Increasingly, experts can agree that small companies spearhead innovation.  Of course, this isn’t to state that large companies don’t innovate at all.  But the simple fact is that usually the size and internal bureaucracy of large companies is such that innovation comes at a much, much slower pace.  Since small companies are at the heart of innovation, they often draw the attention of larger companies who need the new products and services being created by smaller companies in order to maintain a competitive advantage.

According to Fortune Magazine, big companies rarely innovate.  Fortune points out that this is unfortunate as innovation is necessary to “gain propriety advantage and stay profitable.”  It is important to note that innovation itself is not a rare commodity.

Innovation is taking place everywhere and in every industry; it’s just that innovation is rare within large companies.  Thus there is the need for larger companies to acquire smaller, more agile and more innovative ones.  A business that wants to remain profitable should be innovating internally while also seeking out sensible acquisition targets.  In other words, large corporations should be looking for all-important innovation both from within and from outside.

There are many reasons that innovation is hard within larger companies.  Bureaucracy and groupthink are two factors that occur, but perhaps more importantly is that innovative people tend to prefer to work for smaller companies and organizations.  They feel more comfortable in the small business environment.  Innovative thinkers can find it frustrating when even a smaller company adopts a large-company management style and approach.

Many feel that in the end the problem with large companies isn’t that they never try to accomplish large and ambitious projects, but instead that they fail to attempt the smaller and more controversial ones.  Growth and new ideas is often about being at the cutting-edge and thinking outside the box, which are inherently risky.

Large organizations tend to be risk adverse, and here lies the paradox.  How do large, typically risk adverse organizations foster an environment where innovative thinkers can thrive?  Employees will need to successfully work on smaller and even controversial ideas in an unorthodox manner within the confines and framework of a large company.

Large corporations, dedicated to preserving their existing place in the market, often find themselves threatened by new ideas whether they are generated internally or externally.  As a result, large companies are typically hostile and very resistant towards innovative thinkers.  Most the of the time the innovative thinkers know this.

A recent article posted on Business2Community.com entitled “How to Close the Deal and When to Walk Away When Buying or Selling a Business” explains the business sale process and how to differentiate between a good deal and a bad deal during the process. Closing a deal involves quite a bit of legwork, including producing a letter of intent, doing due diligence, acquiring financing, signing a purchase agreement, and actually closing the deal. These items can be easier with the help of a Business Advisor, Business Broker, or attorney, but emphasis should be placed on the due diligence aspect: knowing the business inside and out is vital to a successful sale.

Walking away from a deal can be difficult for a motivated buyer, but is sometimes necessary to avoid emotional and financial disaster. The following red flags help to signify that it’s time to walk away:

1. Inconsistencies
2. Neglect
3. Undisclosed Problems
4. Poor Credit Rating
5. The Industry is in Decline

Being prepared is one of the best things that a buyer can do in the business sale process. Whether preparation proves a business deal is worth it or uncovers red flags, it will be worth the effort.

Click here to read the full article.

A recent Axial Forum article entitled “3 Reasons an M&A Advisor is Worth the Cost” presents impressive statistics regarding the utilization of M&A advisors in the sale process. 100% of owners that used an advisor when selling their business stated that the advisor had a positive impact on the sale, with 84% of these sellers achieving a sale price equal to or higher than the advisor’s initial estimate.

While these types of statistics are expected among industry insiders, many business owners will still hesitate to hire an advisor for the sale of their businesses. As the article outlines, advisors can help to identify weak links in a business’ management team, find quick ways to increase cash flow, and whip financials into shape, among many other things.

Click here to read the full article.

A recent Forbes article entitled “The Question Every Owner Should Ask: Is Now The Right Time To Sell The Business?” explains why choosing to sell sooner is actually better in a lot of ways than putting off a business sale for a few years. The author goes on to explain how when exits are planned for some arbitrary point in the future, owners often never seem to make it there, ending up wanting to sell but never actually selling. The article goes on to explain five important reasons to consider selling now:

1. You May Be Choking Your Business
2. Money is Cheap
3. Timing Your Sale is a Fool’s Errand
4. Cyber Crime
5. There is No Corporate Ladder

Being an owner gives so much power over the path a business takes, whether it’s a sale or acquisition or even the owner staying on to work on the business for an extended period. The beauty of this is that the owner has the choice over whether or not to sell, but also the choice on what to do after. Starting another business is a common route to take for successful first-time entrepreneurs after an exit, so the sooner a sale occurs, the sooner they can get started on another business.

Click here to read the full article.

