals and business valuations.

How to Run a Baking Business From Home

The idea of being self employed may be appealing but you may be second guessing your ability on how to start your own small business from home. However, many people have found their niche on how to run a small business from home including baking.

Just take inspiration in knowing that everybody loves fresh baked goodies. It reminds them of their childhood and it can be extremely comforting. So if you have a talent for baking, it would certainly make sense to turn it into a business idea.

Plenty of people like to eat freshly baked food especially in the morning for their breakfast. Unfortunately, not many people actually like or have the time to bake themselves. This is where your baking business from home would come in extremely handy.

A legitimate work from home business idea may cause a higher level of uncertainty than an already established business model. A business startup might require a lot of effort from you.You might need to study the market, getting the right equipment, and charging the right price. It is also worthwhile to consider what kinds of baked goods you will supply or will specialize in depending on your location and target market.

Baking businesses are no different from other small home based ones. They have to be thoroughly researched and you need to figure out how your target market is getting their needs met right now, are they satisfied with the products of competitors, are they getting quality goods and how much is the current price for the same baked goods the other baking stores are offering. If these needs are met, then it's more likely that your business will earn and attract more customers.

If you have decided on what kind of bakery goods you are going to supply, then you can now determine the different bakery equipment and facilities that you need. If you choose to specialize in whole grain breads and/or pies and specialty cakes, you may need to acquire dough dividers, molders, rolling pins, cake pans.

You may need to invest on a baking oven and a laptop where you can also market your goods. Think of a name for you home baking business and register it. The cost of licensing is only minimal and it will allow you to maintain a business bank account as well as take advantage of wholesale supply discounts.

So, how to start your own small business from home? There are three important things to remember,first is to determine which cluster of people will greatly benefit from your business.

Focus your efforts on the line of market your business will serve. Will it fit the busy mothers who want their children to snack on freshly baked goodies with nutritional value? Or are they better suited for busy executives who want to throw an event for their staff and include a delectable home baked treat for the entire office?

Making this choice upfront will save you lots of time and energy. Remember, your business does not exist to serve everybody; it only exists to make the lives of a specific subset of people better. The quicker you come to grips with this reality, the better your chances are for business survival.

Your business has to have a purpose and be centered on making a difference in the lives of a niched cluster of people who you hope will go absolutely crazy with your products.

Second, you need to look at your competition. Who else is serving your target market's needs? What are they charging? Is your target market satisfied with their product choices? Third, you need to pay attention to pricing. You will need to look at the competition and determine whether the prices you want to charge are reasonable.

The basic procedures to follow to start a baking business from home would be the following:

1. Decide what kind of baked goods you will supply.Your decision may weigh upon the baking facilities available to you, your baking experience and the amount of time you have to dedicate to the business.

2. Think of a name for your home baking business and register. The cost of licensing is usually minimal.

3. Find your customers. Bring sample baked goods to local offices, civic clubs, delicatessens, restaurants and even catering firms. These are the types of accounts that result in consistent orders and high volume profits.

4. Keep up with needed supplies. You'll likely want to replenish perishables weekly and staples monthly, preferably through a food co-op or a wholesale baking supply vendor.

5. Keep good track of the "bread" coming in as income. This process also includes tracking the cost of supplies to do business, advertising fees and operating expenses.

If you want to make this a full time home based baking business, just make sure to maintain a healthy business life balance. It is very easy to maintain this type of business once you get used to how to run a business from home. You may also want to consider if you will get the assistance of family members who are able to work with you during their free time.

If it gets bigger, you need also to consider hiring additional help. You need to practice knowing your limits and build a business in such a way that it will work for you, your family, and the customer demand.

Myths That Stop Simple Business Ideas From Becoming Reality

Do you dream of starting a business, but somehow, some way you found a way to talk yourself out of it?

Maybe you came up with a few simple business ideas - great ideas but others told you that it can't be done because it's too risky, or the idea won't work. Maybe you are starting to listen to them.

Before you decide to walk away from those simple business ideas of yours, lets put to rest some of those things you are hearing or might have heard out there.

These are statements, old wives tales, stuff that have been around for a long time, things that sound true but are not. Nonetheless, these are things that keep people from pushing forward with starting a business. Things that almost kept me from starting.

In his book, Start Late Finish Rich, David Bach mentioned six myths that people hear about starting a business.

Myth 1 - You need a lot of money. The reality is that most people don't have a lot of this. I did some research and it's amazing how little you need to start a business. For me, I was looking for a business I was passionate about and did not require a huge investment upfront on my part.

