Before deciding on selling your business you might want to consider what are the reasons for doing so and who will be affected by the sale of your business.

Here are some of the reasons that entrepreneurs want to sell:

• Death, disability or serious illness can have an impact on your ability to continue
• Relocation of your family to another area , town or even country
• The business isn’t generating sufficient income for your need
• Personal reasons such as death in the family or divorce
• You have received an excellent offer that is just too good to turn down
• The business is losing money
• You wish to change careers and do something different.

How to go about selling your business?

Specify exactly what is being sold  , what assets and liabilities are included in the sale Use the services of  professionals such as accountants and lawyers. You may want to get the help of a professional to assist you in the complex selling process. Hiring a professional valuator, business broker or even a lawyer to assist you with the sale can make the process a lot easier and help you obtain a better price.Plan the sale carefully so that you are able to present the business in a favorable light.

Two factors important in the sale of any business would be finding willing buyers and sellers and agreeing on a fair price for the business. Selling any business is largely defendant on marketing  marketing. There is a need to properly position the  business in order to attract interested buyers.

Using Business Brokers To Sell The Business

Hiring a professional to help you out in selling your business is easier than selling by yourself. Since selling a business is a complex process, asking for assistance would be a pretty smart option for you.

Advantages of using a broker include,

• They have access to a network of qualified buyers who are seriously willing to buy
• Assist with the preparation of contracts and legal documents
• Provide a valuation of the business
• Provide valuable advice that facilitates the sale process

The role of an intermediary broker is crucial in the selling process of the business. They act as the middle man between the seller and buyer. They help sellers to find potential buyers and negotiations with them.

How To Value Your Business?

Valuation of business worth are frequently complex and a number of methods are used in doing so. Employing experts like financial advisers makes the process a lot easier.

There are a number of ways to value your business. The most common would be discounting future cash flows and valuations based on multiples of future earnings.

Asset business valuation – is usually used if your business is not profitable and is sold in liquidation. It measures the worth of your assets including equipment, inventories and real properties less any liabilities. It is the easiest method of valuing a business and is commonly used.

Discounted cash flow – An estimated based on discounted future cash flows to determine the present value of the business operations. It is fairly complex and the most accurate method as any business is only worth its ability to generate cash and profits.

Market business valuation – compares the value of the business to prices obtained for similar businesses. Similar to the method used by estate agents to value a property. Typically used for small business – it is fairly subjective.

Earnings based multiple – also termed as earnings business valuation. This method determines the value of your company based on historic earnings. Companies with strong intangible assets usually use this type of method for valuing their business, however it does not differentiate worth of tangible and intangible assets.

The factors that affect the value of your business consist of its ability to generate positive cash flows and profits plus certain external factors like state of economy and market the business is in. Obviously if a number of interested buyers are interested in buying then you will be able to get a premium over the valuation.

Most entrepreneurs will at some point be faced with the decision to sell the business – ideally you should have your exit strategy in place when you start off your business.

When Is The Right Time To Sell Your Business? is a post from: Start-up

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By all accounts an uneventful budget speech with speech with nothing earth shattering , but that is exactly what the markets needed. However the challenges facing the Government are great and unless they are able to address these challenges Pravin Gordan will face even more challenging budgets in future years.

Pravin Gordan’s Budget is a post from: Start-up

What finance options are available to prospective South African entrepreneurs and business owners?

The easiest and cheapest source of finance is to use your own capital , this can be savings , investments , retirement savings. Few individuals are fortunate enough to be able  to finance a new venture entirely on their own and in most instances in is probably not the best course to follow in any event. Most finance providers will require that you invest some of your own capital usually between 10 and 30% in the new venture.

Many prospective business owners also approach friends and family members to assist in financing a business venture. This is a risky approach as often all parties concerned don’t fully understand the risk factors involved and in the event of the business failing these relationships will be ruined as well.

Most business owners seeking finance typically use finance provided by financial institutions like banks and development finance institutions like the IDC or Business Partners. For a detailed listing of institutions please consult our resources page. Financial institutions would require that you present a business plan detailing whe proposed business and also require financial deatails from you and your partners. The application will be subject to the financial institutions standard credit vetting procedures and dependant on the financial viability of the business they will approve/decline the financing. In addition the financial institution could make the loan dependant on meeting additional requirements , like taking out life insurance etc.

It is highly likely that the financial institutions will require that you provide a significant cash investment of your own typically in the range of 10 to 30% of the toatal amount. In instances where you are running your business through a structure that provide limited liability like a close corporation or a private company they will also require that you stand personal surety for the loan amount.

Repayments are structured like any loan amount usually over a period of five years and it is important that you factor these repayments in your financial projections that are incorporated into your business plan.

Another source of new business funding is venture capital finance , venture capital firms usually take a equity stake in a new venture and when the business reaches a more mature phase they usually exit the business by selling their stake either  back to the founders or via an IPO on the market , if the intention is to list the business. This is more relevant for significantly larger businesses that require investments into the tens of millions of Rands.

The funding source will play an important role in the overall cash flow of the business as well as determining the business format. Financial institutions and venture capital firms will be comfortable investing in a business that is audited annually , they will also require more stringent accounting procedures and policies. Consult an expert on business finance as your initial funding choice will be with you and your business for a long time.

Finding Business Finance is a post from: Start-up