A recent article posted on the Axial Forum entitled “7 Reasons to Perform Sell-Side Due Diligence” talks about why sell-side due diligence can be a useful and productive technique within the M&A process. While buy-side due diligence is much more common, sellers can take advantage of this practice to maximize the value presented to potential sellers so that they can ultimately get more out of the sale.

Sell-side due diligence can help to uncover and improve:

1. Weak financial and operational data systems
2. Overextended employee resources
3. Unclear financial narrative
4. Unhelpful “tax guy”
5. Multiple entities and no consolidation
6. Likely purchase price reductions
7. Ineffective tax structuring

In the end, due diligence is part of any M&A process. But with so many things factoring into a successful sale, both buyers and sellers have a responsibility to know the business inside and out if they want to get the most out of a transaction.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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You may have heard that entrepreneurship is in trouble, but the facts don’t support this assertion.  A recent Boston Globe article noted that increasingly large numbers of people are successfully running their own businesses.  Approximately 500,000 new businesses are launched each and every year.

When those numbers are viewed in a different light, it becomes clear that entrepreneurship is doing very well.  Half a million new businesses mean that roughly 10% of the workforce is either starting a small business or working for one that is less than 3 ½ years old.  Perhaps the best news of all, is that these new businesses are also creating a large number of new jobs.

From Where Does Seed Capital Originate?

Considering that so many new businesses are started every year one has to wonder  as to where the funding originates.  The simple fact is that most people don’t have the funds necessary to start their own business.  Bank loans and SBA funding are not available to most people, and a mere 7% of new or prospective business owners receive venture capital funds.  How does the bulk of this army of new business owners fund their businesses?

There are several ways that business owners are funding their businesses.  It is quite common for new small business owners to use credit cards and take out second mortgages to fund their new business endeavors.  The Boston Globe article noted that in the last few years more than 80% of Inc. Magazine’s “Fast 1000 companies” had been started with roughly $50,000 or even less.

New Companies Boost the Economy

The article also outlined the great importance for seed capital as well as additional funding form both public and private sources.  Considering the number of jobs that small business owners are generating every year, this only makes sense.  As the Boston Globe article recommends, new sources of funding should be made available to these new small business owners.  Additionally, this article serves to underscore the tremendous importance and role that small businesses play in the overall health and well-being of the nation’s economy and the global economy.

With a truly whopping 80% of the Inc. Magazine’s Fast 1000 coming from small businesses started with less than $50,000, can we afford to continue to largely ignore the needs of small businesses?

The fact that so many small businesses are initially funded with credit cards and second mortgages is a testament to just how strong the entrepreneurial spirit is in the United States.  So forget what you’ve heard, entrepreneurship is doing quite well.

Copyright: Business Brokerage Press, Inc.

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The National Foundation for Women Business Owners (NFWBO) identifies trends relating to the small business climate for women.  New studies examining the role of female entrepreneurs by the NFWBO have yielded some surprising and eye-opening results.

A joint IBM, NFWBO study of the top fifty women business owners as well as 10 additional “up-and-coming” business owners reached several interesting conclusions.  The women in the study covered a diverse array of industry categories including 27% in manufacturing, 25% in retail and 10% in real estate.  46% of the women inherited a business and over 50% started their own businesses, with 34% starting businesses themselves and another 17% starting businesses with others.

A Preference for Flexibility

One key part of the study centered on the fact that women business owners, in general, appear to prefer smaller operations.  Among the 8 million women-owned businesses in the U.S., a full 75% are one person operations.  Through ownership of these businesses women achieve a high level of flexibility in their work schedules.  It is believed that this flexibility improves the odds of women keeping their home lives satisfying and rewarding.

Overall, millions of women are ignoring the notion that small businesses do not equate with success.  While NFWBO research indicates that fewer than 1% of small women owned businesses generate over a $1 million in sales, there is no doubt that women are showing their strength in numbers.

Tackling Loan Issues

One major obstacle women business owners have faced comes in the form of bank loan inequities.  Recently, for the first-time women owned business are experiencing access to business loans on par with male owners; this may be due in part to the increasing number of women in high bank positions as well as banks now seeing the previously untapped potential of women-owned businesses.  The NFWBO has also discovered that women tend to direct loans towards business growth.

Internationally Owned Businesses

On an international scale, the NFWBO studies have shown that women business owners often come from similar backgrounds and express the same concerns regarding business issues.  Today, female business owners represent between one-quarter and one-third of the world’s independent business owners and have become increasingly vocal as evidenced by female participation at an international conference in Paris sponsored by the Organization for Economic Cooperation and Development (OECD).

