Are You Too Small For Advice?

By common definition a ‘board of directors’ is a body of elected or appointed members who jointly oversee the activities of a company or organization. Most small businesses do not see or have a need for a body of members to oversee the company, this can usually be done by one person – the owner. This does not go to say that the owner of the company doesn't need advice now and then on operating the business. In today’s fast-paced business world with rapid changing technology and constantly changing economics, a smart business owner would be well served to seek expert advice on short and long term business plans and investments.

A small business owner is most likely already using the services of a tax accountant and attorney in the business. However how regularly do they use confidants who know their industry, who understand logistics and delivery, customer service and quality, technology, labor management or financial markets? When it comes to matters outside their area of expertise are they using trusted consultants to assist in making critical decisions?

A small business owner who assemblies a team of specialists in the various fields related to their business can find it very rewarding. Asking these specialists to meet together on a regular basis, say one to four times a year, can bring unexpected synergistic results. In order to gain maximum benefit from their energy, the owner should recognize and reward these specialists for their efforts. After all, the purpose of assembling this ‘board of advisers’ is to get the best advice possible to make the business better. Selecting the best people to do that and getting them excited about doing that is the owner’s job! When properly motivated and excited, the right advisers will return your expectations. Expectations that should trend towards the exponential versus the incremental.

No company is too small for advice. Success comes to those that seek it!

LOOKING-WANTING-NEEDING : A CHANGE PROCESS

There are many people in the market "looking" to buy a business, however do these people "need" a business? When it comes to acquiring a business there are three stages of buyer preparedness and a transaction does not occur until the buyer gets to step three. Many prospective buyers never progress past step one or two and a frozen in a perpetual state of desiring to become a small business owner, never making the crucial steps to become one.

The first step to becoming a small business owner is a desire for change. It may be unemployment, dissatisfaction with current job, a want for more money or independence, or just a view that the grass is greener on the other side. Desire is an easy emotion to engage and often kicks off an endless search of the advertisements for what businesses are available. Ad watching becomes an enjoyable past time. Lookers may even make a few phone calls and ask a few questions, but perpetual lookers do not buy businesses.

The next step is committing to change. Stepping from the world of nine to five into small business is likened to climbing Mount Everest. This may be an accomplishment you want to do in your lifetime, a sincere intention, but are you committed? Have you prepared for the journey? Have you worked to gain the necessary knowledge and experience to be successful? Many buyers rush into this step finding themselves ill prepared for the tasks ahead of them, hence they find ways not to buy and keep wanting to acquire a business. For wanters time is not of the essence when it comes to buying a business.

The final step is preparing for change. A buyer committed to buying a business has prepared themselves for the acquisition process. They have a plan laid out, knowing the steps they are going to follow to reach their objective. They have educated themselves on the industry they are planning to buy in. They are confident in their abilities to run the business. They know their financial status and capacity. They have formed a group of advisers and mentors to help them along the way. They have a true need and burning desire to succeed. Needers are ready to buy.

If you are bogged down in a perpetual state of looking or wanting and would like to to progress forward, click here to see what the SBA says about "Buying an Existing Business" and then let me help you prepare for change!

Buyer Representation

A prospective buyer seeking a business can gain significant benefit by using an intermediary to acquire a business. A business intermediary brings experienced insight and discipline to the acquisition process. The value of this insight can be significant in dollar savings, the difference between making good or bad decisions, and, most often, can be at no cost to the buyer (i.e. paid by the seller) if done correctly.

There are many value points a strong business intermediary can bring to a buyer.

• Expertise in determining the market value of the business.
• Strong understanding of financial documents.
• Negotiation skills.
• Process and procedural skills.
• Strengths, weaknesses, opportunities & threats (SWOT) analysis.
• Market opportunities.

If you are looking to acquire a business, your first step should be to contact an experienced business intermediary, before you start searching the for sale listings. It will save you time, money and mistakes!

Note in a business transaction, different than a residential transaction, a prospective buyer may end up relying on a seller's representative to provide them with the information they need to make an informed decision. Dual representation, often used in residential transactions, is not a common approach used in the business transaction and the seller's representative does not represent the buyer. The buyer's need for further representation will depend on the strength of the seller's representative and their capability to manage the needs of the seller and the buyer neutrally. If a buyer does not feel their needs are being met in a fair and competent manner, it is recommended they seek independent representation.

Brian Tjaden - The Biz Guy! 612.963.3810 www.briantjaden.com brian@calhouncompanies.com