Myth 2 - You need to have experience. If most people are like me, most of those things I have experience in would be hard to translate into a business, or into something I was passionate about doing as a business. So for some, it may just be a matter of finding a business that you would really enjoy or something you can easily learn how to do.

Myth 3 - You need a lot of time. It seems time is something everyone is having a hard time finding these days. I guess what David meant is the fear around being told that once you start a business, it is going to require a lot of your time.

Time away from family, friends, loved ones. You all have heard it. Every waking minute is going to be spent in or on the business. I guess for some people this may be true.

But it doesn't have to be. There are many businesses that you can start part-time. Then as the business becomes successful, you can decide to remain part-time or go full-time.

You may also discover that as the business becomes successful you will have more time to do the things you always wanted to do like travel, volunteer, or spend more time with friends and love ones.

Myth 4 - Nine out of Ten businesses fail. I cannot tell you the number of times I have heard or read this. If I had a dollar for every time I heard it, I would not have to start a business because I would already have enough to retire rich. This myth may be the single biggest reason why many simple business ideas never get off the ground.

Thanks David for quoting this statistic: "According to the Small Business Administration, two-thirds of all new businesses survive at least two years, and about half survive at least four." Thank goodness.

Another myth laid to rest. Another excuse to keep from getting started shot down.

Myth 5 - You need a lot of stuff to get started. Not really.

More and more people today are finding ways to start small businesses with little to no money. There a hundreds if not thousands of simple business ideas you can start today on a shoestring and people from all walks of life are doing every day.What's also amazing is that most of the businesses do not require a lot of equipment or inventory to get started.

Today with a few simple business ideas, passion and commitment you can start a business. Just look on the internet with all the successful online businesses. The opportunities are greater today than they have ever been.

Myth 6 - You have to be passionate about the particular business you choose. Thanks again David for putting another myth to rest. Like before, I cannot tell you the number of times I heard you have to be passionate about what you are selling, passionate about the company.

As David pointed out, this is not necessarily true. What if you like the product but not love it, but the product has an excellent marketing system, training, support, customer service, etc.

And what if you are more passionate about "WHY" you are starting a business more than the product itself? Is your passion for the "WHY" enough to make you successful? Some may disagree, but something to think about.

It still amazes me that I am living in a time where now more than ever it is easier to start a business. This is fact, not fiction. Don't take my word for it. Check it out for yourself.

Business Liability Insurance

Many businesses, especially small businesses, ignore the need of business liability insurance. Though, they take all measures to protect their businesses against risks by taking insurance for physical assets like buildings, stocks and goods, they do not consider protecting their businesses against various possible liabilities they may face. Protecting against all the possible kinds of liabilities is of great importance to a business, given the severity of damage they cause to the business's reputation, finances and survival.

This article will help you know the various types of insurance policies available and their importance for a business.

Types of business liability insurance

Business liability insurance helps small business owners to secure their businesses by protecting against liabilities like public liability, employer's liability, professional liability and product liability. Depending upon the type of business you are in, you should purchase the suitable insurance. Following are some of the prime types of insurance suitable to small businesses.

• General liability: This insurance is helpful to small businesses in protecting the owners from claims of liability raised due to property damage or a physical injury caused to the general public, employees or customers resulting from the operational negligence in course of the business. This insurance protects you by compensating for the medical expenses of bodily injuries caused to a person. It also protects you against claims of damage to the third party's property.

• Professional liability: If you are a software consultant, plumber, chartered accountant or any such professional offering your service for price, the probability of facing professional liability is high. Professional liability protects professionals from risks of liability resulting from loss of data, claims involving malpractice, say, copying of data, breach of confidence, accidental loss of data or inadvertent mistake by your employee. The cost of litigation is too high in these cases and this insurance takes care of those expenses.

• Product liability: When an individual gets injured by using a defective product that you have sold or manufactured, law suit can be filed by this individual against your business. Product liability protects your business from such liabilities by taking care of all the legal hassles and the compensation claims.

Importance of business liability insurance

Business liability insurance protects your business from various liabilities. It is, however, advisable to check the suitability of the insurance with respect to the amount of coverage and the risks involved in the business. Let's discuss its importance:

• Protection against claims resulting from injuries, damages and malicious ad: Business liability insurance protects your business from liabilities involving bodily injury caused by the operations of your business to any of your customers, employees or general public.