A Trend Towards Progress

To date, many obstacles have been overcome.  Simply stated, the future looks very bright for women-owned businesses around the globe.

Copyright: Business Brokerage Press, Inc.

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Far too many customers have grown to expect poor customer service.  Whether its rude employees and customer support or impersonal robotic phone system responses, customers are often shocked when they receive pleasant customer service.  In such a climate, it is clear that businesses that simply treat customers well are taking advantage of a huge opportunity.

If you’ve ever personally called a credit card or cable company looking for help, then you already know that it can be something of a depressing and even Kafkaesque experience, leaving you feeling drained.  More than likely you don’t feel too positive about any automated experience that bounces you around from one hold menu to the next.  Summed up another way, hold music is never a fun or rewarding experience.

Communication is Always Changing

In the “old days” a telephone call was often a customer’s first experience with a business.  Now, the game has, of course, changed, with most customers first experience being via the business’s website.  While we can’t predict with 100% accuracy how businesses with be communicating with their customers in the future, we do know one fact for certain.  The human touch will likely be valued for a long time to come.

Your Website is a Valuable Tool

The initial point of communication with a client, whether it is via telephone or your website, is of critical importance.  If a customer has trouble finding key information about your business, such as your location, hours of operation or an easy to understand menu of what goods or services are offered, then they will take their business elsewhere.  Consumers don’t generally wait for businesses to get their “act together.”  They simply move on.

Simply stated, you want your business’s website to be very user-friendly, streamlined and intuitive as possible.  Keep in mind that you understand your business and what it offers, which means you may not be the best judge in spotting flaws in your website presentation.  For this reason, it is best to test your website designs with many different potential users who have little or no information about your business and what goods and services you provide.

In the end, every single client is valuable.  For every client you lose represents both a potential loss of revenue and revenue being placed in the pocket of your competitor.  Don’t let customers slip away simply because there wasn’t a friendly voice answering the phone or your website lacked clarity.

Copyright: Business Brokerage Press, Inc.

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Burnout is a strange phenomenon in that often a business owner doesn’t know that he or she is experiencing it until it is too late.  Owners who feel beleaguered and over stressed frequently want to sell their business and move on.  However, buyers are not so eager to accept burnout as a believable reason for why an owner wants to sell.

It is the responsibility of every business owner to be on guard against potential burnout.  After all, it is better to “cash in” than to “burnout”.  In this article, we will examine a few of the key warning signs that you may be on the verge of burning out.

Sign 1: Loss of Interest in Owning Your Business

Once upon a time, you were likely excited about your business.  But if those days are long gone, then it might be time to move on.  Owning a business is hard work and eventually over a long period of time, it can take a toll.  If you find each day to be boring, then it is probably time to sell, move on and start a new chapter in your life.

Sign 2: You Feel Exhausted

Just as losing interest is a potential sign of burnout, the same holds true for feeling exhausted.  If you feel exhausted all the time, then it is unlikely that you can run your business effectively over the long haul.  In short, it may be time to consider selling.

Keep in mind that if your business is doing well, growing and expanding, then there will be more demands on your time, not less.  If you feel exhausted a large percentage of the time and your business is expanding and seems poised to expand even more rapidly in the future, then cashing in may be your best bet.

Sign 3: You Feel Overwhelmed Almost on a Daily Basis

Business owners who frequently feel overwhelmed are likely teetering on the edge of burnout; this can be particularly true for business owners who are operating a “one-man show.”  Operating a business, especially one where you are doing most of the work, can be both mentally and physically exhausting.

There is certainly something to be said for being proactive and tackling burn out before it tackles you.  In this way, you’ll be able to sell your business on your own terms.  The last thing you want is to try and sell your business after you no longer have the energy to keep sales going in the right direction.

Working with an experienced Business Broker is one of the easiest and quickest ways to get your business ready to sell.  Don’t let burnout put the fate of your business in a vulnerable position.

A recent article from Divestopedia entitled “How the Best M&A Advisors Deliver” explains the importance and value of an experienced M&A advisor in the business sale process. Maximizing value and improving how a potential buyer views a business are some of the most important factors in a sale, and also things that a good M&A advisor can help the management team work through.

The author goes on to stress the importance of having an experienced advisor on hand during the preparation phase of the selling process: their prior experience with this sometimes difficult and lengthy process makes them an invaluable asset to a seller. They are able to develop a complete approach that takes all important factors into account, from aligning the goals of the management team and shareholders with the exit to coordinating with legal counsel in developing negotiation strategies and more. An experienced M&A advisor has virtually seen it all and done it all, and in the end, can help relieve the stress of going it alone while increasing the probability of a positive outcome for a seller.

Click here to read the full article.

A recent article from Entrepreneur.com entitled “Avoid These Financing Mistakes That Kill Business Valuations” speaks on the importance of “good debt” and trying to avoid “bad debt” when financing a business. The utilization of either of these forms of debt, which encompass several different types of financing, can either significantly help or harm a business in the transaction process, depending on what forms are used and how they are used.

The main differentiator between these good and bad sources of debt centers is whether or not the debt contributes to business growth or can provide positive cash flow in the event of a sale. Whether it’s under-utilized assets or a high-interest loan, bad debt can be an instant turn-off for a buyer come sale time.

Click here to read the full article.

A recent article from BizBuySell entitled “How to Find an Investor for Your Small Business by Thinking Outside the Box” explores some unconventional or less frequently thought of ways to find a small business investor. Typical routes of asking friends or family or other personal loan options are always possibilities, however the following list includes some alternative funding options:

1. Assistance from the Small Business Administration
2. Incubators or accelerators
3. Online lending clubs
4. Smaller, more specialized social media platforms aside from Facebook or LinkedIn
5. Crowdfunding

These methods, however, aren’t sure-bets for everybody. Like any investor, investors from the aforementioned channels will likely need to see a proven business model, a thorough business plan, and an exit strategy, among many other things.

Click here to read the full article.

A recent article posted on Divestopedia.com entitled “How an MBO Can Be the Right Solution When Planning Your Exit” illustrates the potential value a management buy-out (MBO) might have during the transaction planning process.  After all, the management team typically knows the ins and outs of the business and has an excellent grasp of how the company is run. But no matter how well they know the business, having the proper skills and experience to take the company forward with success is vital.

While moving forward with an MBO can have its advantages, like maintaining the confidentiality of a sale for example, value and growth can potentially take a hit during an MBO. These are just a few things to consider when determining the viability of this type of business transaction.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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When it comes time to sell a business, not everything goes as planned.  You may be one of the lucky ones and find that selling your business is a streamlined process with only a few unexpected occurrences.  But most CEO’s looking to sell a business find they can expect the unexpected.  Let’s take a closer look at some of the top surprises CEO’s experience during the sale process.

Unexpected Occurrence #1 – Surprisingly Low Bids

CEO’s looking to sell their businesses need to be ready for almost anything.  One of the larger surprises that CEO’s face are surprisingly low bids.  Don’t let low bids shock you.

Unexpected Occurrence #2 – A Huge Time Commitment

CEO’s have to make sure that everything from an offering memorandum to management presentation and suggestions to potential acquirers are ready to go.  The offering memorandum is considered the cornerstone of the selling process and is typically at least 30 pages in length.

Most business intermediaries expect the potential acquirers to submit their initial price based on the information contained in the memorandum.  Management presentations are also time consuming, but it is common to have these presentations ready before the final bids are submitted.  Ideally it is best for the CEO to show the benefits involved in combining the acquirer and the seller as well as the future upside for selling the company.

Unexpected Occurrence #3 –The Need for Agreement from Other Stakeholders

You, as the CEO, are able to negotiate the transaction, but the sale isn’t authorized until certain shareholders have agreed and done so in writing.  Until the Board of Directors, shareholders and financial institutions who may hold liens on key assets, have agreed to the deal, the deal simply isn’t finalized.  Often this legal necessity turns out to be an issue that gets in the way of a successful deal.

Sellers can take their “eye off the ball” during the time-consuming process of selling a company, however, this can be a serious mistake.  CEO’s must understand that potential acquirers will be examining monthly sales reports with great interest.  If potential acquirers notice downward trends they may want to negotiate a lower price.  No matter how time consuming the sales process may be, CEO’s have to maintain or even accelerate sales.

Ultimately, there can be a wide array of surprises awaiting a CEO who is looking to sell a business.  Avoiding these kinds of issues is often, but not always, a matter of excellent preparation.  However, it is vital that they keep in mind that even with the very best preparation and diligence, there can still be surprises when selling a business.

Copyright: Business Brokerage Press, Inc.

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The time you invest getting to know and understand your customers is time very well spent.  The feedback you get is gold, pure gold.  Yet, there are other reasons why this is a prudent move.  Let’s take a look at some of the key reasons you should learn more about your customers and their specific needs.

Today’s world has become increasingly impersonal.  Most of us spend a shocking amount of time looking at one type of digital screen or another.  Personal interaction isn’t what it once was, and you can use that fact to help build your business.