Likewise, if your business causes damage to property, say, while displacing the inventory from/to the warehouse to/from your business, there is high probability that you would face liability for property damage.

Personal injury cases arise when any of the employees gets injured while on job. This insurance protects you against the risk of liability when one is injured in course of the business, say, in accident. In such a case, the insurance protects your business, by compensating for the medical expenses incurred in the treatment of the person.

Another risk is a business advertisement that unintentionally causes resentment. A malicious advertisement brings forth litigation against your business. The insurance protects your business, by awarding the suitable compensation to the aggrieved party in case of such litigation. It also compensates for the litigation expenses.

• Legal fees and medical bills: Business liability insurance finances the medical expenses involved in the treatment given to the injured and the expenses involved in litigation. Even the insurance lawyer would represent you in the court, in the instance of inability to attend the court hearing.

Business insurance is, thus, important to protect your business against various liabilities. It is, however, significant to choose appropriate insurance policy - right cover and the right type taking into account the risks of hazards in your business. Both, inadequate or excess insurance coverage can cause financial loss to your business.

Creating a Strong Business Culture

"Business culture," sometimes called "corporate culture," can come across as a meaningless buzzword only employed during pep talk business meetings. It sounds more like corporate nonsense than anything helpful, much less vital, for a business. But as it turns out, business culture, meaning the shared values and practices among individuals in a business, is absolutely crucial to the health of any business. According to research, up to half of the difference in operating profits between companies is due to business culture. And profit isn't the only aspect it affects: it can be responsible for lower turnover, higher productivity, better relationships with customers, and all of the improvements that can be the result of these facets.

If business culture is so important, then, it only makes sense to take charge of it and make it as beneficial to you as possible. Take a look at your business's current culture. How do the people on your team work together and interact? What makes your company unique? Are there any traditions your company holds or other ways people connect? This is your current business culture.

A strong business culture is one that is consciously shaped by business owners. Now that you've taken stock of your business's current culture, take some time to reflect on what about it is beneficial and what is less so. What pieces would you like to keep, and what would you like to improve? The first step to creating this new culture is to create a mission statement for your business, or, if you already have one, to revise it based on what you would like the company to look like. In a sentence or two, this should outline your business's goals, philosophy, and unique characteristics. Other steps to develop and maintain your business culture should always come back to these ideas. Let this statement be the focal point of your business's culture.

To make this mission statement and its resulting culture authentic and appropriate for your business, make sure that you're not the only one making these decisions. Involve people on all levels of your team to contribute ideas, criticism, and possibilities. A business culture should arise organically and genuinely from who you are and who your company is. You won't get an idea of what it should be without involving the other elements of your business. Find out what matters to the people you work with and what motivates them. What about the company is important to them? This will give you a fresh and more well-rounded perspective on what makes your company, and the people who work in it, unique.

When you've arrived at a mission statement that you and the people in your business are happy with, it's time to actively use it to shape your business culture. You can start small. To involve everyone on your team in the culture you want to create, start some company rituals to connect everyone. These can take plenty of different forms: whether it's Friday pizza lunch, crazy stories you always tell at training, or another tradition, just make sure it's something that involves everyone and reflects the culture you and your mission statement are trying to create. Company rituals, even if they're small, are a great way to connect everyone to the mission and ideals of your company.

Rituals are a good way to start, but once you've really established the business culture you want your company to maintain, it should begin to show in everything you do. From your workspace to your marketing materials to the way you interact with clients, you should incorporate your business culture across the board. This is why it's so important to make sure that the culture you want to create is appropriate to you and everyone else involved: it should be a culture you're comfortable working with in every situation.

In addition, give your employees a stake in the culture. Ask what they think they can contribute to the culture and to the work of the company, and hold them accountable. Give them room to grow their own ideas within the border of the mission statement and surrounding culture. The more your employees are connected to the goals of the business and the more they hold a stake in its success, the more successful your business culture will be.

Business culture is also something you should keep in mind when hiring new people. Make sure your new team members fit the business culture you're creating or maintaining. If your business is creative, flexible, and a little wacky, and you hire someone who's very experienced but is also very uptight, you and your new employee are both going to be uncomfortable.

That being said, don't be afraid to adjust your mission statement and your company's culture if they seem to no longer fit. Every business evolves over time, and the culture you set out to create at the company's onset may no longer be applicable down the road. Be flexible and willing to check in on how it's working, but when you do make decisions, make them strongly. The key to a strong business culture is to follow through on the ideals, values, traditions, and goals that you decide make your business unique.