The Ultimate Form of Customer Service

Good old fashioned human contact goes a long way when it comes to keeping customers happy, loyal and returning.  The personal touch can go a long way towards building your business by improving customer service.  Customer service has become, in general, a very impersonal experience for most people in the modern world.

In most businesses, the owner is more of an impersonal theoretic concept that an actual being; after all, how often do you meet the owners of the businesses that you frequent?  As a business owner, when was the last time that you got on the phone or had lunch with a good customer?  The truth is that customers and clients enjoy working directly with owners, and it makes them feel more connected with a business.  An owner who is working directly with his or her customers or clients is engaged in a powerful form of customer service.

Building Relationships

Investing time to build your business’s key relationships is a prudent step.  When was the last time that you took a moment to contact your accountant, banker, legal adviser or other key people that support your business, such as key suppliers?  The time you invest communicating with these key people and institutions is time well-spent especially should a problem ever arise.  Since most communication is now done online, a handwritten thank you note or a quick phone call can go a long way towards maintaining and building relationships.

It is important to rise above all the background noise of life.  One of the best ways of doing so is to invest the time to add a personal touch.

Owning and operating a business shouldn’t be a stealthy activity.  Instead, you the business owner should be out front meeting with customers, suppliers and other key people.  Running a business isn’t a “backroom” operation, so go out there and meet your customers and other key people!  This is how you build and protect your business.

Copyright: Business Brokerage Press, Inc.

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A recently published article from Business.com entitled “Why Every Business Owner Needs an Exit Strategy” outlines the importance of having an exit strategy for business owners, no matter what point they are at in running their business. The author uses an analogy involving building construction: if multiple exit options are required for each floor of a multi-story commercial building in preparation for disaster, why not plan for the same in your business?

As can be expected with most elements of a business, exit strategies will vary depending on the business and will be tailored to each specific business’s circumstances. The basics, however, include the following:

1. Business Goals
2. Timeframe
3. Intentions for the Business
4. What’s Next for the Business Owner

While some may argue against incorporating an exit strategy into a business’ initial business plan, some benefits for exit planning early on include enhanced business value and the ability to use the strategy as a blueprint for success or a flexible template for sale preparation. Whether or not an owner decides to pursue exit planning now or further down the road, these are all factors to consider.

Click here to read the full article.

A recent article from Divestopedia entitled “Who is the Right Buyer for Your Business?” illustrates the thinking that should go into determining which type of buyer will fit best in the sale of a business. A single business transaction can present several different types of potential buyers, each having their own goals and motivations for buying a business. Understanding these types of buyers can help an owner make the right choice for their own personal goals as well as for the good of the business.

Some buyer types include:

1. Defensive
2. Synergistic
3. International Entity
4. Financial or Private Equity

While sometimes surprises do happen during the sale process, it is invaluable for a seller to have some knowledge and understanding of the types of buyers they will encounter during the sale process.

Click here to read the full article.

A recent article posted on the Axial Forum entitled “Succession Planning — A Critical Missing Element in Many Family-Owned Businesses” outlines shocking statistics from a recent survey that shows the succession plans of U.S. family-owned businesses: only 52% plan to keep their businesses in the family! This is down a whopping 22% from only two years ago and raises some questions regarding the goals and plans owners have for their businesses after their death or retirement.

These statistics can help to reveal some important findings about the owners of family-owned businesses in this country: they often have little understanding of the fair market value of their businesses. Unfortunately, many small businesses overestimate the true value of their investment, which can come as a shock when it comes time to sell. According to the survey, less than 25% of respondents had a clear, actionable transition plan in place, while almost a third had no plan in place at all. These things alone can debilitate any seller, especially in the necessity of a quick sale.

Understanding what an effective transition plan and process entail is a great start for any business owner, especially one that falls into the category of owners without proper transition plans. These things can be better understood with the help of an M&A advisor or business consultant, who will help iron out some of the wrinkles and prepare a business for its future.

Click here to read the full article.

A recent article posted on The Business Journals entitled “How to Pass a Family Business from an Overbearing Father to the Next Generation” illustrates a hypothetical example of a difficult business transition from a ruthless old-school owner to a seemingly less passionate and less aggressive family member. It explains how transitioning from an overbearing leader is often difficult because not only are potential family successors unmotivated to take over, existing employees are also alienated due to harsh and improper treatment.

The author’s solution for this is forgiveness: when it comes to business, animosity can kill motivation and productivity and revenge is never the right answer. Business survival relies on proper practice and great leadership, among many other factors, so forgoing personal grudges for a seamless transition can prove to be vital to future and ongoing success.

Click here to read the full article.

Copyright: Business Brokerage Press, Inc.

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